Two speakers explain why usage limits matter in SaaS pricing. Set them too low and users get frustrated; too high and they're pointless. The trick is basing limits on how long it takes customers to form a habit, then adding a 10% buffer to signal value and create natural moments to upsell.
Chapters
people don't like to feel like they're getting suckered and paying a higher price than they should. And I think people don't like talking to salespeople and feeling like they're getting sold. People like to understand, here's what I get, here's what I pay, and here's what this means. Okay, so why do I say that? Because in the world of AI, in the world of driving more usage-based consumption, people need to understand what they're gonna pay and they're gonna, uh, and have a sense for what that looks like. Consumption-based models naturally have less predictability factor than say a flat fee seat-based model. So you have to make up for that capital.
Yeah, I 100% agree with you. One thing that we started to see more, like I remember 2 and a half years ago, this was before I founded Schematic, but I was starting to do discovery for the company and I would ask people like, you know, to what extent do you care to enforce limits? To what extent do you care to enforce usage limits? And 2.5 years ago it was like, we never enforce anything. Like we're just trying to drive adoption. And now I think that like more and more I'm seeing people get limits are these really cool leverage points where, you know, value's been created and it creates moments of extending more value for free or capitalizing on the value via a product-led post-sale expansion or Hey, it's time to have a sales conversation.
I completely agree. I love limits. I think limits are some of the most underutilized web tools in a pricing and packaging model today. I think it signals how much value that you can get. It also helps you understand what customers are finding valuable and where you want to either invest more or push. Some folks do it really wrong though. They either set the limit way too low before they're able to get some value. Kind of just more frustrates folks and maybe gets this nickel and diming sensation. And then on the other end, they'll set the limit too high where it doesn't even matter. They never get even close to it and it's just there and it's just more of a noise and a distraction than anything else. So when I think about limits, I think it's a fantastic weapon. I think you have to be very selective on where you put the limits and how you set that. And so if you think about from a time basis, how much usage can get them there to build a habit, that's where you want to— and that plus maybe 10% more just to give a little bit of buffer. That's how you want to try to think about, uh, limits. Agreed. Good point.
