Much has been written about the different SaaS pricing models and choosing the right strategy for your business. Each company should consider what best fits its corporate philosophy, identity, and demographics. While the choice can be intimidating, this is an important decision, as is the business model that governs and in turn is governed by it.
The appeal of SaaS is the flat-rate access versus purchases of copies and licenses that are constantly becoming outdated. This is a stronger organic access lease than property ownership.
As a result, you must work within idealistic constraints with your pricing system, but still take into account your demographics and the identity and attitude of the service and the business you are presenting.
With that said, let’s consider how these factors work to affect your potential decision.
Price limit:
First, you have to deal with that expected price expectation. While the prices can be high, you should be priced well below a traditional software model, so you should put an upper limit on your price range right away.
Ad revenue deduction:
From here on, it depends on what you are doing with the software. First, are you using ads? If so, you must deduct the projected income from your pricing unit immediately. This is because if you don’t meet your revenue expectations with the pricing unit, then the ads should be removed and the prices raised to match your internal price. When a model doesn’t work, ads should be the first thing to go, because honestly customers don’t like them, they tolerate them.
Factor overhead:
After this, are you freemium? If so, you need to consider the overhead projection for your free users, calculate a difference to these overhead and advertising revenue.
Again, ads should be the first to go, but if they’re the only thing that makes up for the freemium overhead, and you’re otherwise experiencing good conversion rates, then your ads shouldn’t be abandoned.
Multi-level subscriptions:
If you choose the subscription path at any level, you may need to sell more than one level account. The best way is to use a reasonable feature disparity to achieve this goal, as it will prevent the loss of freemium. You will probably need to use this at some point, so you can implement it from scratch as well.
Cost per unit:
Lastly, it is important that some services exist in a completely different universe. Transaction interfaces for sales, resource transfers and other SaaS merchant establishments price per transaction unit or transaction return percentage.
If your service appears to be a merchant system, you may want to calculate your unit cost based on standard overhead and demographic comparison cascade.
Hopefully now you know a little more about the dynamics of SaaS pricing models and can make better decisions about yours.
