How do I price a SaaS product?
Start from the value customers get, pick a pricing metric that grows as they get more of it (seats, usage or outcomes), and build a few tiers that match your customer segments. Then check that your costs per customer, including hosting and any AI usage, leave a healthy margin at every tier.
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Steps
- 1Talk to customers about the problem's cost to them and what they pay for alternatives.
- 2Choose a value metric: per seat, per use, per account or a mix.
- 3Design tiers around segments, with clear reasons to upgrade.
- 4Work out cost to serve per customer, especially usage-based costs like AI APIs.
- 5Check unit economics: customer acquisition cost, lifetime value and payback.
- 6Launch, watch conversion and churn, and adjust. Pricing is never finished.
Watch AI features closely
AI features have a real cost per use. A flat price with unlimited AI use can lose money on heavy users. Use fair-use limits, credits or usage-based pricing for the costly parts, and track cost per token by feature.
Check it for your case.
Common follow-up questions.
Should I offer a free plan?
Only if free users lead to paid ones and they are cheap to serve. A free trial is often simpler.
Monthly or annual billing?
Offer both. Annual plans with a discount improve cash flow and reduce churn.
How often should I change prices?
Review regularly as the product grows. Give existing customers notice, and consider keeping their old price for a time.
