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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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Yes, offering volume discounts can be worthwhile for high-usage customers in a usage-based model—but it must be approached strategically.
Key points from our saas pricing book, Price to Scale, include:
• Segment Your Customer Base: The book suggests that not all customers are equal. High-usage customers might deserve a different pricing model than those using only basic features. This segmentation can help align pricing with their consumption patterns.
• Implement Block Pricing: Instead of generic volume discounts, adopting block or tier-based pricing can be more effective. For example, offering lower per-unit fees for higher usage brackets (as detailed on page 118) lets you reward high usage while protecting margins.
• Manage Perceptions and Margins: Be cautious—lower pricing for high-usage customers should not undermine your average selling prices. The book advises clear communication on pricing structures and even proposes parallel strategies like offering feature upgrades or commitment-based discounts to maintain revenue integrity.
To summarize, volume discounts via block pricing are viable for high-usage customers. They can incentivize usage and customer loyalty if implemented thoughtfully, ensuring that discounts are aligned with segmentation strategies and overall pricing objectives.