SaaS Pricing Models: Choosing the Right Structure
The pricing model you choose shapes customer behavior, revenue predictability, and your ability to expand accounts. Here's how to pick the right structure for your SaaS business. Working with a fractional CFO can help you model different pricing scenarios and their impact on growth.
Per-Seat Pricing
Charge a fixed amount per user per month. The most common SaaS pricing model, especially for collaboration and productivity tools. For a broader view of pricing approaches, see our complete pricing strategy guide.
How It Works
Formula: Monthly Revenue = Price per Seat × Number of Seats
Example: $10/user/month × 50 users = $500/month
Advantages
- Simple to understand and sell
- Predictable revenue for both sides
- Natural expansion as teams grow
- Easy to forecast and model
Disadvantages
- Customers limit seat count
- Seat sharing/gaming
- Doesn't capture value from power users
- Penalizes broad adoption
Best For
- Collaboration tools where more users = more value (Slack, Notion)
- Products where each user creates data/content
- Teams where headcount growth correlates with value received
Per-Seat Variations
Consider tiered per-seat pricing (full users vs. viewers), volume discounts at scale, or minimum seat counts to prevent gaming.
Usage-Based Pricing
Charge based on consumption metrics: API calls, storage, transactions, events, or other usage indicators. Growing rapidly in modern SaaS.
Common Usage Metrics
| Metric | Example Companies |
|---|---|
| API calls | Twilio, Stripe, OpenAI |
| Data/storage | AWS S3, Snowflake |
| Events/records | Segment, Mixpanel |
| Transactions | Stripe, Plaid |
| Active contacts | Intercom, Customer.io |
Advantages
- Aligns cost with value
- Low barrier to entry
- Scales with customer success
- Drives high NRR
Disadvantages
- Revenue volatility
- Harder to forecast
- Customer bill anxiety
- Complex to communicate
Revenue Volatility Risk
Pure usage-based models can swing dramatically. Customer layoffs or seasonality directly hit your revenue. Consider committed minimums or platform fees to create a revenue floor. Many companies moving to enterprise pricing use hybrid approaches to stabilize revenue.
Flat-Rate Pricing
One price for everyone. Simple, transparent, and removes pricing as a variable in the sales process.
When Flat-Rate Works
Flat-Rate Tradeoffs
Flat-rate pricing leaves money on the table from larger customers who would pay more. It also attracts small customers who may not be worth serving. The simplicity benefit must outweigh these costs.
Hybrid Models
Most mature SaaS companies use hybrid models that combine elements of multiple pricing approaches. The key is aligning price with customer value.
Common Hybrid Structures
Platform + Usage
Base platform fee plus usage charges. Provides revenue floor while capturing value from heavy users.
Seat + Features
Per-seat pricing with feature-gated tiers. Good/better/best packages at different price points.
Commit + Overage
Committed minimum usage with overage charges above. Predictability for both sides.
Free + Premium
Free tier with paid upgrades. See our guide on freemium vs free trial for when each works best.
Complexity vs. Optimization
Hybrid models can optimize revenue but add complexity. If your pricing page needs a calculator, you've probably gone too far. Balance optimization with customer experience.
Need Help Choosing a Pricing Model?
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