What are the three common SaaS pricing models used in 2024?

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PAGE: https://alison.com/course/strategy-for-profitable-pricing

PROMISE: Learn to match pricing strategy to resource limits and market value.

WHO: Entrepreneurs and small business owners who want to align pricing strategy with value and resources.

WHYNOW: Resource constraints often force pricing decisions before the underlying strategy is fully understood.

DESC: Bundling, discounting, seasonality, average profits for typical industries and proven pricing strategies are all covered in this free entrepreneurship course.

BEFORE: Pricing decisions are made reactively without a clear framework.

BEFORE: Perceived value is underestimated because cost basis is the only metric used.

BEFORE: Confusion about which pricing model supports current resource limits.

AFTER: Pricing is set using a deliberate framework that aligns with business goals.

AFTER: Value perception is factored into pricing to boost margins without increasing costs.

AFTER: A chosen pricing model matches resource availability and market positioning.

GAIN: Clarity on how customers perceive price and value.

GAIN: The ability to assess when higher prices are justified in a competitive market.

GAIN: Confidence in selecting the pricing model that fits the specific business.

STEP: You rely on gut feel and ignore the gap between cost and perceived value. || Discuss how customers perceive price and value || Adjust pricing points to reflect actual customer perception, not just your internal costs.

STEP: You struggle to justify price increases in a crowded market with similar products. || Assess the justification for higher prices in a competitive market || Document clear value drivers that support premium pricing in your specific niche.

STEP: You are unsure which of the three common SaaS models fits your resource constraints. || Recognize which pricing model you should use for your business || Select a pricing structure that aligns with your available bandwidth and customer expectations.

NOTFOR: Teams needing immediate, template-based pricing spreadsheets rather than strategic concepts.

NOTFOR: Those seeking specific software implementation guides for SaaS billing systems.

FACT: Average duration: 1.5-3 Hours (Contains Video)

FACT: CPD-accredited certificate available

FACT: Beginner level

COVERS: Discuss how customers perceive price and value

COVERS: Recall how to add value that boosts margins, not costs

COVERS: Assess the justification for higher prices in a competitive market

COVERS: Identify what customers are willing to pay more for

COVERS: Discuss why pricing is important to potential investors

COVERS: Recognize which pricing model you should use for your business

COVERS: State common pricing mistakes

COVERS: Recognize price variables and their effects on pricing strategy

COVERS: Distinguish cost-based pricing from market-based and value-based pricing

COVERS: Strategic Planning

COVERS: Business Management

MODULE: Basics of Pricing Strategy and Pricing Models || Pricing Strategy Basics | Pricing Models | Building a Successful Pricing Model

MODULE: Pricing Influencers and Pricing Variables || Pricing Influencers and Variables | Pros and Cons of the Various Pricing Models

What you are probably seeing

You notice your competitors changing their price tags or adding new feature locks that confuse your potential customers. Your sales calls often stall when prospects ask why your flat monthly fee feels high compared to what they pay for other tools that charge based on actual activity.

Your dashboard shows a mix of churn and growth that does not align, suggesting your current model may be attracting the wrong type of user or failing to capture the full value of your heavy hitters who use the platform daily.

Why it happens

The market has moved away from one size fits all because buyers now want to scale costs with their business size and specific output. This shifts the value proposition from owning a license to paying for outcomes and growth.

Companies use these distinct models to align revenue with customer success metrics. A misaligned pricing structure creates friction, making it harder to justify higher costs as your customers expand their usage or team sizes over time.

What changed recently

Step by step

1. List your top five competitors and record whether they charge per seat, per transaction, or offer a free tier with paid upgrades.

2. Map your own cost structure to see which pricing variable, such as active users or data volume, best matches your resource consumption.

3. Draft a simple tiered option that covers your basic needs and an enterprise option for advanced features to test market appetite.

4. Review your support logs to identify which features drive the most engagement and consider if usage based billing would reward those users.

5. Present two distinct pricing scenarios to five existing customers to get feedback on which model feels most fair for their budget.

Ways to go further

Start here: Strategy for Profitable Pricing For when You are optimizing revenue models based on resource availability. Open the free course on Alison ↗

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