How can I price my SaaS app better?


4

This is what my current monthly pricing is:

  • $29 for up to 50 users
  • $149 for up to 150 users
  • $299 for up to 300 users
  • Pricing on request above 300 users

A few things to note:

  • This has to be a straight swap 3 tiers for 3 better tiers. I don't have the development resources to add one of those price sliders like https://zenpayroll.com/ has.
  • I've checked with my $29 customers and 3 out of 3 think $35 would be fair for their price (i told them their current price is locked in).
  • In the beginning we thought the cheap $29 plan would help us break into big companies... get one department first etc. It has not.
  • I have 10 customers with employee counts at about 23, 25, 33, 38, 120, 120, 270, 250
  • Customers rarely mention the price as being high.
QUESTION: What are 3 better tiers (both user number and $ price can change)?

Pricing Saas

asked Apr 25 '13 at 01:24
Blank
Dmurtagh
157 points
  • You should probably specify the nature of your app - it's really hard to provide a good advice without having any more information – Salmon 7 years ago
  • I went with 3 plans: $149 for 150 users, $75 for 75 users, $35 for 35. A dollar per user per month. Over time I will raise my prices. thanks for the advice! – Dmurtagh 7 years ago

3 Answers


2

The first thing it sounds like you need to change is your $29 package. You said you wanted it to be a "cheap" package for breaking into companies by conquering individual departments. You should do just that. Instead of raising the price you can drop the amount of employees supported to 15 or 20 users - the size of a small department. This way you are having a larger yield for the smallest tier while allowing a company to experience the product. The company can then upgrade tiers if they feel other departments need it.

I noticed you charge 41% less per client on your lowest tier. Normally (like with the Zenpayroll example you gave) the costs will experience a diminishing return with larger licence numbers. With your current pricing setup potential buyers see it actually HURTS them to have a larger company. If you use the $29 for 15 employees example I gave you it makes it easier to lower both the cost as well as the amount of covered employees. Here's an example:

$29 for 15 employees ($1.93 per employee)
$99 for 75 employees ($1.32 per employee)
$199 for 250 employees ($0.79 per employee)

Now potential buyers can sample your product for an inexpensive rate ($29 package), upgrade if they are serious about their business ($99 package) or get the best value if they have a decently sized business ($199 package). On top of this your product will seem much more affordable now as the perceived "maximum cost" is $199, and not $299. (Large companies will still be required to contact you, but smaller ones will not feel as overwhelmed by the costs)

Hope this helps.

answered Apr 25 '13 at 01:57
Blank
Pblock
133 points
  • I guess you mean $99 for 75 employees ($1.32 per employee) right? – Dmurtagh 7 years ago
  • I would worry that the next prospect that comes along with say 40 employees will think $99 is too much and there's way to big of a jump between the $29 for 15 and $99 for 75. This might work better: $35 for 30 employees ($1.163 per employee) $99 for 100 employees ($1 per employee) $199 for 250 employees ($0.79 per employee). What you think? – Dmurtagh 7 years ago
  • Yes, I meant up to 75 for $99. Thanks for catching the error! – Pblock 7 years ago
  • The numbers you give Dmurtagh are great too, and I'm sure they would work better since you know your clients best. The point I was trying to make is that you should look to A) make the simplest package accessable but not usable in larger companies and B) make the remaining 2 packages "more affordable" by lowering the coster per employee (This gives the client better Return On Investment) – Pblock 7 years ago

1

I am by no means an expert, but I want to share my thoughts incase it helps:

I think the problem is that it seems too steep and too generous at the same time. I'm not quite sure exactly what you're app is about, but I have a feeling that 50 users may be a lot for the average guy. I would bring that down to a more realistic number like 10-20. I just think that a lot of people will look at that and say '50 is a lot, Ill never use that!' and won't even bother considering the other two.

I think $29 may be a bit too high for the average user. Of course, I (again) know nothing about the product so I could be completely wrong.

Are there any additional features that is limited by price? I wouldn't just price by the amount of users. Maybe there's specific cool features you can hold off on the basic plan. That's the thing that usually sways me when I'm making a decision on a SaaS price plan.

answered Apr 26 '13 at 00:54
Blank
Andy
155 points

0

Not knowing what your product is, what each segment considers "affordable" based on their price anchors makes this an impossible question to answer.

The data you provide also doesn't help much - 10 customers with 8 datapoints, 4 customers within the $29 bracket (< 50) yet "3 of 3 (within the $29 bracket) stated that.."

That said, there are some resources to determine pricing models in as objective an approach as possible. One example: Price Intelligently defines pricing strategy based on determining customer value - their "developing your price theory" pdf coupled with their blog postings of example studies to emulate are good reads.

answered Apr 25 '13 at 23:49
Blank
Jim Galley
9,952 points
  • You can find out my product by clicking on my name and going to my website. I didn't want to distract everyone by creating a debate over how to value my product. I am just looking for advice on how to break up the tiers really. I don't have more databpoints because I don't have any more customers than that ! :) – Dmurtagh 7 years ago

Your Answer

  • Bold
  • Italic
  • • Bullets
  • 1. Numbers
  • Quote
Not the answer you're looking for? Ask your own question or browse other questions in these topics:

Pricing Saas