SaaS Pricing Experiments You Should Try at Every Stage of Business Growth
Pricing is one of the most important levers for driving sustainable growth. As your SaaS business evolves, you need to continually experiment with different pricing models and strategies.
The pricing experiments you try should align with the stage of growth your business is in. Here are some pricing tests to consider at each phase:
Pre-Product Market Fit
Before you have found a strong product-market fit, pricing experiments should focus on learning:
Try free plans – Offer a free version with core features to acquire users and get feedback. Upgrade pricing can come later.
Research willingness-to-pay – Conduct customer interviews and surveys to determine what pricing models users respond best to.
Test variable pricing – Try pricing plans based on different variables like number of users, storage space, etc. and see what resonates.
Offer limited-time discounts – Provide discounts like 25% off for the first 3 months to incentivize early signups and conversions.
Validate with smaller customers first – Seek feedback from smaller customers initially before setting enterprise pricing.
Post-Product Market Fit
After finding product-market fit, double down on pricing experiments that maximize the value captured from your best customer segments:
Segment feature pricing – Provide pricing tiers with different features based on customer segments like SMB vs. Enterprise.
Price anchors – Test presenting three pricing plans (e.g. Pro, Business, Enterprise) with the middle plan as the anchor that appeals most to your target customers.
Land and expand pricing – Focus on landing new customers with your most aligned offering then expand from there.
Commitment discounts – Provide discounts for annual vs. monthly commitments once the value is proven.
Customer cohort pricing – Introduce pricing tiers that change over time based on the customer lifecycle stage rather than just plan features.
Scale Stage
When scaling your business, pricing experiments should focus on maximizing revenue from your existing customer base:
Optimize legacy pricing – Revisit any legacy pricing that’s underpriced based on the value delivered today. Raise it incrementally.
Leverage account usage data – Offer add-on pricing for features your highest-value customers use heavily that others don’t yet pay for.
Reduce friction to increase spending – Make it seamless for customers to upgrade plans or purchase add-ons to increase existing spend.
Customer success-led expansion – Empower the customer success team to identify expansion opportunities and make targeted upsell offers.
Usage-based add-ons – Offer add-on packages priced based on usage of specific features like APIs, storage, or support.
Optimizing Long-Term Value
For long-term sustainability, experiments should focus on maximizing customer lifetime value:
Outcome pricing – Price based on value customers achieve vs just software access, like leads generated or time saved.
Inflation-adjusted pricing – Gradually increase pricing annually to account for inflation and rising SaaS costs.
Value metric pricing – Track value metrics for each customer like engagement or satisfaction and vary pricing based on those scores.
Customer equity pricing – Calculate lifetime value for customer segments and charge premium pricing to high-equity customers.
Churn pricing – Develop retention offers with discounted pricing for at-risk customers showing signals they may churn.
Pricing dynamically evolves as your business grows and you learn. Continually experiment to find the optimal strategies aligned to each growth stage. Get your pricing right, and growth will follow.
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The Keys to Pricing Experimentation
For pricing experiments to be effective, you need the right foundations in place:
Analytics – Track pricing metrics like conversion rates, churn, revenue expansion, and lifetime value to measure impact.
Testing capabilities – Have the technical ability to easily test pricing plan variations, discounts, and promotions.
Customer research – Talk to customers often to understand evolving needs and willingness to pay.
Segmentation – Know your customer cohorts to align pricing to each group. Don’t take a one-size-fits-all approach.
Organizational alignment – Get buy-in across the organization on pricing objectives and experiments being run.
Optimization culture – Take an optimization mindset vs. just setting and forgetting pricing. Review pricing frequently.
Legal compliance – Consult legal counsel to ensure pricing experiments comply with regulations and contracts.
Features to support pricing – Build features like usage tracking that enable and support advanced pricing approaches.
Financial modeling – Model pricing scenarios to project impact on revenue, profitability, and other key financial metrics.
Pricing is a Journey
Pricing is never a set-it-and-forget-it exercise. Markets change, products evolve, and customers have new needs over time.
Treat pricing as an ongoing optimization effort. Experiment frequently to maximize value captured and align to the growth stage you are in.
With the right foundation and discipline, pricing can be a driver of sustainable growth rather than just a one-time decision made at launch.
