Should we have flat-rate pricing, per-user pricing, or tiered plans – and what factors should drive that decision?

Based on the insights from our SaaS pricing book, Price to Scale, there isn’t a one‐size‐fits-all answer – the right model for your product depends on several factors.

Here’s a breakdown of the three models and the key considerations for each:

• Flat-Rate Pricing
– This model offers simplicity and ease of understanding for your customers.
– It works well if your product delivers a uniformly consistent value across all segments.
– It minimizes billing complexity and helps accelerate sales conversations.
– Consider whether a single price point can capture the varying levels of value different customer segments experience.

• Per-User Pricing
– Per-user (or per-seat) pricing ties directly to the value each additional user brings.
– This model can scale with your customers’ growth and aligns pricing with usage, making it attractive for organizations that expand over time.
– However, it sometimes penalizes highly collaborative environments or teams with shared resources since each additional user incurs extra cost.
– Evaluate whether the incremental value per user justifies the associated costs, and how your customers view individual versus team usage.

• Tiered Plans
– Tiered pricing involves several levels, each offering different feature sets or usage limits. This approach helps address a broad range of customer needs.
– It allows you to capture more value from high-usage or enterprise customers while keeping an affordable entry point for smaller customers.
– Tiered plans enable you to segment the market effectively, but they also add complexity in both sales and internal billing structures.
– Consider how clearly you can differentiate feature bundles so that customers can self-select the plan that truly matches their needs.

Key factors to drive your decision include:

Customer Segmentation: Understand how your customers derive value differently from your product.
Value Capture: Ensure the model aligns pricing with the value delivered, whether that’s per user, per usage, or through differentiated tier levels.
Simplicity vs. Granularity: Balance the ease of a simple pricing structure with the need to segment and capture value across varied customer types.
Competitive Landscape: Factor in how your competitors price their offerings so that your model remains both attractive and economically sustainable.
Scalability & Operational Complexity: Assess whether your internal systems and sales processes can support more complex pricing plans.

In summary, our book Price to Scale emphasizes that your pricing model should reflect how customers derive value as well as the internal dynamics of scaling your business. Whether you choose flat-rate, per-user, or tiered plans, confirm that the model aligns with both market posture and long-term business objectives. The key takeaway is to carefully match your pricing structure not only to customer behavior and segment needs but also to your company’s operational capabilities and growth strategy.