Pricing strategy · Saas

SaaS pricing model best practices?

Vijay MD Founder Chefalytics, Co-owner Bite Catering Couture, Independent consultant (ex-McKinsey)

July 31st, 2013

Hey everyone,
Building a niche market software to automate catering kitchen planning/ reporting (wife owns a catering business so we're building for ourselves first).

It's a SMB SaaS type product.  Customer base is very cheap at the small end and at the larger end, this likely (at least for us) frees up 1-2 FTE or more per $1M in sales and should increase margins and sales conversions.  Existing products take 3-6 months to implement and UI is a bit "Microsoft-office" like in look and feel (powerful but confusing).

Was wondering if any of you had much experience with more data-driven SaaS models at the small business side of the market.  Trying to map cost impact (servers, etc) of going freemium and then pricing models after (e.g., sell lots of add-ons/ expansions vs. more simple 3-5 tiers of pricing vs. more usage driven models)

Any thoughts?  Are there resources you'd recommend?

Anonymous

July 31st, 2013

Read everything from David Skok, VC and SaaS expert:

Jonathan Murray Co-Founder / CEO of MyVR.com

July 31st, 2013

Couldn't agree more with the above link by Dan Abdinoor.  


Alan Peters VP Product and Technology at BusinessBlocks

July 31st, 2013

Hi Vijay I would look at competition and then there's a good SaaS financial model template shared by investor in ZenDesk. I can send along when I am not on the move. Also am happy to be a sounding board if you'd like to talk. I really like SaaS and Small business markets. Cheers

VAIBHAV JAIN Founder @StartupFlux

July 23rd, 2017

SaaS Pricing can be tricky, and a very good way that i recommend to everyone is Sensitivity Analysis.


Sensitivity Analysis lets you price your product just right making sure you're not selling too low or two high.(Both can hurt your business more than you think)

It also enabled you to set realistic expectations of the amount of market you can capture and be more calm and content doing it.


How it Works:

  • Find Competitors
  • Discover their price ranges
  • Estimate the Market Size
  • Set realistic targets
  • Use Sensitivity model template to find the right price for you

You can read the details on an article I wrote. There's also a link to a Google Sheet with Sensitivity Analysis Template that you can copy and use.


SaaS Pricing Best Practices: Sensitivity Analysis