There are many ways to skin a cat, or to charge for SaaS services. After many years of structuring and negotiating SaaS agreements, here are what I see as the most common options:
🔄 Subscription-Based Pricing Subscription-based pricing is the classic SaaS model. It involves charging users a recurring fee, usually on a monthly or annual basis. The beauty of this model is its simplicity. Users know what they’re paying for and can budget accordingly, while companies enjoy predictable and recurring revenue.
📈 Usage-Based Pricing Usage-based pricing, sometimes referred to as pay-as-you-go, charges users based on how much they consume—whether that’s the number of transactions, API requests, storage, or data processed. This model is great for users with variable needs since it ties costs directly to usage.
👥 Per-User (or Seat-Based) Pricing Per-user pricing charges based on the number of users or “seats” that access the software. This model is common in team-based or collaborative tools like CRM platforms, project management software, or communication tools.
🔧 Feature-Based (Tiered) Pricing Feature-based pricing, also known as tiered pricing, offers different levels or plans that unlock additional features at higher price points. A basic plan may include essential features, while advanced plans provide premium tools and services.
🛠 Freemium with Paid Add-ons The freemium model offers users a free version of the software with basic functionality, while charging for premium features, advanced capabilities, or expanded usage limits. This model is excellent for attracting a broad user base, especially for new SaaS products.
⚖️ Flat-Rate Pricing Flat-rate pricing involves charging a single fee for access to all features and services. This model is straightforward—users pay one price and get everything the software offers, with no limits or tiers.
🔄 Hybrid Pricing Models Some SaaS companies use a combination of these models to create a hybrid pricing strategy. For example, you might offer a subscription with certain limits but also include a pay-as-you-go component for heavy usage. Alternatively, you could have a freemium tier with paid add-ons and also offer per-user pricing for premium plans.
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