What are the Most Common Pricing Models for SaaS Products?
“SaaS” means software as a service. It refers to the utilization of software through the internet, without the need for installation on a personal computer. Many companies use SaaS in running their emails, keeping track of their sales, or organizational work. But how do these companies decide how much they should charge customers for their SaaS products? In this paper, we would look at common pricing models utilized by SaaS products.
- Free Trial
The most common pricing model is the “Free Trial.” With a free trial, you get to use the software for some time without paying. The company allows you to use the product before you decide on its purchase. A free trial usually lasts from 7 days to 30 days. After the trial period, you must pay to keep using the product.
This is an effective way for companies to demonstrate the ease of use of their software. If you find it useful, then you can purchase it. Otherwise, you can just discontinue using it.
- Freemium
The “Freemium” model gives you the basic features for free, but you have to pay for the others. This business model offers a free, basic version of a service or software. However, those who desire additional features will need to upgrade to a paid plan.
Freemium is a very popular model. It allows people to test the software without any risk; if the free version works fine, they may be willing to buy it for extra features.
- Subscription
The “subscription” model means you pay an amount per month or year to use the software; it’s quite common among SaaS products. The price can vary based on how many features you require or the size of your company.
For example, you can pay $10 a month for a basic version and $30 a month for a more advanced version. Some companies give a discount if you pay for the whole year at once and not on a month-to-month basis.
- Pay-As-You-Go
The “Pay-As-You-Go” model means you pay only for what you use. If you use the software a little, you will pay less. If you use it a lot, you will pay more. This pricing model is beneficial for people who do not use the software all the time.
For instance, if a company provides cloud storage, you pay according to how much space you use. The more space you use, the more you pay.
- Tiered Pricing
In the “Tiered Pricing” model, there are several levels or “tiers” of pricing. Each tier includes more features or services. You can choose the tier that suits you best.
For instance, a company might have three tiers.
- The basic plan costs $10 per month, the standard plan costs $25 per month, and the premium plan costs $50 per month. The more you pay, the more features you get. This model helps customers choose what they need and not pay for things they do not need.
- Per-User Pricing
With “Per-User Pricing,” you pay for every person who uses the software. If you have five people in your company who need the software, you will pay for five users.
For instance, a company could charge $15 per user each month. So, if you have 10 users, your bill would be $150 every month. This is a common practice for collaboration tools among teams and software that is needed by a large number of people simultaneously.
- Usage-Based Pricing
“Usage-Based Pricing” means you pay based on how much you use the service. For example, if the software helps you send emails, you may pay based on the number of emails you send per month.
This approach is beneficial if your needs fluctuate monthly. You pay more when you send a lot of emails in one month and pay less when you send fewer emails in the next month.
- Per-Feature Pricing
The “Per-Feature Pricing” model means you pay for features you are using. Choose a feature to pay for if the software has 10.
With this model, you can customize your plan by paying only for what you want and nothing else.
Conclusion
Companies have quite a few ways to decide how much to charge for their SaaS products. The most common are the free trial, freemium, subscription, pay-as-you-go, tiered pricing, per-user pricing, usage-based pricing, and per-feature pricing models.
Each of the models has its own set of benefits. Some are excellent for people who want to try before they buy; others are excellent for businesses where payment is on a pay-as-you-go basis. It’s just a matter of choosing the pricing model that best fits your needs and budget.
You can start with a free trial or even a very affordable plan if you’re interested in any SaaS product.