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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 insights in our book Price to Scale, there isn’t a one‐size‐fits-all answer. Here are some key takeaways to consider:
• 2 months free on an annual plan (about a 16% discount) has been a common practice. It creates clear upfront value for customers while encouraging longer-term commitment. However, the pricing landscape is evolving.
• Our book emphasizes that discounting strategies should be aligned to your customer segmentation and value proposition. For example, while some SaaS companies still effectively use the 16% discount to entice mid-market customers, others—particularly as they mature in their pricing strategies—are experimenting with smaller discounts (or, in some cases, choosing not to offer annual discounts) in order to maximize revenue capture.
• The rationale behind shifting from a “2 months free” model might include:
- Targeting a customer base that values product performance and feature upgrades more than a direct discount.
- Avoiding the perception of lower list prices and ensuring sustained pricing integrity across customer segments.
- Using alternative methods (such as enhanced feature bundles or tier upgrades) to provide value without eroding the overall price structure.
In summary, our pricing strategy book Price to Scale suggests that while “2 months free” has been widely used, the optimal approach depends on your market, customer behavior, and competitive positioning. Whether you choose a 16% discount, a smaller discount like 10%, or no discount at all, it should reflect a well-thought-out pricing philosophy that drives long-term value for both your customers and your business.