A SaaS founder explains why consumption-based pricing works better than seat licenses when customers use more data over time. He started with two simple SKUs, gradually added features and pricing tiers, and warns that constant repricing can slow growth more than it helps.
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So in a lot of our sales cycle, I taught, hey, how do you, what's the value of this to the customer? What's the business outcome? Because they have to be able to understand, okay, does my pricing model kind of match how I get value? And so for us, like the more data you have and the more queries and the more analysis and analytics you can do, the more value you're going to get out of it. So having a consumption-based model makes a ton of sense. And also our baseline continues to grow. So as people get more and more data and more and more queries, our revenue grows as well, right? Which I think is a way superior model than a licensing or a seat-based, because eventually you might run out of users. For us, data consumption continues to grow, but it depends on your business model, but that's what made sense for us. And we stayed true to that. Today we would publish our list pricing on the website. It's still out there, very transparent. Again, we're engineering-driven company, so pricing's pretty transparent. And yeah, I think one thing, your second part of your question was like, what's one thing looking back that maybe we might have done differently? We started with really simple pricing, right? Like maybe 2 SKUs, and then we did an add-on, and now we have fairly complex pricing because we have lots of products. And so thinking through what are the biggest value points propensity to spend in terms of how you make your packages. Because the trade-off is, do you make your pricing super simple and make it easier for customers to buy, or do you make it super complex and try to capture every dollar? I think we did actually a pretty good job starting simple, and now we're getting a little bit more complex just with the product complexity. But that trade-off, I think, is something you really want to look at because What you don't want to do is have to keep redoing it every year or every couple years, because it'll slow you down. I think being super thoughtful on your pricing, packaging, especially your packaging strategy, is really important.
