
Frameworks, core principles and top case studies for SaaS pricing, learnt and refined over 28+ years of SaaS-monetization experience.
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Join companies like Zoom, DocuSign, and Twilio using our systematic pricing approach to increase revenue by 12-40% year-over-year.
In a world where customers increasingly demand value for every dollar spent, SaaS companies are shifting from traditional subscription models to outcome-based pricing. But what exactly is this approach, and how can you implement it without a PhD in pricing strategy? This simple playbook breaks down outcome-based pricing for SaaS leaders who want better alignment between what customers pay and the value they receive.
Outcome-based pricing (sometimes called results pricing or performance-based pricing) is a model where customers pay based on the measurable value or outcomes they achieve by using your software, rather than a flat subscription fee.
Unlike traditional pricing models that charge the same amount regardless of results, outcome-based pricing creates a direct link between customer success and your revenue. When your customers win, you win too.
According to OpenView Partners' 2022 SaaS Benchmarks report, companies implementing value-based pricing models saw 25% higher net revenue retention compared to those using only traditional subscription models.
Before rushing to revamp your pricing strategy, consider if your SaaS solution is a good fit for this model:
Good candidates for outcome-based pricing:
Poor candidates:
The foundation of any outcome-based pricing model is identifying the right value metrics—measurable outcomes that directly correlate with value delivery.
Common value metrics include:
Marketing automation platform HubSpot, for example, uses contacts as their primary value metric—as your contact database grows (indicating business growth), so does your investment in their platform.
With your value metrics defined, design a pricing structure that aligns with customer outcomes:
Option A: Percentage of Value Created
Charge a percentage of measurable gains (e.g., 10% of revenue generated or costs saved).
Option B: Tiered Results Pricing
Set pricing tiers based on outcome thresholds (e.g., $500/month for up to $10,000 in generated revenue, $1,000/month for up to $25,000).
Option C: Base + Performance
Combine a lower base subscription with performance bonuses when certain outcomes are achieved.
Salesforce partner Simplus found success with option C, charging a base implementation fee plus bonuses tied to adoption rates and ROI milestones.
You can't charge based on outcomes if you can't measure them. Invest in:
"The single biggest challenge with outcome-based pricing is accurate measurement," notes pricing expert Tom Tunguz from Redpoint Ventures. "Your measurement system needs to be trustworthy enough that customers will happily pay based on its results."
Before overhauling your entire pricing model:
Even with a solid framework, implementation challenges abound:
Measurement Disputes
Problem: Disagreements over how outcomes are measured or attributed.
Solution: Establish clear, contractual definitions of metrics and measurement methodologies upfront.
Customer Resistance
Problem: Customers worry about unpredictable costs.
Solution: Offer pricing caps or hybrid models during the transition period.
Internal Alignment Issues
Problem: Sales teams struggle to sell a more complex pricing model.
Solution: Develop simple tools to demonstrate value and provide comprehensive training.
Revenue Forecasting Challenges
Problem: Variable pricing makes financial planning difficult.
Solution: Implement minimum commitments and use historical data to improve forecasting over time.
Case Study: Drift
Conversation marketing platform Drift implemented a pricing model tied directly to pipeline generation. By aligning their pricing with the sales pipeline their customers generate, they've achieved 100%+ net revenue retention and stronger customer relationships.
According to David Cancel, Drift's CEO, "When we tied our success directly to customer outcomes, we stopped having pricing conversations and started having value conversations."
Case Study: AdRoll
Digital advertising platform AdRoll charges based on a percentage of ad spend, ensuring they only make money when their customers are actively driving results. This model helped them scale to over 37,000 customers across 100 countries.
Ready to explore outcome-based pricing? Here's your 30-day action plan:
Outcome-based pricing isn't an all-or-nothing proposition. The most successful SaaS companies typically start with hybrid models that combine elements of traditional subscriptions with performance components.
Remember that the perfect should never be the enemy of the good. Your initial outcome-based pricing model won't be flawless, but by starting small, measuring carefully, and iterating based on real-world results, you can build a pricing strategy that truly aligns your success with your customers' outcomes.
As your confidence grows, so too can the sophistication of your approach. What matters most isn't perfection but the commitment to tying your revenue to the value you deliver—a principle that benefits both your customers and your bottom line.
Join companies like Zoom, DocuSign, and Twilio using our systematic pricing approach to increase revenue by 12-40% year-over-year.