This method, also known as the one size fits all approach, offers the product with a set of features at a fixed price. Customers do not have the flexibility to choose different pricing structures or features. The price remains constant regardless of the number of customers or their overall usage. While this model is simple to implement and communicate, it may not suit businesses requiring custom plans. It lacks upgrade options, limiting upselling opportunities. Example: Basecamp.
With tiered pricing, different versions of the product are offered at varying price points based on features, number of users, or usage. Typically, 2 to 5 tiers are created to cater to customers' proficiency levels, from novice to advanced. This strategy allows customers to select and customize based on their needs. However, having too many tiers can complicate decision-making. Tiers must be carefully constructed to eliminate confusion and align with target customers' preferences. Example: Hubspot.
This model, also known as the pay as you go approach, charges customers based on their usage of the product. Some companies employ pure usage-based pricing, while others combine it with a base subscription fee. While appealing to customers due to its transparent pricing, it lacks flexibility for organizations of different sizes, potentially leading to revenue loss. Forecasting revenue can also be challenging due to varying usage patterns. Example: Chargebee.
In this strategy, businesses are charged based on the number of users, with multiple accounts priced individually. This model facilitates scalability for SaaS companies, as pricing scales with the number of team members using the product. However, companies must guard against login abuse and access limitations by organizations to reduce costs, as these factors can impact revenue and hinder growth. Example: Canva.
With per-feature pricing, the product's price is determined by the features and functionality offered, allowing customers to upgrade their plans for additional features. Pricing directly correlates with the value the company provides to its customers, who pay only for the features they need, saving costs on unnecessary features. However, predicting customer needs can be challenging, leading to restrictions on plan upgrades if certain features are not valued by customers. Example: Quickbooks.
