In this video Akeel Jabbar of SaaS District walks viewers through the four most common SaaS pricing strategies and explains when each is appropriate. He starts with the flat‑rate model – a single price for unlimited users and features, using Basecamp as a case study, and stresses the need for many independent buyers to scale. He then covers usage‑based pricing, where charges rise with consumption, citing Amazon AWS and Stripe, and notes the importance of demonstrating long‑term value as customers grow. The tiered model is presented next, with multiple feature‑based plans (e.g., HubSpot’s freemium → paid tiers, Postalytics), and guidance on typical price brackets and the psychology of price points under $200. The per‑user model follows, charging per seat and encouraging team‑wide adoption; HubSpot and Pipedrive are highlighted as examples that blend tiered and per‑user structures. Jabbar points out that per‑user is the most popular model according to a survey, but emphasizes that hybrid approaches are common and can be tailored to a product’s value proposition. He concludes by summarizing the four models, their scaling mechanics, and invites viewers to comment on their own pricing choices, while reminding them to subscribe.
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Hey guys, Akeel Jabbar here from the SaaS District channel. Welcome back to another video. One question I get often is, how should I set up my pricing strategy? Which one should I choose? And today we're going to talk about the top 4 pricing strategies that you should consider when building your SaaS startup, right? So deciding on your pricing strategy decides almost everything in terms of your business model and how your company will scale effectively. So welcome back and let's dig right into it. So let's start with the simplest SaaS pricing model. You have one product, you have one set of features, and you have one price, and that is the flat rate pricing model. Okay. So one example that I really like here is Basecamp. If you guys haven't heard of basecamp.com, what they do is they offer one price, $99 per month. And with that, they give you unlimited users. They give you unlimited features, all the features that you want, and you get unlimited functionality and shares within your team. So they are a project management and team communication tool. They only have one plan, $99 a month. And with that is, with that type of model, what you need to really focus on if you're going to consider the flat rate pricing is that in order to scale that business model, you need to have as many independent buyers or businesses in this case buying your product because once they buy it, they're going to share it with their entire team and they're still going to be paying you $99 a month regardless of how many people use it. And the way you keep growing is you just keep adding more features. Adding more value to your product, and over time you should be able to get more users and scale your business. The second type of pricing model that you want to consider is the usage-based pricing model. Now what that means is that as the usage grows, as people use your product and the demand on your servers increases, your pricing goes up over time. So I'll give you an example here. You guys have probably heard of Amazon AWS. You guys can use it starting off with a couple cents per the volume of storage that you use. And as your storage, as your demand goes up of your product that you're using, they will charge you based on the usage that you want. So it's pretty nice because you only pay what you use essentially. And that's the beauty of that model. The problem is that you're going to get a lot of people up front who are going to just use it very, very little. And then you're not going to get a lot of money. You're going to get pennies, probably dollars. Upfront, but then over time as those users continue to use your product and they grow, you get to grow along with that. So if you're, if you're looking to, you know, focus on this pricing model, what you need to focus here is that you need to show the value of your product that over time it's going to actually generate a lot of revenue. And as these companies grow, they're going to grow along with you because the usage goes up. Another one, a quick example there that I like is Stripe. So as they, as you use more, there are percentage, they charge you a percentage of each transaction. And as you grow, they make more money. And you know, that's what they bank on is that you're going to grow and they're going to make more money on the percentage over time. The next one, number 3, that we're going to talk about is the tiered pricing model. So you guys probably see this all the time, right? You guys go on a SaaS landing page and you see they have a different, different, you know, probably 3 or maybe 4 different tiers. And by that they package them in different, based on different features and, you know, depending on what you're looking for as a business looking to sign up. So one example here, or I'll give you a couple. One is say HubSpot. Many of you guys are familiar with HubSpot. Their first tier you come in is the freemium model. You can use all these features for all these users, unlimited contacts, $0. Now if you want to access more features, you now have to upgrade to this plan. If you're, if you're, uh, you know, you want the additional features here, now you upgrade to this plan. So what you're banking on over time is that people will want to use those more features because in order to, you know, actually use it, function the full functionality of your product, they'll have to upgrade and start paying for it. So, you know, just to summarize, they can offer different price points at different features. And, you know, the average pricing of this is really dependent on the product and what you're doing. But generally, if you're listing it on your website, people are willing to pay generally under $200 a month without speaking to somebody on the phone and sign up directly on your website. Generally, you want to be under $100 a month. So if your pricing plan is under $100 a month, you can go something like $0, $49 a month, $99 a month, or even $199. Because after that, when the price goes above that $199 a month price point, They usually wanna speak to somebody before paying and entering their credit card. Another example there that I really like is Postalytics, postalytics.com. They offer a freemium plan, a $199 and a, sorry, $99 and a $299 plan. So same thing, you guys can check them out and see how they do. So that's an example of the tiered pricing. That's probably the most common one you'll see in the SaaS industry, and I recommend checking, using that one. So the last one, the last pricing model I wanna talk about is the per-user pricing model, okay? What that is, people are gonna pay based on how many users are actually using the platform. So this is another pricing model that's probably the go-to SaaS pricing model. You can look around. So I would say between tiered and per-user, those are probably the most common ones you'll see out there. Some examples, so I think HubSpot, so you can actually combine a lot of these, right? So it's not just because you pick one doesn't mean you're stuck with using that one. For example, HubSpot actually combines number 3. They have tiered and they also have per user. So you want more features, here's the pricing. If you want more users, you can also tag along. And that's how they upsell you. The focus there is that, you know, they get a company, one person to use your product, and then if they like it, they're going to expand and the entire team will start using it. And that's where you can grow. So with that, you don't actually need to get a lot of independent buyers and businesses using your product. The goal there is to show value and the real value of how a team can use it. Okay. And with one person using it, that they'll be able to share it with the rest of the team and everybody will become a paid user at that point. So there was a survey done by another company that I saw that they didn't see what are the most popular pricing models. That's probably what you're wondering. So what they found was that the per-user pricing model was actually the most popular one. But like I said, you can combine a lot of these. So for example, Pipedrive, if you guys haven't heard of Pipedrive, they're a sales CRM. They're similar to HubSpot where they combine the tiered pricing model and the per-user model. I mentioned Postalytics as well. They're a combination of the usage-based pricing. So they actually send physical direct mail. The more people that you, you want to send to, the volume and pricing goes up. And then they also have the tiered pricing models of their different packages. So I mean, that's it guys, 4 different pricing models. Number 1, flat rate pricing where the focus is getting as many independent buyers as possible. Number 2 is the usage-based pricing where it's dependent on getting people to grow with their business along with you. Number 3 is the tiered pricing, which is the different packages based on features, functionalities, and usage of the product. And then the 4th one is the per-user business model where you want people to share it with their team and get more people using your product. All right guys, hope you guys enjoyed this video. Hopefully this was helpful to you. You now know what are the 4 types of pricing models of the SaaS company. Let me know what kind of pricing model are you guys using in your SaaS company? What are you guys considering? Comment below, let me know which one you're using, and I'd love to hear what you guys are considering for your SaaS business. All right, thanks again for joining SaaS District. Don't forget to subscribe, and we'll see you guys on the next video.
