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  • Writer's pictureManish Nepal

Good SaaS Pricing Strategy Is a Total Package

saas pricing strategy

Bad SaaS pricing sounds like this:

"Here's a shoe for you—completely free of cost. Enjoy!"
"However, if you want another side of the pair, you will have to pay $75 per month."
"Shoelaces extra."
"Insoles? Oh, you will have to buy our enterprise plan for that."

On the other hand, a good SaaS pricing strategy offers complete value in each plan in a way that fits (and scales with) the customers' needs.

  1. If a customer needs shoes for walking, just give them a pair of shoes that's good for light use.

  2. If they want them for running a marathon, show them a pair of shock-absorbing shoes.

  3. If they want to scale Mt. Everest—offer them an all-terrain mountaineering shoes with spikes that can weather the harsh icy terrain.

To be fair, SaaS pricing is tricky on so many levels.

As an individual user, I have never felt the need to upgrade my Canva or Grammarly accounts because I get plenty of value from their free plans.

On the other hand, I feel cheated when HubSpot markets its CRM is free and doesn't offer me even the most basic features that a CRM should offer. The free plans that HubSpot and several other SaaS brands offer are practically useless for most business users.

There's no easy answer to the SaaS pricing conundrum. But the brands that get their pricing right are the ones that will earn an all-around happy user base.

I think Henrik Kniberg's explanation of what a minimal viable product (MVP) actually is does a pretty good job of extending what a good SaaS pricing strategy should be. A few years ago, he came up with this brilliant illustration which simplifies how an MVP should be built much better than any other resource you can find.

Henrik Kniberg what's an MVP

And that's exactly SaaS brands should structure their pricing tiers. Every pricing plan should be a total package in itself and not a deliberate push to upgrade to a higher paid plan.

The move to the higher plans should happen like a natural progression based on the user needs and requirements — when they make the most of the product and outgrow the offerings in their current plan. Offering a great product experience plus helping customers achieve specific milestones in the form of customer success nudges is a great way to ensure that.

I believe that brands should understand what value customers are most willing to pay for and charge based on that. For instance, these vectors can vary based on features, contacts, storage, hosting bandwidth, or something else.

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