The Best Saas Pricing Model For Your Business

1170 Words Apr 12th, 2016 5 Pages
What is the best SaaS pricing model for your business?

With the industry showing no signs of slowing down in SaaS, the key principle of successful SaaS business is often based on understanding the market and being able to offer the right type of product with a higher-value pricing model that brings more revenue in the long haul.
Here I will discuss in depth what are the four most popular SaaS pricing models and what are the main things to consider before choosing a particular pricing model for your business.

Freemium is a SaaS pricing model that has gained the most popularity among all other pricing models in today’s industry offering free services or features that effectively attracts potential target audience and has a premium service with more sophisticated component that paying consumers can easily access when upgrade.
The goal for companies that uses Freemium model is to be able to sample their services to a future consumer without extremely high costs that are usually spend on sales and marketing strategies. With intent to offer a product that meets customers needs and entice them to pay for the premium pricing models.
The idea of this model comes from Carl Shapiro’s 1983 paper where he discusses optimal pricing of experience goods and discusses that an optimal pricing strategy low introductory price leads the customer to realize the true value of the offering.
Four methods of a Freemium model are:
1) Capacity based Freemium – one of the most common…
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