How to price SaaS in 3 steps

🟢 Price Point + 🟡 Billing Frequency + 🔴 Feature Set. Here's how it works:

15 Aug 2023 • 1 min read

How to create your SaaS pricing structure in 3 steps:

🟢 Price Point + 🟡 Billing Frequency + 🔴 Feature Set

Here's how it works:

🟢 Price Point = Do you charge, and if so, how much? For example, freemium, $49, $99, or $2999
🟡 Billing Frequency = How often you bill. One-time lump sum for lifetime access? Recurring monthly? Every six months? Annually?
🔴 Feature Set = What access users get. This includes the number of seats, API calls, functionality, speed, storage or support options. You're only limited by your imagination here.

Using a video conferencing product as an example, this might look like:

🟢 $79 + 🟡 Monthly Billing + 🔴1 user seat, 1 terabyte cloud storage, customer support via email / chatbot

To create different tiers (Basic/Standard/Pro), you only need to adjust these 3 variables.

Using the same example above, an upgraded tier might look like:

🟢 $149 + 🟡 Monthly Billing + 🔴 2 user seats, 3 terabytes total cloud storage, 24 hour phone support, transcription services

As you can see above, you can play around with the pricing structure itself to incentive longer-term contracts.

For example, offering a 10% discount if buyers buy a 6-month subscription upfront rather paying by month. And a 20% discount if they buy a full year.

Anyway, pricing is a place where you can get creative in maximizing Lifetime Value (LTV)...as long as you watch your numbers.

Pricing Structure = 🟢 Price Point + 🟡 Billing Frequency + 🔴 Feature Set
🟢 Price Point = What you charge
🟡 Billing Frequency = How often you charge
🔴 Feature Set = What the buyer gets
Adjust any of these 3 to create more/less expensive tiers with appropriate levels of service and functionality
Adjust any of these 3 variables to incentive greater Lifetime Value (LTV) from your buyer

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