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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 the rapidly evolving insurtech landscape, Managing General Agents (MGAs) face a critical strategic decision that can dramatically impact their growth trajectory and profitability: selecting the right pricing metric for their SaaS offerings. As specialized insurance intermediaries leveraging technology to revolutionize underwriting and distribution, MGAs must align their pricing strategy with both their value proposition and their customers' perception of value.
Let's explore the three dominant pricing models—per seat, per transaction, and per outcome—to determine which best serves insurtech MGAs in the SaaS space.
The Current Insurtech MGA SaaS Pricing Landscape
Insurtech MGAs operate at the intersection of insurance and technology, typically offering platforms that streamline policy administration, claims management, underwriting, or distribution. Their unique position in the value chain demands pricing strategies that reflect both their operational model and the value they deliver to carriers and brokers.
According to a recent OpenView Partners survey, 45% of SaaS companies have incorporated some form of usage-based pricing into their models, up from 34% in 2020. This trend is particularly relevant for insurtech MGAs, whose services generate measurable outcomes for clients.
Per-Seat Pricing: Simplicity vs. Value Alignment
How It Works for Insurtech MGAs
Under a per-seat pricing model, insurtech MGAs charge based on the number of users accessing their SaaS platform. For example, an underwriting platform might charge $200 per underwriter per month.
Advantages
- Predictable revenue: Subscription-based seat licensing creates stable, predictable monthly recurring revenue
- Ease of understanding: Both the MGA and customers easily understand the pricing structure
- SOX compliance: Straightforward revenue recognition aligns well with Sarbanes-Oxley requirements for public companies
Disadvantages
- Value disconnection: The number of users rarely correlates directly with the value an insurtech platform delivers
- Growth limitations: Customers may limit seat purchases to control costs, hindering adoption
- Price sensitivity: Creates pressure to discount for enterprise clients with many potential users
According to Profitwell research, companies using strictly per-seat pricing grow at an average of 16% annually, compared to 25% for those implementing value-based metrics.
Per-Transaction Pricing: Aligning Usage with Cost
How It Works for Insurtech MGAs
Transaction-based pricing charges customers based on the volume of specific actions—for instance, $5 per policy issued, $10 per claim processed, or a percentage of premium written.
Advantages
- Usage alignment: Costs scale with actual platform usage
- Lower barriers to adoption: New customers can start with lower costs
- Flexible tier structuring: Enables volume-based pricing tiers that encourage greater usage
Disadvantages
- Revenue unpredictability: Monthly revenue becomes dependent on customer transaction volumes
- Seasonal fluctuations: Insurance business seasonality can create revenue volatility
- Potential for price caps: Large customers often demand price ceilings that limit upside
A McKinsey study found that 80% of insurtech customers prefer usage-based pricing for transactional platforms, citing better alignment with their business cycles.
Per-Outcome Pricing: The Value-Based Approach
How It Works for Insurtech MGAs
Outcome-based pricing ties costs directly to measurable business results—such as a percentage of loss ratio improvement, a share of operational cost savings, or a portion of increased premium volume.
Advantages
- Perfect value alignment: Directly connects pricing to the value created
- Compelling ROI narrative: Easier to demonstrate positive return on investment
- Enterprise-friendly: Resonates with larger clients focused on business outcomes
- Premium positioning: Establishes the platform as a strategic investment rather than an expense
Disadvantages
- Complex implementation: Requires sophisticated tracking and agreement on metrics
- Longer sales cycles: More stakeholders involved in purchase decisions
- Accounting challenges: May create revenue recognition complications for SOX compliance
OpenView Partners reports that companies employing outcome-based pricing metrics achieve 38% higher net dollar retention and attract customers with 50% higher lifetime value.
Finding the Right Mix for Your Insurtech MGA
The most successful pricing strategies for insurtech MGAs often blend elements of multiple models, using price fences to segment the market appropriately.
Factors to Consider in Your Decision
Your platform's primary value driver: Does your solution primarily save time, increase efficiency, or improve underwriting results?
Customer sophistication: Are your clients equipped to measure and value outcomes, or do they prefer simpler models?
Market positioning: Are you a premium solution commanding value-based pricing, or a volume player?
Growth stage: Earlier-stage companies may need the predictability of seat-based pricing, while established players can experiment with outcome-based approaches.
Example Hybrid Models for Insurtech MGAs
- Base + Transaction: A modest base subscription fee plus per-policy fees
- Tiered Usage: Fixed monthly fee for transaction bundles with overage charges
- Outcome-Based with Floor: Percentage of savings with minimum monthly commitments
Conclusion: The Value-Based Advantage for Insurtech MGAs
While each pricing model has merits, insurtech MGAs providing substantial value are increasingly moving toward outcome-based or hybrid models that align pricing with customer success.
This shift reflects the maturing insurtech MGA market, where customers increasingly expect vendors to share risk and reward. The most successful insurtech MGAs are those that confidently quantify their value and build pricing models that reflect this value—moving beyond commoditized per-seat models toward sophisticated approaches that capture a fair share of the value they create.
For insurtech MGAs navigating pricing decisions, the key is alignment: alignment with your value proposition, with your customers' perception of value, and with your own growth and profitability goals. The right pricing metric isn't simply a financial decision—it's a strategic positioning choice that communicates your confidence in the transformative power of your technology.