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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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Effective pricing of SaaS add-ons and premium features requires a strategic approach that balances value delivery with revenue optimization. Here's how to structure your add-on and premium feature pricing:
Strategic Approaches
Align with Go-to-Market Strategy
Creating a cohesive pricing model for add-ons requires alignment with your overall GTM strategy. For instance, if you're focused on enterprise sales, your premium features should be packaged and priced accordingly to support high Average Selling Prices (ASP).Feature Remapping and Package Rationalization
Analyze your current feature distribution across tiers and identify which premium features deliver the most value. Our methodology often includes consolidating excessive tiers (as demonstrated in our case study where we rationalized four packages to two) and strategically placing premium features to create clear upgrade paths.Implement Value-Based Metrics
Premium features should be tied to metrics that reflect the value customers receive. This could be a combination approach - for example, scaling by both users and customer revenue to capture different dimensions of value.
Implementation Best Practices
- Feature Prioritization: Use methodologies like Max Diff analysis to identify which premium features customers value most highly
- Empirical Tier Analysis: Analyze performance of existing tiers looking at metrics like Average Deal Size, upsell rates, discounting, and shelfware to optimize your add-on strategy
- Usage Analysis: Ensure your product usage data supports your chosen pricing metrics for premium features
Add-on Pricing Structures
Platform Fee + Usage Model
Implement a base platform fee with usage-based charges for premium capabilities. This provides predictable base revenue while allowing monetization of high-value features based on consumption.Tooling & Enablement Add-ons
Package premium features with supporting tools like pricing calculators and sales enablement materials to increase perceived value and adoption.Implementation Support Add-ons
Bundle premium technical features with implementation assistance and customer communication strategies to reduce friction in adoption.
Case Study Example
One $10M ARR IT Infrastructure Management company we worked with struggled to monetize new strategic features due to their lump sum subscription model. We helped create a consistent pricing model by:
- Aligning pricing with their enterprise GTM strategy
- Reducing package complexity while remapping feature-sets
- Implementing a combination pricing metric that scaled with both users and company revenue
This approach successfully resolved sales friction and created clear paths to monetize new premium features.
By applying these strategic approaches, you can effectively price your SaaS add-ons and premium features to maximize revenue while delivering clear value to your customers.