Determine tiers for SaaS pricing

Contributors

@paul-boag


Business Benefits

Increase conversions, facilitate upselling, and boost overall revenue.


Segment your users based on how frequently they will use your SaaS product and what tools they need to succeed.

Consider the different use cases for your product. Not everyone wants all of the features your tool provides, so give them a lower-cost option that will help them achieve their goals without paying for unnecessary functionality.

Define your base tier by choosing the minimum features needed for a viable product.

The bottom tier should include enough features that your SaaS platform will be useful. It should not contain extra enhancements or added functionality that they could theoretically live without. This is your starting point, so the tiers above this one should include more features and options.

Allocate tiers to each of the segments created that differ based on features and SaaS options provided.

Each tier should be different enough that customers can determine why the next package up is more valuable. The higher tiers will appeal to a narrower audience, but they will need a more robust platform to meet their goals.

Avoid using too many tiers and pricing levels – keep it simple.

It can be frustrating for customers when there are too many tiers and pricing packages to choose from. Try to narrow it down to a few packages that they can easily distinguish between. They should not have to guess why certain packages are worth more. Too many options can also lead to analysis paralysis, where the user never decides because they have an overwhelming number of choices.

Balance the pricing of your base tier with the higher-level packages.

Start by setting the price for your base tier and ensure that it is affordable enough to encourage users to sign up. However, it should be priced to cover the cost of supporting those users. The pricing for the subsequent tiers should increase according to the additional features the user obtains. It may be helpful to reference competitor pricing scales to make sure your ranges are reasonable.