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Key takeaways:
- Choosing the right price— and pricing model and pricing strategy— for your SaaS product is incredibly complex
- There are multiple factors to consider; some customers will be willing to pay a higher price, for example, and bring in more revenue, but others may churn
- A pricing template can help you determine which product price, pricing model, and pricing strategy works best for your business to maximize overall revenue
Choosing a price for your SaaS product is tough. It needs to be dependent on your product’s value, your customer’s perceived value of your product, as well as your finances.
You also need to determine how you’ll structure your pricing, and how you’ll leverage it to attract more customers, and how it all impacts your bottom line.
What Is a SaaS Pricing Template?
In the business world, pricing is one of the biggest challenges most companies face. Pricing your services correctly has a significant impact on the amount of business you earn and your annual revenue projections.
If you sell too high, you price yourself out of the market. If you go too low, you risk jeopardizing your annual revenue and not getting the sales you need. This pricing strategy dilemma is even more pronounced for SaaS businesses.
Because there are so many models to choose from, and because SaaS companies are, by nature, subscription-based, the pricing possibilities are virtually endless.
A SaaS pricing template is a foolproof guide that takes the guesswork out of pricing tiers and ensures you’re using the right pricing model for your business. It can be an essential part of conducting a price analysis for your SaaS business.
If you’re curious about how your churn stacks up with similar companies, our Open Benchmarks show you average churn rates based on average revenue per user.
Examples of Pricing Models & How They Impact Revenue
Depending on your needs, there are a few different pricing template options to choose from. The one you select will depend on a few factors, including whether you’re a B2C or B2B company, your target market, and your average number of users per sale.
Understanding these pricing models is imperative to choosing the right one for your business. You can learn more about this in our blog post on SaaS pricing models, but here are a few common options to consider
1. Flat Pricing Strategy
Flat pricing is popular because it’s one of the easiest ways to price SaaS services. It breaks down to a single price for a tier of service. For example, Basecamp offers a flat-rate pricing strategy.
It’s easy for both companies and customers to understand and make it easier for teams to predict churn rates and revenue growths. It may also help reduce customer decision time.
2. Per-User Pricing
Per-user pricing is another simple pricing model. The price in this model depends on how many team members use a product. Slack is an example of a SaaS product that does per-user pricing well.
It’s more common than flat-rate pricing and is also more scalable. It’s particularly well-suited for B2B SaaS companies who target fast-growing teams, marketers, and social media teams as potential customers.
3. Tiered Pricing
Tiered pricing is currently the most popular pricing model for SaaS companies since it provides the most customization.
It relies on offering different prices for different tiers of service, with progressively more advanced product features at each tier. These plans usually also offer a free plan.
For example, a pro plan would offer more features (and a higher price) than a basic plan. HubSpot is one company that executes tiered pricing expertly. Dropbox is another outstanding example. This model allows SaaS teams to provide a wider appeal and functionality to customers.
It’s also great for upselling startup customers, e-commerce users, and small businesses and increasing their lifetime value. This model can be very effective at encouraging clients and new customers to level up to the next price point.
4. Use-Based Pricing
Some SaaS startups offer usage-based pricing plans. Customers pay for what they use, and nothing more.
Within this model, SaaS companies charge either for storage or on a per-action basis. For example, Salesforce offers usage-based pricing on some of its products.
This model is excellent if your business has a customer base that wants the maximum level of flexibility in product pricing.
Customers who want more features can usually access a library of add-on options. However, while this model can be profitable, it can also lead to cash flow issues.
Why Use our SaaS Excel Pricing Template?
Our SaaS Excel pricing template is the easiest way to get started with your SaaS pricing. If you think it might be right for you, start by making a copy of the Google Sheets template, or downloading the Excel version.
This template includes multiple different tools you can use to assess operational decisions, cash flow, and more. Track your profitability against expenses, see how hiring decisions can impact your bottom-line, and more. You can see how MRR changes stemming from pricing alterations can impact your total revenue.
Improve Your SaaS Pricing Strategy: Use Baremetrics
Pricing is not something that has to be static. In fact, we recommend testing it regularly until you find that ultimate sweet spot.
And pro tip: It is possible to raise prices without upsetting customers, and even a small price change can lead to significant impacts.
If you’re creating a SaaS pricing proposal template or updating your pricing pages, Baremetrics can help you get the most from your document.
We offer metrics, dunning, and engagement tools tailored to cater to your SaaS product and subscription model businesses. We are also here to help your team track business metrics in real-time.
To make sure your pricing fits well into your finances, you’ll want to model out your finances. To guide you on this journey, we have an awesome post on SaaS financial modeling.
Tired of wasting time on spreadsheets? Get a free trial of Baremetrics today!
