I'm having hard time trying to price my SaaS which is a productivity workflow software for Enterprises. Currently, I'm just pricing it as 1.3-1.5x my estimated cost (and the estimated cost may not be very accurate). The existing solutions used by my potential customers to that problem are either non-existent or few point tools stitched with some manual work. So I don't have a real metric to compare against. This price is for my very first customer (who really likes the product and has asked for the pricing) so I don't have any prior user metric either as reference. My current thoughts are to just price it up to 1.5 times the estimated cost to minimize the chances of any losses. Learn from the first customer experience and revise the price for the future customers.
Your advice is greatly appreciated.
1) Subscribe at least 10 to 20 real customers without cost ( J to improve product and more value added feedback)
a. Genuine customer feedback is essential while you are launching your SaaS product in the market
b. Let them use free for some time and subscribe to them with special invitation and get more insight feedback from your real customers and later get a survey what price is suitable for your valuable product for their business and then go to with final price. You may get different aspect feedback
c. Before this product development I am sure you did study your competitors and the business segment where you are launching product. Now you can compare with your real customer feedback and your pre-launching statistics.
2) Once you get details, you may go with any below strategy based on your product nature and user audience.
a. Free (Up-to specific duration)
b. Per-User Pricing (Straight forward per user pricing)
c. Ad-Supported (Like mobile app free subscription with ads and paid subscription without ads)
d. Pay Per Active User (Allow users to subscribe but only pay for Active users)
e. Tiered User Pricing (Up-to few no of user X price and after no. of users XX price)
f. Per Storage/Usage Pricing (If product nature is about storing data, usage of data, etc)
g. Feature-Based Pricing (if you have premium features, basic features free)
h. Pay as You Go (Just like cloud services)
i. Roll Your Own (Allow customer to customize their requirements and pricing matrix according to that
There are many factors for SaaS pricing. It depends on product nature, user audience, geographic area, technology used (if you are using any third-party APIs), competition, user base, and current business stage, etc. if you highlight more details I can help more.
Instead of focussing on your costs, I would focus on the value your SaaS provides. By focussing on value, you shift the conversation away from price and onto benefits and value gained, and you should be able to have a price that is much more healthy than 1.5x cost and your client will be happy to pay it. This also allows you to have a more flexible pricing model, since as value increases, you can increase prices.
Cost-plus vs competitive-based vs value-based pricing
Remember the “three little pigs” story? Each built a house, but with a different material. The three most popular (in the SaaS world at least) methods for setting prices follow a similar pattern.
Now, fixed the value of your Saas by yourself. Hopefully, now you can.
Frankly, you are silly to worry about the pricing of your product for the first few users. I know firms who are paying their customers to try their new product. A brand new software product has some flaws, so it isn't unfair. When you hire a salesman at 5k/month to sell a product that is only generating 1k/month and costs 0.5k to operate, it is cheaper to drop the salesman, and give the product away until you get enough customers to know how much it is worth to your customers. The cost to you is completely irrelevant. What matters is the value it provides to the customer. You can't know the value, which will vary by customer, until you get more feedback, so you gotta get a dozen or a few dozen customers first at any price, including negative, so you can then find out if you have a product worth its salt.