How Do You Choose The Perfect Pricing Plan For Your SaaS?
Choosing the wrong pricing structure for your SaaS can lead to less conversation and if you select the correct one users will convert into paying customers. Thus in today’s article, I will be walking you through different payment structures and which one is good for what use case.
Before we start, if you want to take a deep dive into running a successful AI-based SaaS business and want to know all the key strategies and points, I’ve written a book “Cheat Code for Building AI-Driven SaaS”. This book will provide you with extensive guidance and you will find your path for building your AI-based SaaS.
Freemium Model 🆓
If you are a startup and building the first SaaS of your career, and the only source of income to fund your SaaS is your 9–5 job, then in this case just forget about the Freemium Model. Do not give the ability to users to use the features of your SaaS free of cost for a lifetime.
I know this might sound silly as a lot of other SaaS do have a freemium to it, but you need to check if those companies have a good revenue source, and also if they give the features for free they have some sort of advertising to it like a watermark this will allow them to easily advertise the SaaS.
Even if you want to have the freemium model in place you should only allow the users to use the platform for free for a certain period like 7 days or a month and always ask for the card information at the time of sign-up. This will decrease the toxic customers and you will have good revenue generated. Trust me converting a user from Free to paid is a whole other part of the work that needs to be done.
Usage-based pricing ⌚
This type of pricing is mostly what you have seen on the cloud and other cloud-related SaaS where there is an exchange of cloud resources for money. So depending on how much bandwidth you consume or compute power you take from them you have to pay that amount to the provider.
This type of pricing is good when you don’t have control over the resources and your customer's demands are volatile.
Credit-based pricing 🔢
Credits are often provided when a SaaS has to offer only 1 service as a feature, for example validating the email address on Clearout or Usebouncer. Where there is one feature like validating the email address and that will provide you like you can validate 1,000 email address and here are your 1,000 credits.
A similar structure has often been seen in places like job-posting where the demand is not constant and the user can use the service anytime he likes.
You should use this type of pricing when you have to provide 1 particular feature or your user demands are not constant for 1 day they might use your platform and next, they will come after 2 months again.
Tier-based Pricing 🔗
So tier-based pricing works when you want to limit the user's limits of use, you can divide the user into tiers like Tier-1, Tier-2, and Tier-3. In each tier the limits increase based on the consumption of the users.
You’ve seen a similar model getting followed in OpenAI where there are Tiers based on how much you use the APIs of them.
You can use a similar system when you want to protect your SaaS and resources from getting abused and want to make sure the user who is using the SaaS is authentic and reliable.
Subscription-based pricing ⭐
As the name suggests this is the package where we provide the users some packages like 2 or a maximum of 4 to choose from. Make sure you don’t overwhelm these packages with all the features, only add those features that make sense, and make sure to have a genuine price tag on the packages.
This type of feature is for those who have a stable product running in the market and have to offer features to the users. You have seen systems like Clickup having this kind of pricing structure.
User-based Pricing 🧑
This type of pricing is best when it comes to users, like you can provide the features for free for 1 user and when they need to add the teammates or increase the count of users they need to pay the amount.
Trello and Zoho use the same kind of pricing structure for their product and you can use it too if you have a SaaS that demands users to work as in team.
These were some pricing models that you need to be aware of and make sure what I’ve told in the Freemium mode, it’s not for everyone, especially for the startups. In case you have any more doubts please feel free to reach out or comment down below.
I also wanted to share with you a book that I recently wrote on marketing if you want to take a deep dive into marketing and know how to get long-term paying customers for your SaaS, “Marketing Strategies to Grow Your SaaS” which will cover all the necessary steps and strategies in depth to help you take your SaaS from scratch and get some real paying users.
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