B2B SaaS pricing strategies that work
Pricing is the most powerful lever for SaaS profitability, yet Price Intelligently research shows that 80% of SaaS companies have never optimized their pricing. A 1% improvement in pricing yields an 11% improvement in profits—more than any other factor. Despite this, most companies spend less than 10 hours total on pricing strategy.
The impact of pricing optimization
According to McKinsey's pricing research, companies that actively manage pricing achieve 2-4% higher profit margins than competitors.
Common SaaS pricing models
Per-Seat Pricing
Charge per user/seat. Simple, predictable, but can limit adoption.
Usage-Based Pricing
Charge based on consumption (API calls, storage, events). Aligns cost with value.
Feature-Based Tiers
Good-better-best packaging based on features. Clear upgrade path.
Flat-Rate Pricing
Single price for unlimited use. Simple but limits monetization.
Hybrid Models
Combination of base fee + usage or seats + features.
The Shift to Usage-Based: According to OpenView's SaaS Benchmarks, 61% of SaaS companies now have usage-based pricing components, up from 34% in 2020.
Choosing your value metric
Identify Value
What outcome does your product deliver to customers?
Align Metric
Find a metric that scales with customer value received
Test Measurability
Can customers easily understand and predict costs?
Validate Growth
Does the metric grow as customers succeed?
Check Defensibility
Is it hard for customers to game the metric?
Ensure Fairness
Do customers feel the pricing is fair?
Value metrics by SaaS category
Common Value Metrics by SaaS Type
| Feature | Collaboration (Slack) | Marketing (HubSpot) | Payments (Stripe) | Infrastructure (AWS) |
|---|---|---|---|---|
| Per Seat | ✓ | ✗ | ✗ | ✗ |
| Per Transaction | ✗ | ✗ | ✓ | ✗ |
| Per Record/Contact | ✗ | ✓ | ✗ | ✗ |
| Per GB Storage | ✗ | ✗ | ✗ | ✓ |
| Per API Call | ✗ | ✗ | ✗ | ✓ |
| Revenue Share | ✗ | ✗ | ✓ | ✗ |
The psychology of pricing tiers
Typical Revenue Distribution by Tier (%)
The Decoy Effect: Strategic placement of a higher-priced tier makes the middle tier seem more attractive. The enterprise tier often serves as an anchor that makes the professional tier feel affordable.
Pricing page best practices
Show Value First
Lead with outcomes, not features
Highlight Recommended
Make the preferred tier visually distinct
Use Social Proof
Show which tier most customers choose
Annual vs Monthly
Offer 15-20% discount for annual commitment
Clear CTAs
Free trial or start buttons for each tier
FAQ Section
Address common pricing questions
Usage-based pricing economics
Usage-Based Revenue Growth Pattern
Price testing strategies
Van Westendorp Analysis
Survey asking at what price product is too cheap, a bargain, expensive, too expensive.
Conjoint Analysis
Statistical technique to determine how customers value different features.
A/B Testing Prices
Careful: Can damage trust if customers discover different pricing.
Cohort-Based Testing
New customers get new pricing, existing stay on old plans.
Geographic Testing
Test pricing in different markets before global rollout.
Enterprise pricing strategies
Enterprise Pricing Approaches
Common pricing mistakes
Common SaaS Pricing Mistakes (%)
Underpricing is Common: Most SaaS companies underprice by 20-50%. Founders fear losing deals, but data consistently shows that premium pricing with premium positioning wins more enterprise customers.
Implementing price increases
Communicate Value
Share product improvements before increase
Grandfather or Not
Decide if existing customers keep old pricing
Phase In Gradually
30-90 day notice for existing customers
Offer Alternatives
Annual commitment locks in current price
Train Sales Team
Prepare responses to price objections
Monitor Churn
Track impact on retention and acquisition
Pricing metrics to track
Key Pricing Health Metrics
| Feature | Healthy | Warning Signs |
|---|---|---|
| ARPU Growth | ✓ | ✗ |
| Net Revenue Retention | ✓ | ✗ |
| Expansion Revenue | ✓ | ✗ |
| Win Rate by Price | ✓ | ✗ |
| Discount Rate | ✓ | ✗ |
| Price Sensitivity | ✓ | ✗ |
FAQ
Q: How often should we review pricing? A: Annually at minimum, quarterly for fast-growing companies. Market conditions, competitive landscape, and product value all change—pricing should too.
Q: Should we show pricing publicly or require contact? A: For SMB-focused products, public pricing increases conversion. For enterprise-focused products, "Contact Sales" can yield higher deal values through customization.
Q: How do we handle price negotiations? A: Have clear discount authority levels. Never discount more than 20-25% without executive approval. Require multi-year commitment or prepayment for significant discounts.
Q: When should we switch from per-seat to usage-based? A: When per-seat creates adoption friction (users don't share seats), when value delivered varies significantly by usage, or when you want to capture more value from power users.
Sources and further reading
- Price Intelligently: SaaS Pricing Strategy
- OpenView: State of Usage-Based Pricing
- McKinsey: The Power of Pricing
- Profitwell: SaaS Pricing Research
- First Round Review: Pricing Lessons
Optimize Your Pricing: Pricing strategy requires understanding your value proposition, competitive landscape, and customer segments. Our team helps SaaS companies develop and implement pricing strategies that maximize growth. Contact us to discuss your pricing optimization.
Ready to optimize your SaaS pricing? Connect with our business strategy experts to develop a tailored pricing strategy.
