
Frameworks, core principles and top case studies for SaaS pricing, learnt and refined over 28+ years of SaaS-monetization experience.
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SaaS Pricing
Business school might teach the basics of pricing strategy - supply and demand curves, cost-plus formulas, competitive benchmarking - but the real world of SaaS pricing is a different ballgame. Pricing is not a one-time decision or a simple formula. It’s an ongoing, strategic lever that can accelerate growth or stifle it. In fact, pricing impacts everything from your ability to raise capital to your net retention and customer lifetime value. Yet many of the most crucial pricing lessons rarely make it into the MBA curriculum.
This blog post explores five overlooked or advanced insights about SaaS pricing that business school didn’t cover.
Business school pricing is too geared for FMCG products and for those products cost plays a big role. In SaaS, those approaches often fall flat. The real key is pricing based on customer value and willingness to pay. B2B SaaS buyers are usually far less price-sensitive than you’d think - they care most about the ROI, risk mitigation, and reputation impact of your product.
If your software delivers significant value (saves money, increases revenue, solves a painful problem), many customers will pay a premium for it. In other words, don’t underestimate your product’s value or underprice out of fear. Charging too little not only leaves money on the table, it can also signal low value. It’s no coincidence that companies who struggled often say they waited too long to monetize or chose the wrong model.
Actionable Guidance:
Shift your mindset to value-based pricing. Talk to your customers and quantify the outcomes your software enables - for example, does it save 100 hours of labor or increase conversion rates by 20%? Use that to anchor your pricing. Test higher price points with new customers or new features, and collect data on willingness-to-pay. Many startups find that raising prices (gradually and with clear communication) has little impact on churn if the value is there.
In fact, a majority of SaaS companies raised prices in the past year, with 73% planning price increases in 2024 (up from 54% in 2023). The enterprise video platform Zoom, for instance, initially gained traction with a generous free plan, but as its value became mission-critical during the pandemic, businesses proved willing to pay for premium plans and added features.
The lesson: if you deliver 10x value, don’t be afraid to charge a fair share of that. B2B buyers will pay for outcomes (3 R’s: ROI, risk, and reputation), not just features, as long as you can prove the ROI. So align your price with the value and impact you create.
Another thing you won’t learn in school is that how you charge can be as important as how much you charge. In SaaS, choosing the right pricing structure and value metric (the unit by which you charge - per user, per API call, per project, etc.) is a strategic art. Many MBA courses gloss over this, but in practice a misaligned pricing metric can create friction, slow growth, or spur churn. Don’t just copy a competitor’s pricing model assuming they got it right. Your pricing should reflect how your product delivers value.
For example, Twilio charges per message/API call, directly tying cost to usage, while Slack famously only charges for active users to ensure teams feel they’re paying for actual value received.
The analytics company Mixpanel learned this the hard way - they initially charged based on events tracked, which worked for small customers but led to pushback from larger ones as event volumes (and bills) grew without clear incremental ROI. In 2019, Mixpanel switched to a Monthly Tracked Users (MTUs) model to better align price with value (charging by the number of unique users engaged, rather than raw events). This change simplified conversations and improved customer satisfaction, because the metric was more intuitively tied to the value clients got from the product.
Actionable Guidance: Select a value metric that aligns with your customers’ success. Brainstorm all the possible metrics (users, API calls, data usage, transactions, etc.) and evaluate them against criteria like:
Rarely one metric will tick all boxes, but aim for the best trade-off. If needed, use a hybrid model (e.g. base fee + usage) to balance predictability and value capture. Monitor feedback closely - if customers constantly complain about pricing or if you see usage growing faster than revenue, those are red flags that your metric might be wrong. Be willing to adjust. Keep in mind, the industry is trending toward more usage-based and hybrid pricing: around 61% of SaaS companies now have some usage-based component.
This can unlock growth and expansion revenue, but it also comes with challenges like longer sales cycles (enterprise deals with usage-based pricing took ~29% longer to close in 2023 than seat-based deals). Manage those trade-offs by offering commitments or tiers to give heavy users predictability. The bottom line: choose your pricing metric deliberately. The right metric aligns price with customer value and usage, making your model naturally scalable - the wrong metric can alienate customers or cap your growth.
Think back to any pricing lecture you had - did anyone talk about how to structure product packages or tiers? Probably not in detail. In practice, how you package features and offers is just as critical as the price point. Packaging isn’t just a marketing bundle; it’s a strategic tool to align your product with different customer segments and to drive expansion revenue.
