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August 20, 2023
General
Darren Stewart

An Intro to B2B SaaS Pricing Models

There a lots of pricing strategies when it comes to SaaS. We give a brief intro to the most popular ones.

B2B SaaS companies typically employ various business models to monetize their software solutions and generate revenue. Although we are listing a number of different models here in isolation, in reality most companies will have a mismatch of a number of different models combined together, and nearly all of them will be subscription based.

The Pricing Models

1. Subscription-based

2. Usage-based

3. Freemium

4. Tier-based

5. Pay-per-user

6. Value-based

7. Professional Services

Subscription-Based

This is the most prevalent model in the B2B SaaS industry. Companies charge customers a recurring subscription fee, usually on a monthly or annual basis, to access and use their software. Subscription models can include different pricing tiers or plans that offer varying features and capabilities.

Pros:

Cons:

Usage-Based

In this model, customers are charged based on their usage or consumption of the SaaS product. The pricing is typically determined by factors such as the number of users, storage space, data volume, or the level of activity within the software. This model allows customers to pay for what they use, making it flexible for businesses with fluctuating needs.

Pros:

Cons:

Freemium

Freemium models offer a basic version of the software for free, with limited features or functionality. To access more advanced features or additional resources, customers can upgrade to a paid subscription. This model allows companies to acquire a large user base by offering a free entry point while monetizing through premium upgrades.

Pros:

Cons:

Tiered Pricing

B2B SaaS companies may offer tiered pricing models with different pricing levels or packages targeting different customer segments or use cases. Each tier offers varying levels of functionality, features, and support, allowing customers to choose the one that best suits their needs and budget.

Pros:

Cons:

Pay-Per-User

In this model, customers are charged based on the number of users who have access to the software. The pricing typically scales with the number of users, and additional users can be added or removed as needed. This model is common in collaboration tools and software where multiple users collaborate within the platform.

Pros:

Cons:

Value-Based Pricing

Some B2B SaaS companies employ a value-based pricing model, where the pricing is determined based on the value or impact the software brings to the customer's business. This model involves understanding the customer's specific needs and goals and pricing the software accordingly to reflect its value proposition.

Pros:

Cons:

SaaS Professional Services

In certain cases, B2B SaaS companies offer customization or consulting services alongside their software solutions. This involves tailoring the software to meet specific customer requirements or providing consulting services to help customers integrate and optimize the software within their existing systems.

Pros:

Cons:

It's important to note that these pricing models are not mutually exclusive, and companies may combine multiple approaches or adapt them based on their target market, product offerings, and customer needs.

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