I collected 20 SAAS products and summarized 6 pricing strategies

There are certain strategies for product pricing. Scientific pricing can not only bring good returns to the product, but also make it easier for users to accept it. Among software products, SAAS products provide both software and services, which means there are many ways to charge for them. The author of this article collected SAAS software from 20 domestic and foreign companies and summarized the following 6 pricing strategies .

The price of a product largely reflects the quality of the product and the quality of service, and the pricing model is also an art.

Especially for software products, if the pricing is inappropriate, the consequences will be disastrous. Among software products, SAAS products provide both software and services, which means there are many ways to charge for them.

Of course, enterprise-level users are the main source of income for current SaaS vendors. I collected 20 domestic and foreign SAAS software and sorted out their charging methods. There are roughly 6 pricing strategies.

1. Pricing Strategy

1. Free

The free version here does not mean that all functions are free, but that the basic version is free.

Free is more common in the To C field and relatively rare in the To B field, because To B products, especially SAAS software, need to rely on the sale of software products and services to generate operating income. But in order to attract users, some SAAS software provide users with a free trial of the basic version.

Most SAAS products only offer a 7-day or 30-day free trial, but a small number of products offer a permanent free trial, meaning that the basic version is free for users. For example, Hub Spot, which provides marketing services to customers, as well as domestic companies such as Evernote, Yaoke, Fanwei, and YiKuaibao, all have basic versions that are permanently free.

When it comes to paid products, especially corporate office software for long-term use, corporate users are very cautious and hesitant in purchasing them. A major benefit of a free trial of the basic version is that it increases the user trial rate. If the product and service are excellent, it will easily increase the user purchase rate.

2. Added value

The most common charging model for SAAS software is the "free value-added" model, which means launching a free version and charging other versions based on differences in functionality. Most SAAS products are classified according to the number of functions, mostly into "regular version/basic version", "professional version" and "advanced version". Corresponding to the versions are differentiated charging plans.

Take the famous CRM customer management system sales force as an example: it has many products, and the pricing model of each product is similar, and the price is determined according to the functional division. Each product has a table showing the specific version feature differences, and a complete version comparison chart is available for download. In addition, one point that is easy to attract users is that each version has a 30-day free trial service.

There are also some commonly used apps such as Evernote and Mocha, which are specially designed for product managers , all of which use this freemium model. Compared to other SaaS products, they are incredibly cheap, so they all develop relatively high-priced enterprise premium versions.

In the value-added model, the Visual Website Optimizer A/B testing service has some special features. Since it is a testing software, the number of testers, that is, traffic / click volume, is taken as an important dimension of functionality when pricing.

According to service functions and number of testers, Visual Website Optimizer is divided into Standard Edition and Enterprise Edition. The standard version can be tried for free, and the enterprise version can be applied for to view the prototype. The standard version is further divided into Entrepreneurship Edition and Enterprise Edition according to the number of testers, and the Enterprise Edition can also be priced differently according to the number of testers.

3. Charge by team size

There are not many SAAS products that charge according to team size, and they are mainly project management software.

The difference in team size is essentially the difference in the number of people in the team. Take Freckle, a foreign real-time tracking service product, as an example: its main plan column is divided according to team size rather than function. The actual price of each plan has nothing to do with the size of the enterprise or its business positioning, but instead places more emphasis on the number of team members in the plan.

The price gradient is directly determined by the size of the team, and users can quickly choose the product type based on the number of people in their team.

4. Charge by number of people

The final charges for all SAAS products will be based on the number of people, but the pricing of most SAAS products is to first differentiate the package types by function, and then charge by the number of people at the time of final purchase.

The charging model adopted by the human resources management software dayHR is simpler. There are no different packages and no functional distinctions. It is charged directly per person per year. In this way, it is easier for users to choose, they just need to purchase according to the number of people and time.

This is a relatively convenient approach, but it also has disadvantages: for development companies, it will be very difficult to increase profits in the future if pricing is set in this way; for users, due to differences in company size and business, some companies only use some of the functions in the system. If the unit price of the software is high, users will feel that it is not cost-effective, whether in terms of function or price. Furthermore, such SAAS products fail to achieve customization, differentiation, and personalization of SAAS services.

5. Charge by user type

SAAS products that charge by user type are relatively rare. I have only seen SAAS software App Folio for property management services charged in this way. Unlike other SAAS that differentiate prices based on functions, App Folio divides the objects of property management into four categories: residents, office buildings, student apartments, and communities, and provides differentiated pricing based on different user types. It's a bit like the pricing of utility bills.

In addition, it also features transparent pricing with no hidden fees.

6. One-time payment

Some companies put a lot of thought into formulating pricing strategies, and make price differences based on multiple dimensions such as function, team size, and number of people, trying to differentiate their products. However, some companies follow a simple and crude principle when pricing, and only have one price regardless of anything else.

The project management tool Basecamp is a good example: it has no limit on the number of users and the number of projects, and is priced at $99 per month. This kind of pricing undoubtedly makes users feel particularly at ease, without having to bother comparing functions and prices.

But it is obvious that products with this type of pricing lack value-added features and can only increase revenue by blindly increasing user purchases. In the market, they are more likely to be favored by large companies. But in terms of quantity, there are still mostly small companies in the market, so it is easy for later sales to hit a ceiling.

2. Selected Case Studies

As the world's leading SAAS software service provider, Salesforce's product categories, product features, and pricing strategies are undoubtedly detailed and complete, and the number of its price types is obtained through testing and data analysis . The multiple price plans clearly increase the seriousness and functionality of the software, and as the price of the plan increases, the value of the service also increases. There is no need to doubt the value of the high-priced plan.

It can be said that Salesforce’s free value-added model is a systematic and complete model.

In addition to the Sales Force pricing method with clear functionality, the Hub Spot pricing strategy is also quite attractive. Perhaps because the differences in marketing service products are very obvious and there are more value-added items, the entire pricing system is also very detailed. In terms of the serviceability of SAAS products, Hub Spot does a great job.

Hub Spot mainly has three products: customer management system, marketing center, and sales center. The customer management system is completely free; the marketing center and sales center are divided into different product types according to their functions.

In addition to the difference in default functions, each package type also comes with additional value-added services at varying prices, such as advertising, consulting, technical support, offline one-on-one training, data report interpretation, etc. Once you select the features you want, it will also considerately calculate the total price.

Conclusion

There are many ways to price software, especially for SaaS software. In order to develop a pricing strategy that is conducive to the company's revenue growth and is acceptable to users, the company needs to fully understand the relationship between product value and customer needs.

Of course, as tracking technology and metrics continue to improve, pricing models will better reflect the value and usage of the software.