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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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Credit unions face unique challenges when selecting software solutions. Unlike traditional banks, these member-owned financial cooperatives operate with different priorities and constraints. When credit unions invest in SaaS platforms, the pricing model they choose can significantly impact their bottom line and ability to serve members effectively.
The right pricing metric aligns with how credit unions derive value from the software while remaining predictable for budgeting purposes. Let's explore the three main pricing approaches for credit union SaaS solutions and determine which creates the optimal balance for both vendors and credit unions.
Understanding Credit Union SaaS Needs
Credit unions typically require specialized software for:
- Core banking operations
- Digital banking platforms
- Lending systems
- Member relationship management
- Compliance and security solutions
- Data analytics and reporting tools
Each of these systems potentially warrants a different pricing approach based on how the credit union derives value from it.
The Three Primary Pricing Models
Per-Seat Pricing
Per-seat (or per-user) pricing charges based on the number of people using the software.
Advantages for credit unions:
- Predictability for budgeting
- Simple to understand and communicate internally
- Direct correlation between size and cost
Disadvantages:
- Can limit adoption within the organization
- May not align with the value received
- Potentially expensive for larger credit unions
Per-seat pricing makes sense for solutions where individual usage directly correlates with value, such as specialized lending platforms or wealth management tools used by specific teams.
Per-Transaction Pricing
This usage-based pricing model charges based on the volume of transactions processed through the system.
Advantages for credit unions:
- Scales with activity levels
- Aligns costs with member engagement
- Lower entry costs for smaller credit unions
Disadvantages:
- Less predictable expenses
- Potentially costly during high-volume periods
- Can discourage usage during growth phases
According to a 2022 OpenView Partners report, usage-based pricing has grown in popularity, with 45% of SaaS companies incorporating some form of usage metrics into their pricing strategy - up from 34% in 2020.
Per-transaction models work well for payment processing, core banking transactions, or digital banking platforms where the value correlates directly with volume.
Value-Based/Outcome Pricing
This approach ties costs to measurable outcomes or value created by the software.
Advantages for credit unions:
- Direct alignment with business objectives
- Vendor shares in both risk and success
- Focuses on results rather than inputs
Disadvantages:
- More complex to implement and measure
- Requires agreement on value metrics
- Can be challenging to forecast
Value-based pricing might measure outcomes like:
- Member acquisition costs
- Loan portfolio growth
- Operational efficiency improvements
- Compliance cost reductions
Finding the Right Fit for Credit Unions
The optimal pricing model depends on several factors specific to each credit union:
1. Size and Scale
Smaller credit unions with limited staff may benefit from transaction-based pricing that allows them to start with lower costs and scale gradually. According to CUNA (Credit Union National Association), nearly 70% of credit unions in the United States have assets under $100 million, making cost-efficiency particularly important.
Larger institutions with hundreds of employees might find per-seat pricing more predictable and potentially more economical when deploying enterprise-wide solutions.
2. Strategic Priorities
Credit unions focused on digital transformation might prefer outcome-based pricing for their core technology investments, particularly if vendors can demonstrate clear ROI improvements.
For example, a credit union prioritizing lending growth might accept a value-based pricing model for loan origination software where costs increase alongside portfolio expansion.
3. Compliance and Security Considerations
Solutions addressing PCI DSS compliance or other regulatory requirements often employ tiered pricing models with price fences based on asset size or complexity rather than pure usage metrics.
Security solutions may combine a base platform fee with per-user components for authentication or access management.
Hybrid Approaches Gaining Traction
Many credit union SaaS vendors now implement hybrid pricing strategies that combine elements of multiple models:
- Base platform fee plus per-user components
- Tiered transaction pricing with volume discounts
- Outcome guarantees with usage-based components
According to a recent McKinsey study, 56% of enterprise software vendors have adopted hybrid pricing approaches that combine subscription and usage elements.
Case Study: Core Processing Systems
Core processing platforms demonstrate how pricing models can vary within a single category:
- Traditional players often use asset-based pricing (a percentage of the credit union's assets)
- Newer cloud-native providers frequently offer transaction-based pricing with volume tiers
- Some innovative providers are exploring outcome-based models tied to efficiency metrics
Jack Henry, a leading provider of core systems to credit unions, offers tiered pricing models that scale with credit union size while incorporating both usage elements and service components.
Recommendations for Credit Unions
When evaluating SaaS solutions, credit unions should:
Align pricing with value creation: Choose models that directly connect costs to how value is generated for members.
Consider growth trajectories: Select pricing structures that accommodate planned expansion without punitive cost increases.
Evaluate total cost of ownership: Look beyond the headline price to understand implementation, training, and support costs.
Negotiate volume discounts: Larger credit unions should leverage their scale for enterprise pricing advantages.
Test multiple scenarios: Model how costs evolve under different growth or usage patterns.
Conclusion
While no single pricing metric suits all credit union SaaS applications, the industry is increasingly moving toward flexible models that combine multiple approaches. Per-seat pricing remains appropriate for team-specific tools, transaction-based models work well for processing-intensive applications, and outcome-based approaches show promise for strategic initiatives.
The most successful credit union technology partnerships typically involve transparent pricing discussions where both parties understand how value is created and shared. By approaching vendor pricing discussions with clarity about their own value metrics, credit unions can ensure their technology investments directly support their mission of member service.
When selecting your next credit union SaaS solution, remember that the ideal pricing model should grow with you, align with how you create value for members, and provide the predictability needed for sound financial planning.