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Estd 4.22.2023
Based on Price to Scale, when a single usage metric doesn’t capture the full value of your product, many SaaS companies break down the value into multiple measurable components or "pricing units." Here are some common approaches discussed in our SaaS pricing book:
• Segmenting by Value Drivers:
Instead of relying on one metric, companies often map pricing to various value drivers (like volume, platform capabilities, or feature access). For instance, the two-part model in our book shows how you can charge a per-unit fee combined with a fixed platform fee—each addressing different areas of value.
• Capability-Based or Feature-Based Pricing:
As features become commoditized over time, pricing can pivot to focus on the added capabilities. Our book explains that by pricing add-ons based on their unique value (sometimes as a percentage of the base fee or as a fixed fee), you better capture differences in how each feature contributes to overall value.
• Modular or Package Approaches:
Another method is to create tiered or modular packages (like “Good-Better-Best”) where different groups of features, each offering distinct value, are bundled and priced according to the demographics or needs of target customer segments. This structure simplifies decision-making for customers whose usage doesn’t follow a neat linear pattern.
• Dynamic, Multi-Dimensional Models:
Recognizing that SaaS products often deliver value across several dimensions, models like the linear or two-part pricing structures help align fee structures to both low-volume (or entry-level) and high-volume (or enterprise) customers. This dynamic approach allows the price to adjust as customers grow or change their usage patterns across various capabilities.
In summary, if no single usage metric captures the diverse value your product offers, define pricing units by isolating and measuring distinct sources of value—whether that’s through individual feature fees, capability add-ons, or tiered subscription packages. This layered approach not only reflects the multifaceted value your product delivers but also provides flexibility and scalability in your pricing strategy, as detailed in Price to Scale.