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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, here’s how you can approach pricing bundles when different products have very different cost structures:
Directly set usage ceilings for each component
When bundling products with differing cost structures, it's important to specify a ceiling for the usage metric of each product in the bundle. This means you need clear limits on how much of each product a customer can use within that bundle, ensuring that you’re protecting revenue and managing costs effectively.Consider modular bundling
Our book emphasizes a modular approach as one way to handle bundling challenges. Rather than lumping different products together in a single rate, a modular strategy assigns value individually to each component. This not only accounts for varying cost structures but also preserves flexibility for future upsell or cross-sell opportunities.Balance predictability and flexibility
While bundling can help drive growth and reduce churn through predictable revenue, it’s vital to remember that over-simplifying may limit your ability to adjust prices for individual products later on. The book advises being careful with bundling because excessive complexity or rigid bundling might restrict future pricing flexibility.Evaluate segmentation and pricing tiers
Another recommended approach in Price to Scale is the "Good-Better-Best" model, which organizes products into graded packages tailored to different customer segments. Although this method is often used for markets with relatively uniform cost structures (like SMB and mid-market segments), it highlights the importance of aligning product value with the customer’s willingness to pay—even if the underlying cost bases differ.
In summary, when pricing bundles that include products with different cost structures, our pricing framework recommends:
- Setting clear usage ceilings for each product
- Considering a modular approach to add flexibility
- Analyzing both predictable revenue versus future pricing adaptability
This approach helps ensure that your bundled pricing maximizes revenue while maintaining the flexibility needed to adjust for different customer needs and product cost profiles.