.png)
Estd 4.22.2023
In the competitive SaaS landscape, the initial touchpoints with your customers extend far beyond the sales process. Customer onboarding—the structured process of getting new users acclimated to your product—serves as a critical first impression that can significantly impact customer lifetime value, retention rates, and overall success. Yet many SaaS executives overlook a crucial element of this process: the pricing strategy for onboarding services.
The Strategic Value of Onboarding
According to research from Wyzowl, 86% of customers say they'd be more likely to stay loyal to a business that invests in onboarding content that welcomes and educates them after they've bought. Despite this clear connection to retention, many SaaS companies struggle with how to position and price their onboarding services.
The decisions you make about onboarding pricing don't just affect your short-term revenue—they signal your company's priorities, shape customer expectations, and influence how users perceive the value of your entire solution.
Common Onboarding Pricing Models
Before diving into strategic recommendations, let's examine the prevalent pricing approaches for customer onboarding in the SaaS industry:
1. Free Onboarding for All
Many SaaS companies, particularly in competitive markets, include onboarding at no additional cost. Companies like Slack and Dropbox have pioneered this approach, making the barrier to adoption as low as possible.
Pros:
- Removes friction from the buying process
- Communicates confidence in your product's value
- Creates goodwill with new customers
Cons:
- Significant cost center without direct revenue
- Customers may undervalue what they don't pay for
- Limited resources to provide premium onboarding experiences
2. Tiered Onboarding Based on Package
Companies like Salesforce and HubSpot offer different levels of onboarding support tied to subscription tiers. Enterprise customers receive white-glove treatment, while smaller customers access self-service resources.
Pros:
- Aligns onboarding investment with customer lifetime value
- Creates natural upsell opportunities
- Scales onboarding resources efficiently
Cons:
- May create perception of second-class treatment for smaller customers
- Complex to communicate and administer
- Potential for customer dissatisfaction with limitations
3. Separately Priced Onboarding Services
Some platforms, particularly those with complex implementation requirements like ERP or specialized analytics tools, charge separately for onboarding services.
Pros:
- Creates direct revenue from implementation expertise
- Allows customers to choose their level of support
- Can position onboarding as valuable professional services
Cons:
- Additional cost creates adoption friction
- May be perceived as "nickel and diming"
- Requires separate sales process and justification
Strategic Considerations for Executives
When determining your onboarding pricing strategy, consider these key factors:
Product Complexity and Time-to-Value
According to a study by Pendo, 80% of SaaS features go unused by customers. The more complex your product, the more critical comprehensive onboarding becomes to ensure users experience the promised value.
For highly intuitive products with quick time-to-value, free onboarding makes strategic sense. For complex platforms where value realization takes longer, structured paid onboarding programs can actually increase adoption rates by ensuring proper implementation.
Customer Acquisition Cost vs. Lifetime Value
McKinsey research indicates that improving the onboarding experience can reduce churn by 15-20%. When evaluating onboarding as an investment rather than a revenue center, consider whether better onboarding experiences could substantially extend customer lifetime value.
If your CAC is high and initial months are critical to retention, investing in premium onboarding (even at no additional cost) may deliver superior ROI compared to charging for these services.
Competitive Landscape Analysis
Your onboarding pricing strategy should be informed by competitive realities. A 2021 KeyBanc Capital Markets SaaS survey found that companies offering free comprehensive onboarding saw, on average, 7% higher net revenue retention than those charging for similar services.
If your competitors include onboarding in their base prices, charging separately may create disadvantageous comparisons. Conversely, if they charge but deliver mediocre experiences, including superior onboarding at no cost can become a powerful differentiator.
First Impression Strategies: Making Onboarding Pricing Work
Whatever pricing model you choose, these strategies will help maximize the effectiveness of your approach:
1. Quantify and Communicate the Value
If charging for onboarding, clearly articulate the ROI customers will receive. For example, Workday quantifies the productivity gains and implementation speed improvements from their paid onboarding programs, showing customers they'll achieve value 40% faster with professional guidance.
2. Create Success Milestones
Structure your onboarding with clear success metrics and milestones. Research from Gainsight shows that customers who achieve defined "success milestones" in the first 30 days are 3x more likely to renew.
3. Consider Time-Limited Free Onboarding
Some companies offer free comprehensive onboarding for a limited time after purchase, then transition to paid support. This approach ensures customers get started successfully while setting expectations about the value of ongoing support.
4. Test Different Models with Market Segments
Different customer segments may respond differently to onboarding pricing models. Enterprise customers often expect and value paid white-glove services, while SMBs may be more price-sensitive.
MongoDB, for example, offers a free "Getting Started" onboarding package for all customers but provides separately priced advanced implementation services for enterprise deployments.
Conclusion: Balancing Value Perception and Revenue
The most successful SaaS companies view onboarding not merely as a cost center or revenue opportunity, but as a strategic investment in customer success. According to Totango, companies with structured onboarding processes see 12% higher first-year customer retention.
Your onboarding pricing strategy should reflect your company's broader philosophy about customer relationships. If you position your company as a trusted advisor deeply invested in customer success, your onboarding pricing model should reinforce this positioning rather than contradict it.
The best onboarding pricing strategy achieves three objectives simultaneously: it removes barriers to initial product adoption, properly resources your customer success team for effectiveness, and sets the right expectations for the ongoing relationship. When these elements align, you create not just a good first impression but the foundation for lasting customer relationships.