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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 the principles outlined in our book, Price to Scale, the key is to choose a metric that more directly reflects the value your product delivers—rather than defaulting to a per-user price. When your product's primary value comes from the number of projects or workspaces, it makes sense to price based on that metric. Here’s how you can approach this:
• Direct Value Connection:
Just as discussed on page 193 of our book, if the value isn’t inherently tied to users (for instance, when the product’s usefulness is about managing distinct projects or workspaces), then it can be more effective to price according to the number of projects. This ensures that your pricing model more closely aligns with the benefits the customer actually receives.
• Usage-Based Approach:
In our book (see page 45), we emphasize pricing based on usage metrics when they demonstrate a direct link to product value. Instead of charging per agent or per user, you would structure your pricing around the creation or usage of projects/workspaces. This way, as customers expand their operational scope—creating more projects or workspaces—they naturally pay more, which also allows your revenue to scale with their success.
• Practical Application:
- Consider a tiered model in which the first few projects or workspaces are included in a base package, with additional ones charged at a set rate.
- Alternatively, a pure usage-based model could be developed where each new project or workspace incrementally increases the customer’s bill.
- Ensure clarity for your customers: they need to see that each project/workspace unlocks value, enhancing their productivity and ultimately justifying the incremental cost.
• Strategic Considerations:
Remember that changing the unit of measure—from individual users to projects or workspaces—helps you capture the true growth potential of your customer’s usage. As emphasized throughout our pricing strategies in Price to Scale, it’s all about aligning price with value, ensuring that your model can both attract customers initially and scale revenue as they grow.
In summary, by pricing based on projects or workspaces rather than users, you tie the cost directly to the product’s functional value, align with customer success, and create opportunities for revenue to grow as your customers expand their operations. This is in direct alignment with the methodologies we outline in our saas pricing book, Price to Scale.