How to price a SaaS product: where do you start?
Start with what the customer gains, then make sure the price covers your costs. Bpifrance Création, which publishes guidance for people starting a business in France, suggests combining four analyses to reach a "fair price". None of them works on its own.
- Your customers. How much will they pay, and for what? At the same price, buyers pick the offer with the most service around it: onboarding, guarantees, support. They also accept a higher price when they see better quality or something genuinely new.
- Your competitors. List the prices of similar tools in a simple grid: date, plan name, listed price, current discount, customer reviews. If you charge more, you need an advantage the buyer can see straight away.
- Your costs. Knowing your cost price stops you from selling at a loss. For a SaaS product, count hosting, paid tools, support and time spent, not just development.
- Your positioning. A low price to win volume, a price in line with the market, or a higher price for a demanding audience. Each choice has consequences, covered below.
Pricing from costs alone gives you a floor: what you must bring in to avoid losing money. It says nothing about what the customer is willing to pay. If your tool saves them hours every week, that figure can be much higher.
Low, matched or premium: which positioning when you launch?
Bpifrance Création describes three pricing strategies. They play out differently for a product that has no customers yet.
- Penetration: a low price to win volume. Margins are thin, profit depends on customer count, and you risk a price war.
- Matching: the same price as competitors, common at launch. Check that it is profitable: established players have the history and the bargaining power you lack.
- Skimming: a price above the market, aimed at a smaller, more demanding audience. The price is often disconnected from cost, with higher margins.
If your product serves one trade or one industry, your pool of buyers is small by definition. A low price only works with volume. Run the numbers first: reachable customers, times price, against your monthly costs.
Flat-rate, per-seat, tiered or usage-based: which pricing model fits?
The pricing model decides what the customer pays for. Stripe, the online payments platform behind many SaaS businesses, advises defining your "value metric" first (the unit that tracks what the customer gains) and only then choosing a model. Its documentation lists four common subscription models.
- Flat-rate: the customer picks a service level (say Basic, Starter or Enterprise) and pays a fixed amount. It is the easiest to explain. Stripe recommends two to four tiers: beyond that, buyers struggle to tell the options apart.
- Per-seat: each person who uses the software needs a licence. Revenue grows as the team adopts the tool. Stripe flags the catch: revenue is capped by the number of seats, and a small, very active team pays little whatever value it gets.
- Tiered: the unit price changes with the quantity bought or the usage. It rewards larger customers but makes the price grid longer to read.
- Usage-based: the customer pays for what they consume, for example documents processed. Price tracks value, but revenue becomes less predictable and customers can cut usage to lower their bill.
Stripe also describes a hybrid model: a fixed subscription for access plus a usage-based component. It smooths out the unpredictability of pure usage pricing, at the cost of an offer that is harder to present.
At launch, one test matters most: the customer should understand the price without an explanation. Stripe lists it as one of four criteria for a good value metric. The other three: it scales with customer value, it is hard to game, and it matches how customers set their budgets.
How do you test a price before you have customers?
You check a price with real prospects, not in a spreadsheet. Bpifrance Création suggests a simple way to find the "psychological price", the one buyers find acceptable. Ask potential customers two questions: at what price would this tool seem low quality? At what price would it become too expensive? Keep the price the largest number of people accept.
- List the companies that have the problem your product solves, and book meetings with them.
- Show them the tool, even as mock-ups, and name a specific price. Watch how they react, not just what they say to be polite.
- Ask the two psychological-price questions.
- Ask for a real commitment: a pre-order, a letter of intent or a first payment. "Sounds interesting" is not a signature.
Present this first price as a launch price. Bpifrance Création recommends it because a launch price is easier to raise later. You can keep that rate for early customers and charge more to the ones who follow.
The clearest test is still a first version that customers actually pay for. That is how our SaaS launch offer works: the one or two features your customers will pay for, live in 4 weeks, so you collect a first subscription before building the rest.
When should you revisit your SaaS pricing?
Once you have paying customers, data replaces guesswork. Stripe stresses that a pricing strategy has to be tracked and measured, and points to several signals.
- How customers spread across plans. If nearly everyone picks the cheapest plan, or the most expensive, the gap between plans is in the wrong place.
- Time to upgrade. Very short, and the entry plan is probably too limited. Very long, or nobody upgrades, and the higher plan is not convincing.
- Churn by plan. A plan that loses more customers than the others shows a mismatch between its price and what it delivers.
Before cutting a price, Bpifrance Création suggests raising perceived value instead, with reviews and customer references. Ask your first happy customers whether you can quote them.