6 Best SaaS Pricing Strategies To Get Your Customers To Pay

saas pricing

SaaS Pricing Strategy

Finding the right balance between value and price is a challenge faced by every business. When offering Software as a Service, the company needs to use the right SaaS pricing strategy to generate and retain customers.  The pricing model is the heart of every business and these strategies aid in generating revenue.

Some of the best SaaS pricing strategy used by companies worldwide

1. Market pricing

This SaaS pricing strategy is also known as Penetration pricing. It happens when companies need to gain a strong foothold in the market.  The company will offer the lowest prices in comparison to their competitors. Even though the company might face losses in the short to medium term, they will gain customers.  Once the customer loyalty is secured, the company will be able to upsell and cross-sell their products comfortably.

2. Flat rate pricing

In flat-rate pricing, the company will offer single or multiple products for a set price. They use a clearly-defined offer that lets them concentrate on marketing and sales. This fixed-price gives the user access to all the features provided by the platform. However, this strategy will not generate revenue in the long run as the SaaS platform is in constant update.

3. Accessory pricing

Also known as the Captive product pricing or Captive pricing, this SaaS pricing strategy depends upon the accessories needed for the SaaS to run smoothly. The base price of the product will be quiet low in the market, but the company will charge higher for the additional products.

4. Prestige pricing

Prestige pricing is a method of maintaining high prices that convey of sense of quality and exclusivity. This pricing method only focuses on a smaller segment of high-end customers who look at the price factor.  If the company is well-known and is used by big players in the field, then a premium pricing method is one of the best ways of pricing SaaS products.

5. Promotional pricing

Promotional pricing is also known as ‘Skimming Pricing.’ In this strategy, the initial price is very high and comes down when the product gains popularity. This kind of SaaS pricing strategy is a common occurrence in the IT industry. Skimming pricing also refers to riding down the demand curve. The product’s price is lowered over time to reach larger sections of customers with different price threshold.

6. Free trial pricing

Major software service companies use this type of pricing to garner a customer base. Trial pricing is a staple of the SaaS industry. The customer can access all the features of the software free of cost till a said amount of time. After the completion of the trial period, the customer has to pay to keep using the features. There are two methods in this type of pricing:

  • Time-limited: Generally, 30 days of free usage
  • Usage-limited: The number of times an element can be used is restricted.

Typically, most customers subscribe to the payment plan once their trial is complete. So, the company must have a well-designed follow-up sequence to gain customers.

Freemium pricing model

saas pricing plan

The most popular SaaS pricing strategy is the Freemium pricing model.  Many software companies use this type of pricing to target customers.  The company will offer free to use the product along with additional paid packages. It is also known as tiered pricing, where the user has to pay for using additional features. This model has many advantages, like accelerated company growth through referrals and targeting a more extensive customer base.

Pricing growth strategies are essential for companies to generate revenue and customers. Choosing the right kind of pricing strategy is vital for companies to establish their business in the long-run.

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