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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 our saas pricing book, Price to Scale, there isn’t a one‐size-fits-all “magic number” when it comes to the optimal number of seats to include in your base plan. Instead, the book emphasizes the importance of understanding the underlying cost structure—particularly the difference between average cost and marginal cost.
Key points include:
• The Importance of Marginal Cost:
As discussed in Price to Scale, most of your expenses (such as development, infrastructure, and support) are fixed or do not scale directly with the number of users. This means that while your average cost per seat might be high when spread across few users, the marginal cost for adding an extra seat is typically very low. A pricing model that recognizes this can afford to include more seats in the base plan, as long as additional usage still covers variable costs and contributes to revenue.
• Market Strategy Influence:
The decision on how many seats to include is also influenced by your business goals—whether you’re focusing on maximizing margins (often seen with enterprise products) or growing market share through user virality (a common approach in bottom‑up SaaS companies). Including more seats in the base plan could stimulate adoption and reduce friction, especially if early users drive word-of-mouth and network effects.
• Context and Customization:
While some companies might start with a base plan of 1–5 seats and charge for additional users, others might need to tailor this number based on customer expectations, competitive benchmarks, and the specific value your product delivers with additional users or seats. The book encourages companies to weigh these strategic factors using the marginal cost pricing approach.
In summary, Price to Scale advises that you determine the optimal number of included seats based on a careful analysis of your cost structure and strategic objectives rather than relying on a fixed number. This approach ensures that you balance lowering the barrier to entry with capturing additional revenue as your customer’s teams scale.