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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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Based on our saas pricing book, Price to Scale, the key to communicating usage‑based pricing simply is to make your pricing model:
• Simple – Ensure that you can explain the pricing metric in just an elevator ride’s worth of language. Avoid presenting a maze of numbers or hidden details. Instead, focus on one core, intuitive metric that clearly ties customer usage to cost.
• Measurable – Use a metric that is easy for both you and your customers to quantify. Whether it’s a cost per message, per transaction, or per unit of resource, make sure it’s something that can be counted and understood in real-time.
• Scalable – Demonstrate how increased usage translates into costs in a way that feels natural for the customer. This means showing how costs evolve based on usage with clarity, so potential customers see that they’re paying exactly for the value received.
Here’s how you can achieve this in practical terms:
- Use clear, everyday language when describing the pricing. For example, instead of saying “Our model has an incremental cost based on bandwidth consumption,” you might say, “For every X transactions, you pay Y dollars.”
- Incorporate visuals or simple charts that directly map usage to pricing. This helps to demystify any complexity and lets customers quickly grasp what they’re paying for.
- Limit the amount of detailed information visible upfront – focus on the key takeaways. Detailed breakdowns can be provided later for those who are interested, but your main communication should keep things concise.
- Tie the cost back to value. Explain how each unit of usage contributes to a tangible benefit for the customer, reinforcing that the fee aligns directly with the value they receive.
As discussed in Price to Scale (see our discussion on the Simple, Measurable, and Scalable attributes), it’s all about reducing complexity so that even a non-expert can understand your pricing model quickly. This approach not only prevents confusion but also builds trust with potential customers by being transparent about how costs are derived.
In summary, keeping the communication of usage-based pricing simple, vivid, and directly tied to measurable value is essential for avoiding confusion and driving faster adoption.