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Frameworks, core principles and top case studies for SaaS pricing, learnt and refined over 28+ years of SaaS-monetization experience.
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In today's competitive SaaS landscape, a one-size-fits-all pricing strategy often leaves significant revenue on the table. Forward-thinking executives are increasingly implementing use case pricing—a sophisticated approach that tailors pricing to how customers use your product across different applications. This strategy not only maximizes revenue potential but also aligns your pricing with the specific value customers derive.
The Limitations of Traditional SaaS Pricing
Traditional SaaS pricing typically revolves around seats, usage volume, or feature tiers. While these models work for many businesses, they often create misalignment between price and perceived value, especially when your product serves multiple use cases.
According to OpenView Partners' 2023 SaaS Benchmarks Report, companies implementing value-based pricing strategies like use case pricing report 14% higher net dollar retention and 9% higher annual growth rates compared to those using simpler models.
What Is Use Case Pricing?
Use case pricing differentiates pricing based on how customers apply your product. Rather than charging all customers identically, you price according to their specific application, which often correlates more closely with the value they receive.
Consider these real-world examples:
- Salesforce: Charges differently for Sales Cloud, Service Cloud, and Marketing Cloud, despite sharing the same core platform
- AWS: Prices compute instances differently for general-purpose, compute-optimized, and memory-optimized workloads
- Twilio: Offers different pricing for messaging used in marketing versus authentication, reflecting different value propositions
The Strategic Benefits of Use Case Pricing
1. Aligns Price with Value
Different use cases often deliver vastly different ROI to customers. When an enterprise deploys your inventory management software for critical supply chain operations, they may derive significantly more value than when using it for internal asset tracking.
Patrick Campbell, founder of ProfitWell (acquired by Paddle), notes that "customers are willing to pay two to three times more for the same core technology when it's positioned against their highest-value use cases."
2. Expands Total Addressable Market
Use case pricing enables you to serve price-sensitive segments that might otherwise find your product unaffordable, while still capturing premium prices from segments deriving higher value.
According to research by Simon-Kucher & Partners, companies implementing multi-dimensional pricing strategies like use case pricing expand their serviceable addressable market by an average of 25%.
3. Reduces Competitive Pressure
When your pricing is tailored to specific use cases, you create a more nuanced competitive position. Rather than competing on a single axis (price), you compete on fit-for-purpose and specific use case value.
Implementing Use Case Pricing: A Strategic Framework
Step 1: Map and Analyze Your Use Cases
Begin by identifying the distinct applications of your product. For each use case, document:
- The specific problems being solved
- The economic value delivered
- User personas and departments involved
- Deployment patterns and usage characteristics
Cross-reference this information with customer satisfaction data to understand where your product delivers disproportionate value.
Step 2: Quantify the Value Delta
Not all use cases deliver equal value. A telecommunications company using your analytics platform for network optimization might realize millions in infrastructure savings, while a marketing team using the same technology for campaign analysis might only see incremental conversion improvements.
According to Ibbaka's pricing research, the value differential between high-impact and low-impact use cases typically ranges from 3x to 10x.
Step 3: Design Your Use Case Pricing Structure
Based on your analysis, determine whether to implement:
- Package-Based Approach: Different bundles for different use cases
- Metric-Based Approach: Same features, but different pricing metrics by use case
- Hybrid Model: Different packages with use-case-specific metrics
The key is ensuring customers can easily identify which option aligns with their intended application.
Step 4: Test and Refine
Before full rollout, test your use case pricing with:
- Sales conversations with prospective customers
- Pricing experiments in controlled market segments
- Customer advisory boards and feedback sessions
Overcoming Implementation Challenges
1. Technical Enforcement
Detecting how customers use your product can be challenging. Consider implementing:
- Application-specific API keys or endpoints
- Usage analytics that categorize activities by use case
- Self-certification with audit rights
2. Sales Enablement
Your sales team must understand and effectively communicate the value proposition for each use case. Invest in:
- Use case playbooks with ROI calculators
- Customer success stories specific to each application
- Training on identifying and qualifying use cases during discovery
3. Managing Customer Perception
Transparency is essential. Clearly communicate why pricing differs based on application to avoid negative customer reactions.
Real-World Success: Stripe's API Pricing
Stripe offers a compelling example of sophisticated use case pricing. While maintaining a simple 2.9% + $0.30 for standard payments, they price differently for:
- Recurring billing (additional 0.5%)
- Marketplace payments (different fee structure with connect)
- Identity verification (per verification)
- Fraud prevention (per screened transaction)
This approach has helped Stripe grow to a valuation exceeding $95 billion by capturing appropriate value across diverse financial service applications.
Conclusion: The Future of SaaS Pricing
As SaaS markets mature and competition intensifies, simplistic pricing models increasingly leave value uncaptured. Use case pricing represents the next evolution in value-based pricing strategies, enabling more precise alignment between the value customers receive and the price they pay.
For executives looking to optimize revenue and strengthen market position, analyzing how different customer segments apply your product—and adjusting pricing accordingly—offers a substantial competitive advantage. Those who implement thoughtful use case pricing strategies typically see improvements in both acquisition efficiency and customer retention, driving sustainable growth and profitability.
Is your pricing strategy leaving money on the table? The answer likely depends on whether you've aligned it with the diverse ways customers use your product.