Pricing is an important aspect of building a SaaS because it can have a significant impact on the success and sustainability of your business. Pricing can affect the demand for your product: Customers are more likely to purchase a product that they perceive as being fairly priced. If your pricing is too high, you may discourage potential customers from signing up. On the other hand, if your pricing is too low, you may not be able to sustain your business in the long run. Pricing can also impact your business model because different pricing models can have different implications for your business model. For example, if you charge customers on a per-use basis, you may have a higher volume of transactions but lower average revenue per customer. On the other hand, if you charge a subscription fee, you may have a lower volume of transactions but a higher average revenue per customer. Finally Pricing can influence your profitability. If you are able to charge a high price for your product, you may be able to generate more revenue. However, you need to consider the costs associated with delivering the product and ensure that your pricing is sufficient to cover those costs and generate a profit.

As shown in the picture there are 4 main different types of SaaS pricing models:

1. Subscription-based: In this model, customers pay a recurring fee (usually monthly or annually) to access the SaaS platform. This model is commonly used for SaaS platforms that offer ongoing services or support, such as cloud storage or project management tools. There are several variations of this model such as:

  • Fixed-rate: customers pay a fixed monthly or annual fee to access the SaaS platform. This model is commonly used for SaaS platforms that offer a set of standard features and services.

2. Per-seat: In this model, similar to the subscription-based one, customers are charged a fixed fee for each user that has access on the SaaS platform. There are several different types of SaaS per-seat models, including:

  • Flat-rate: customers are charged a fixed fee for each user that has access to the SaaS platform. This model is commonly used for SaaS platforms that offer collaboration or communication tools, such as email or video conferencing.

3. Usage-based: In this model, customers are charged based on their usage of the SaaS platform. This model includes:

  • Pay-per-use: customers are charged based on the number of times they use the SaaS platform or the specific features or services they access. This model is commonly used for SaaS platforms that offer high-volume or resource-intensive services, such as data processing or storage.

4. Freemium: In this model, commonly used for platforms that have a large user base and rely on a small percentage of users to generate revenue, the SaaS platform is offered for free to users, but customers can pay for additional features or premium services. The different types of SaaS freemium models are divided into:

  • Basic: the SaaS platform is offered for free to users, but customers can pay for additional features or premium services.

5. Enterprise: In this model, the SaaS platform is tailored to the specific needs of large organizations and is sold on a contract basis. This model includes:

  • Licensing: the SaaS platform is sold to the enterprise on a contract basis, and the enterprise has the right to use the platform for a specific period of time. This model is commonly used for SaaS platforms that offer specialized or customized services, such as data analytics or software development.

To identify the best pricing model for your SaaS platform it is important to evaluate several factors among which:

  • Value proposition: Consider the value that your SaaS provides to your customers and how that value can be captured in a pricing model. For example, if your platform saves your customers time or money, you may want to consider a usage-based pricing model.

Final tip: Consider to experiment with different pricing models to evaluate which one is the most effective for your business.