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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 is to link the pricing directly to the measurable performance metric that drives customer value – in this case, speed or performance. Here’s how you can approach it:
• Directly tie pricing to the performance metric:
The book emphasizes that when usage is measurable (whether it’s data volume, compute power, or system response times), pricing can be aligned with the real value and cost of delivering that performance. For example, if faster speed requires additional infrastructure or higher operating costs, you can reflect that cost in your pricing model.
• Tiered or modular pricing:
One common approach from the book is to offer tiered packages (similar to the Good-Better-Best model). In this context, you might have tiers that offer different speed and performance guarantees, with higher-priced tiers promising lower latency, higher throughput, or faster response times. This allows customers to select a package that matches their performance needs and willingness to pay.
• Value and cost correlation:
Our saas pricing book also advises that if the performance features (like speed) are directly related to your underlying cost structure, you should calibrate the pricing accordingly. This means evaluating how increasing performance impacts both customer value and your infrastructure costs, and setting the price at a level that captures that additional value while covering any extra costs incurred.
In summary, by measuring performance factors (like speed) and structuring your tiers or modular pricing around them, you ensure that each customer is paying a price that reflects the exact performance level they require. This strategy not only clarifies the value proposition to the customer but also helps manage cost risks associated with delivering premium performance.