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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 Price to Scale, the answer isn’t one-size-fits-all—it depends on your product’s maturity, usage predictability, and target customer preferences. Here are key takeaways:
• Direct Clarity vs. Flexibility:
– Creating separate tiers offers clear differentiation by bundling specific features for different use cases. This structure has been shown to provide higher predictability and revenue, especially when usage metrics are measurable and defined.
– On the other hand, if your product is newer or if users benefit from a simpler purchasing experience, keeping features flexible across plans (a more linear or usage-based model) might encourage broader adoption.
• Considerations from our book:
– The book highlights that a well-designed tiered model can drive projects to improve clarity (using tools like feature grids) and even tackle questions like “what’s in the elite plan?” or “does this work in Europe?”
– It also points out that while more granular tiering can drive incremental revenues by nudging customers towards higher bundles, if the product isn’t yet entrenched in the market, simpler structures might reduce buyer hesitation.
• Practical Application:
– Evaluate how predictable and measurable your primary pricing variable is. More granular, predictable usage signals can support discrete tiers.
– For new products with uncertain usage patterns, a flexible or linear pricing strategy might reduce friction, with the possibility to introduce separate tiers as adoption matures.
In summary, our saas pricing book, Price to Scale, recommends weighing the trade-offs: discrete tiers are great for revenue predictability when usage is clear, while flexible structures can lower the barrier to initial adoption. The right choice depends on your market stage and how easily you can articulate and justify the differences between plans.