One-size-fits-all pricing often fails to capture the full revenue potential or alienates certain customers. That’s why many SaaS companies adopt tiered packaging models like “Good-Better-Best.” (GBB)
This structure works better than a singular plan because it differentiates by customer sophistication and WTP, offers clear upsell paths as usage grows, and simplifies decision-making for buyers. At the same time, we don’t only advocate for GBB, we advocate for the right packaging for the right segments. Even GBB is not a default pick.
Actionable Guidance:
Ensure each tier delivers clear incremental value that resonates with its target audience, justifying the higher price.
Economics 101 teaches willingness-to-pay (WTP) as a static concept on a demand curve, but in the SaaS world WTP is a moving target. Customers’ willingness to pay evolves with market conditions, alternatives, and the value you add to the product over time. What they would pay last year might not be what they’ll pay today. This is especially true in fast-changing markets or when you’re continually releasing new features (think of the surge of AI features being added to software in 2023-2024, which has altered customers’ value perception). Business schools rarely cover how to systematically gauge and adapt to WTP in an ongoing way.
In reality, SaaS companies need to constantly feel out the market’s willingness to pay - through pricing experiments, customer research, and observing buying behavior - and adjust accordingly.
For instance, during high inflation or booming economic times, customers might tolerate broader price increases; in tighter economic conditions, buyers scrutinize value much more. Overall economic trends (growth, inflation, interest rates) directly impact customers’ willingness and ability to pay. In the post-2021 higher-interest climate, many buyers expect price increases to be moderate and clearly tied to additional value - the era of raising prices “because everyone else is” has ended. This means you must earn your price by continuously delivering value.
Actionable Guidance:
For example, when Zoom introduced new AI-powered features in 2023, they (like others) had to determine how much extra those features were worth to customers and whether to bundle them or sell separately. On the flip side, as pandemic-era usage normalized, some customers’ WTP for unlimited video calls may have tempered, leading Zoom to introduce usage limits on free plans to prompt upgrades. By continually measuring and testing WTP, you can find the pricing sweet spot - high enough to capture value you deliver, but not so high that it cancels out that value in the customer’s eyes.
Just communicate transparently and give customers options, and many will accept reasonable changes if they see the added value.
Perhaps the biggest thing business school overlooks is the execution side of pricing. In class, pricing might seem like a one-time decision you make before a product launch or a number you tweak in a spreadsheet. In real SaaS operations, pricing is an ongoing, cross-functional process that requires proper ownership and enablement.
Leading SaaS companies treat pricing as an ever-evolving strategy - they assign dedicated pricing or monetization teams or at least a pricing owner, and they invest in tools and processes to iterate quickly. This is crucial because your product, market, and strategy will evolve, especially as you scale from startup to enterprise; your pricing must evolve in tandem. Stagnant pricing is a recipe for lost revenue or eroding margins. It’s telling that in today’s SaaS environment, pricing and billing discussions are happening earlier than ever - investors now expect even young startups to have a pricing strategy and the infrastructure to support it, almost from day one.
Actionable Guidance:
SaaS pricing is one of the most under-taught yet powerful skills in building a successful SaaS business. It’s not just a one-time set price; it’s a dynamic lever for growth, a reflection of your product’s value, and a capability to develop within your organization. Understanding and embracing these principles can have a direct, profitable impact.
Start by asking: Which of these five areas is my company weakest in today? Maybe you’ve never done a proper willingness-to-pay analysis and are guessing at your price. Or your packaging hasn’t changed in three years despite a vastly expanded product. Perhaps no one is explicitly in charge of pricing. Pick one area and begin improving it - interview some customers, run a pricing experiment, convene a pricing task force - whatever moves the needle. Continuous small improvements in pricing can compound into significantly higher ARR and profitability. The beauty is that pricing changes, unlike many growth tactics, go straight to the bottom line with very little incremental cost.
Finally, don’t go it alone. If you’re looking for more insight or a sanity check on your pricing approach, our SaaS pricing experts at Monetizely are here to help. We’ve guided SaaS companies of all sizes in implementing these advanced pricing strategies, and we’re happy to share what we’ve learned. Pricing might not be taught in business school, but it’s a lesson you can’t afford to skip. So, get in touch with our SaaS pricing consultants today and get your free pricing assessment.
Join companies like Zoom, DocuSign, and Twilio using our systematic pricing approach to increase revenue by 12-40% year-over-year.