Pricing Strategies

SaaS products have different pricing strategies. The main one are the one below.

Cost-Plus Pricing

This is the most basic pricing model. Easy to calculate but not often a good strategy (you should probably charge more).

To find your price: calculate all your costs and add a healthy margin on top. That’s all.

The pitfall is, the margin (profit) represents the value you give to your customers but it’s probably way to low.

Another problem is, if costs unexpectedly go up in the future, profit margin will take a cut.

Competitor-Based Pricing

Pricing strategy influenced by competitors.

It makes sense to check the price of the competition in order not to be too off. One problem is being influenced too much by the competition, your product loose its personality and the value you are bringing to the table.

Competitors’ price is a good benchmark but it should not be the only strategy; use this strategy with other pricing model.

Value-based pricing/Customer-based strategy

Strategy based on your customer. Needs surveys and research.

How much is your customers willing to pay for your product? Go and talk to them. This is also a good excuse to know your customers and their needs more. It could provides good feedback.

As the name implies, you need a customer base, so this strategy is difficult to use with a new tool. Using this strategy as a last iteration of your pricing strategy could be useful.


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