SaaS (Software as a Service) pricing models vary depending on the needs of both the provider and the customer. Here are some of the most common models:
Check out all the SaaS pricing templates I've built.
Flat Rate Pricing: A single price and set of features offered to all customers. Simple and easy to understand, but may not suit all customers' needs. Most of the SaaS templates I have will be able to be used for this. I usually have a minimum of 3 pricing tiers, but you can simply zero out all but one if this is what you want to model (just one monthly price customers pay).
Usage-Based Pricing: Costs are based on the level of usage of the service. This could be measured in terms of data usage, number of transactions, or other metrics. I've done a few models that have this logic. The DaaS and FaaS financial model templates have logic to drive revenues based on what your customers use over time. Both have advanced retention configurations and up to six pricing / usage tiers.
Per User Pricing: Charges are based on the number of users who have access to the software. Often used in business applications. This is the most common model I've done and have various styles, including the B2B / B2C SaaS model, the 5-tier SaaS model, the security monitoring software business model, and the Simple SaaS Startup Model.
Freemium Model: Offers basic services for free, while charging for advanced features or capabilities. This is a popular method for gaining a user base quickly. I've got two templates that fit this style. They are the freemium SaaS and mobile app models. Both have an option for a free user pool and optional ad revenue that can be earned based on the free user pool count over time and average CPM. The mobile app template also has options for in-app purchases and a single monthly price users can pay for no ads.
Tiered Pricing: Different levels of pricing are set, each with its own set of features and limitations. Customers can choose a tier that best fits their needs and budget. Nearly all the SaaS models I have let the user test pricing of multiple customer pricing tiers.
Feature-Based Pricing: Different features are priced separately. This allows customers to pay only for what they need.
Subscription-Based Pricing: Charges a recurring fee (monthly, quarterly, or annually) for continued access to the software. This is the most common SaaS pricing model. All the models listed above have at least one option for subscription-based pricing.
Per-Active-User Pricing: Similar to per-user pricing, but charges only for users who actively use the software during a billing period.
I've also done a few hybrid models, for example, charging customers a monthly subscription price to access a marketplace as well as charging transaction fees for each transaction on the marketplace. This marketplace + subscription template lets you test various pricing for one or both options.
Another interesting model that involves SaaS pricing frameworks is this subscription box financial model. It works based on customers being able to pay a flat monthly fee in order to receive monthly boxes of curated stuff. It could also be used like the dollar shave club model for a single set of specific products that are sent to customers homes each month in a box. The user can configure up to six pricing tiers in this one.
Further yet, property managers will often be considered enterprise SaaS business models because property owners use their software to manage their properties. I've done a property management financial model template where you can test various pricing options (% of rent under management / flat fee per customer / fee per unit). Scale happens by entering the expected new customers onboarded each month for up to three customer types. Each customer cohort can be configured based on total units, rent, and rent growth over time.
I've also built standalone tools for SaaS businesses. If you want to analyze historical SaaS customer behavior, this cohort performance analysis template is great or if you want to test pricing for up to 10 customer types, this SaaS customer margin and KPI analyzer is very useful.
Each model has its advantages and disadvantages and can be chosen based on factors like target customer segment, software complexity, and market competition. Companies often mix elements of these models to create a hybrid approach that best meets their goals and the needs of their customers.
Article found in SaaS.
