What is the best pricing metric for our SaaS that aligns with the value we provide – should we charge per user, per active user, per project, per amount of data, or some other unit?

Based on the principles outlined in our pricing strategy book, Price to Scale, the best pricing metric is one that is closely aligned with the value your product delivers and the way your customers consume that value. Here are some key considerations to help you determine the right metric:

• Value Alignment:
– The metric you choose should directly reflect the benefit your customers gain. For example, if your product’s value is driven by active engagement, a per active user model might be most appropriate. Similarly, if the value increases with the amount of data processed or projects managed, then a consumption-based metric (like per project or per unit of data) can be justified.

• Customer Usage Patterns:
– Understand how your customers interact with your product. Do they benefit more from additional users, or is their value contingent on actual usage intensity? Our book highlights the importance of mapping customer usage to perceived value. In some cases, a simple per user fee might overcharge or undercharge based on actual activity levels.

• Flexibility and Scalability:
– A flexible pricing metric that scales with usage or outcomes (rather than a flat rate per user) can better accommodate different customer segments and usage profiles. This not only makes your pricing more equitable but also aligns the cost with the growing value customers receive over time.

• Experimentation and Feedback:
– As discussed in Price to Scale, it’s crucial to test and iterate on your pricing model. Start with a metric that closely mirrors the value drivers and then use customer feedback and usage data to fine-tune it. This iterative process can help pinpoint whether a per user, per active user, per project, or per amount of data model best captures the value provided.

In summary, there is no one-size-fits-all answer—your pricing metric should reflect the core value your SaaS delivers. Start by analyzing how your customers use your product and what drives their success, then select a metric (or a combination of metrics) that aligns costs directly with these value drivers. This approach, as detailed in Price to Scale, ensures that your pricing model is both customer-centric and scalable.