SaaS companies are known for making software more accessible, scalable, and user-friendly. But behind every shiny interface and streamlined onboarding is a pricing model that can make or break a company. Pricing in SaaS isn’t one-size-fits-all—it’s about finding a model that attracts new users, retains them, and (hopefully) sustains steady revenue.
While subscription-based pricing has been the go-to approach for many SaaS businesses, usage-based pricing is quickly gaining traction. Companies are increasingly favoring flexible, usage-based models that align costs more directly with the value customers receive. However, subscription pricing still holds strong, offering predictable revenue and encouraging long-term relationships. Whether you’re exploring a freemium model, dabbling in pay-as-you-go, or considering a hybrid approach, each subscription model has unique advantages and ideal marketing strategies.
Let’s dive into six popular SaaS subscription models and look at how to best market each one.
Table of Contents
1. Freemium Model
Freemium offers a taste of your SaaS product for free, luring users in with the hope they’ll be so hooked they’ll shell out for the premium version. Freemium users may flock to you, but how do you turn them into paying customers?
Marketing Tips:
- Onboard Like a Pro: Start with an onboarding sequence that introduces users to the best features—and gently nudges them toward premium ones. Just enough to make them curious.
- Time Your Prompts: Use in-app nudges to suggest an upgrade exactly when they need it. For instance, when they’re using a feature that could be better (read: premium).
- Retarget Those Freebies: Use retargeting ads to remind free users why they love you. Tease the extra benefits waiting in the premium version and keep your brand top of mind.
Freemium builds brand loyalty, but balancing free and paid users is key. It’s a careful dance—give away too much, and they won’t pay. Too little, and they’ll never stay.
2. Tiered Pricing Model
With tiered pricing, you offer various plans, each with a bigger bundle of features. Think of it like Netflix, but for SaaS: Basic, Standard, and Premium, all with increasingly impressive options. It’s perfect for businesses with diverse customers who need different levels of functionality.
Marketing Tips:
- Comparison is Key: Create a pricing page that makes it super easy to compare tiers, with straightforward descriptions of what each level includes. People like to know they’re getting what they pay for.
- Customer Stories by Tier: Use case studies from companies in each tier to show how your product helps everyone, from small startups to big players.
- Upsell Wisely: Highlight the premium benefits with smart upselling techniques, like offering limited-time promotions for new users to try higher tiers.
Tiered pricing helps you reach multiple segments with just a single product, appealing to everyone from the little guy to the enterprise-level giant.
3. Fixed Fee Model
Fixed pricing keeps things simple. One price, all features. This works well for SaaS products that meet a single, universal need or cater to customers who prefer straightforward billing without surprises.
Marketing Tips:
- Embrace Simplicity: Market the ease of one-price-fits-all with a focus on how it eliminates the guesswork and confusion of traditional pricing.
- Showcase Features: Use content marketing to emphasize why your fixed-price solution meets a range of needs.
Free Trials for All: Encourage people to experience the simplicity firsthand with free trials or demo periods.
Fixed pricing removes barriers to entry, making your SaaS product more approachable, especially for smaller businesses or individual users.
4. Pay-Per-Seat Model
With the pay-per-seat model, customers are billed based on the number of users they add. This is ideal for team-oriented software where larger groups can scale their subscription as they grow. It’s simple, scalable, and lets customers pay for exactly what they use.
Marketing Tips:
- Sell Scalability: Emphasize how the pay-per-seat model scales easily with a business, making it ideal for growing teams.
- Volume Discounts: Offer tiered discounts based on the number of users to make your service more attractive to larger organizations.
- Case Studies with Scale: Show how companies of different sizes use your service, from startups with a handful of seats to enterprises with hundreds.
Pay-per-seat is straightforward and ensures your customers only pay for what they need, making it an appealing option for budget-conscious teams.
5. Pay-As-You-Go Model
With pay-as-you-go, users pay based on actual usage, often by the gigabyte, API call, or minute. This is particularly popular for cloud storage and API-based services where customers’ needs fluctuate.
Marketing Tips:
- Promote Flexibility: Highlight the cost-effectiveness of a model where customers only pay for what they use. Emphasize it as the budget-friendly option for fluctuating needs.
- Show Real Usage Costs: Use transparent usage tracking, so customers can see exactly how their usage impacts their costs, which can ease any fears of unexpected charges.
- Incentives for Frequent Use: Consider offering credits or discounts as usage increases to encourage more frequent use.
This model is attractive to companies with varying needs, as it lets them scale up or down based on demand without a commitment to a fixed rate.
6. Hybrid Model
The hybrid model combines elements of multiple pricing approaches. For instance, a SaaS might charge a base fee (fixed) but offer additional usage-based features (pay-as-you-go). This gives companies flexibility in pricing and allows users to pick exactly what they need without overpaying.
Marketing Tips:
- Emphasize Flexibility: Market the hybrid model as the “best of both worlds” option, giving users a cost-effective base with room to grow.
- Feature Education: Clearly explain how each component of the hybrid pricing works to prevent customer confusion.
- Scenarios that Show Value: Highlight common customer setups to illustrate how the hybrid model can meet diverse needs.
The hybrid model lets SaaS companies reach a wider audience by blending options that appeal to different types of users. It’s flexible, customizable, and ideal for a SaaS product with a variety of features and customer types.
Picking the right subscription model isn’t just a financial decision; it’s a key part of your brand identity and customer relationship strategy. Each model comes with unique opportunities to attract, retain, and grow a loyal customer base. To get the most from your subscription model, align your SaaS marketing strategy with the value that model brings to your customers. Freemium users need nudges toward premium benefits. Tiered customers need to see the value in each upgrade. Pay-as-you-go clients need assurance on cost predictability.
Strategic marketing means understanding where your customers are in their journey, then positioning your messaging to meet them there. Whether you’re embracing a simple fixed fee or balancing the complexities of a hybrid model, consider how every touchpoint—onboarding, upselling, retargeting, and even cancellation—reflects your brand’s promise and long-term value.
As your SaaS grows, transparency in billing and cancellation becomes increasingly crucial for customer satisfaction and compliance. Rules like Click-to-Cancel are gaining traction, making it essential to keep your processes user-friendly. For insights on how this might impact your SaaS model, check out our Click-to-Cancel guide.
By selecting the right model and marketing it wisely, you can turn your SaaS subscription into a well-oiled engine that drives customer acquisition, retention, and revenue growth.
