#15 — Pricing SaaS

The big picture: Pricing is your most powerful and underutilized lever for improving SaaS economics. Most founders set prices without much consideration and leave them unchanged for years.§

Between the lines: Your pricing page isn't just about numbers—it's a critical extension of your sales message that should continue convincing prospects why they need your product.§

Market-Specific Pricing Approaches

For consumer apps:§

• The opportunity: When selling to consumers with money (like CoinTracker's crypto investors), don't be afraid to charge premium prices
• Go deeper: Consider pricing tiers like $99/$499/$2,499 instead of $29/$149/$999 to filter out high-maintenance, low-value customers
• Smart move: Offer "Priority" customer service on higher tiers—it's easy to implement and lets price-insensitive customers self-identify

For undifferentiated SMBs:§

• Reality check: Never offer "unlimited everything" for a low flat fee—it decimates your ability to charge appropriately as customers grow
• Better approach: Tier pricing based on company size or usage metrics that correlate with value received
• Pro tip: For a $50/month product used by teams, consider charging $5-10 per employee after the first 10 users

For vertical-specific SaaS:§

• The insight: Selling to specific industries (like KitchenWhiz to carpenters) allows for more precise value-based pricing
• Pricing power: When your tool generates revenue for professionals, you can charge 10-50x what you might think
• The formula: For B2B SaaS in verticals, start with $49/$99/$249 monthly tiers

For sophisticated businesses:§

• The opportunity: Companies in industries like oil & gas expect to pay premium prices
• Counter-intuitive truth: Free offerings can actually reduce credibility with well-funded buyers who associate price with value
• Strategic move: For Geomodelr selling to oil companies, discontinue free plans and shift to $2.5K annually with higher tiers at $10K+

Universal Pricing Principles

1. Plan names matter: Replace generic "Bronze/Silver/Gold" or "Basic/Standard/Premium" with names that help customers self-identify (e.g., "Hobbyist/Professional/Enterprise")§

2. Minimize decisions: Don't make monthly vs. annual billing a major decision—make annual the default with a toggle for monthly§

3. Anchor to alternatives: For B2B tools, explicitly compare your pricing to hiring an employee ($100K+ fully loaded cost) or agency ($5K+ monthly)§

4. Concierge onboarding works: Bundle personalized setup with higher tiers or annual plans to increase conversions and reduce churn§

5. Credit card requirements: For B2B SaaS, requiring credit cards for free trials typically results in fewer but higher-quality trials§

The bottom line: Review and experiment with pricing quarterly, not annually. It's the easiest needle to move in your company.§