How to Price Your SaaS Product

Pricing is the most impactful lever for your SaaS revenue. Yet most founders spend too little time on it.

The Three Pricing Models

1. Per-User Pricing

Simple and transparent. Best for team tools.

2. Usage-Based Pricing

Pay for what you use. Best for infrastructure and API products.

3. Tiered Pricing

Good / Better / Best. Best for products with distinct user segments.

Pricing Principles

• Price based on value, not cost
• Offer a free trial — not a free tier (unless your product improves with more users)
• Annual discounts of 15-20% improve cash flow
• Don't compete on price — compete on value

The Magic Number

Your entry price should be roughly 1/10th of the value you provide. If you save someone 10 hours/month and their time is worth $50/hour, price around $50/month.

When to Raise Prices

• When your churn is below 5% monthly
• When you're turning away customers (demand > capacity)
• When you've added significant new features

Remember: you can always offer discounts, but you can rarely raise prices without backlash.