.png)
Frameworks, core principles and top case studies for SaaS pricing, learnt and refined over 28+ years of SaaS-monetization experience.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Below is a concise explanation drawing from our saas pricing book, Price to Scale:
- Directly tie the metric to customer value
- Begin by listing a few potential usage metrics. Ask yourself: “Does this metric scale with the value my customer is receiving?” For instance, if your product delivers value based on customer outreach rather than just active users, the metric might need to reflect customers reached or engaged, not merely individual user counts.
- Assess each candidate against the key criteria
- Our book suggests using a checklist to rank/assess potential metrics. One of the foremost criteria is whether the metric is proportional to the client’s value. Ask: “To what extent does the metric mirror the value the customer is actually experiencing?”
- Consider the broader pricing model context
- Evaluate if your model is based on consumption or capability. If it’s based on usage (consumption), it becomes critical for your pricing metric to represent real use and, by extension, real customer value. In contrast, if it’s a capability model, you might simply price per product or module.
- Fine tune with real-world examples
- Consider how leading companies have pivoted away from traditional per-user pricing when it no longer correlated with customer value. As discussed in our book, when a capability’s value comes from its impact on a customer’s outcomes (e.g., marketing automation that benefits based on customers reached), the metric should change accordingly.
Summary:
Identify several candidate metrics, evaluate each using a value-based checklist (ensuring it mirrors the actual value delivered to the client), and choose the one that best correlates with usage that drives customer outcomes. This systematic approach, as outlined in Price to Scale, helps ensure that your pricing aligns with the true value your product delivers.