How to choose correct pricing model for SaaS service?

Victor Ponamariov
16 replies
Hello PH Community! Sorry for such a LONG message =( I'm really struggling with my pricing model. In September I launched my product here, on PH, and got initial feedback and users. Now I want to polish everything, add new features, make my product more mature. One of the problems is pricing. Not an advertisement, but here how it looks right now: https://pingr.io/#pricing --------------------------- In the uptime monitoring world, there are few pricing models that are common: Limit only monitors number & have subscription plans Here you have something like 1. Up to 5 monitors - 5$ 2. Up to 10 monitors - 10$ 3. Up to 20 monitors - 15$ 4. ... Limit number of monitors & features For example 1. Basic. You have up to 5 monitors and basic features 2. Pro. You have up to 20 monitors & SSL monitoring 3. Premium You have up to 50 monitors and status pages Less common, but I went to this model. Based on requests usage Here you can add as many monitors as you want, and you can use all the features, but you pay only for request usage. E.g., you added 1 monitor and set up uptime check frequency to 1 minute. 1 request costs 0.00012$ (as an example), and eventually, you pay something like $0.52/month for this monitor. What I'm asking feedback for I found the pay-per-usage model is pretty appealing. If users use my servers a lot, they pay more. Otherwise, if they have few requests per month, they almost pay nothing (0.01$), but they don't use the service much. Pros: - I can add new check types, e.g. SSL check, performance check, some other ideas too, which may cost more - I have more control over server usage. I can approximately know how many requests 1 server can handle, and thus I can calculate 1 request price which should be profitable - I can have a special price for large companies since I can setup any request price for any user Cons: - Not a big con, but might be confusing: I ask for a $1 minimal fixed price, because I need to cover the minimum fee for my payment processor and I cannot charge small amounts of money. If user have to pay 0.6$, then it might turn out that half of the price will be the commission - The model assumes that I'll have a lot of users who pay small amounts of money. It worked well for updown.io. But the support will be hard One way: 100 users pay $10, you get $1000 another way: 1000 users pay $10, you get $1000 But it's hard to support 1000 users. On the other hand, it's easier to make your app popular. ------------ Another question is the billing cycle. I decided to go for Digital Ocean model, when I charge everyone at once, on the first day of the month. So, if a user subscribes on 29th, I charge him in two days, which is a bit unfair. But for me, it looks like it's easier to maintain, rather than charge users in 30 days after they subscribed. So what do you think? Previously I had 3 plans and got quite a lot of complaints that it's expensive. P.S. I know that there are free solutions, but I insist that they usually don't include all the features you might need

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Mobile-first and nocode enthusiast✨
Interesting question, want to hear from others
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Digital Marketing Enthusiast
Hi, You can divide the pricing in 3 part (lite, basic and premium) and add an enterprise option. Another suggestion is you can reduce the free trial period from 21 days to 7 or 14 days. It helps you to get more paid customers.
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UI/UX is my passion
@dmvishal Well, I had 10 days before, just one of my competitors has 21 days so I decided to go this way. I think that it's not that crucial, because if 21 day pass and a person uses my service, he is already "hooked", so he will subscribe. As for dividing plans, I tend to think that pay-per-usage is better, no?
Currently working on Procurelist
> I ask for a $1 minimal fixed price, because I need to cover the minimum fee for my payment processor and I cannot charge small amounts of money. What I can suggest in this use case is that if the amount is very small, make a threshold. Now you can use this threshold in two ways. First one is upfront. They can use the service after they paid the amount, and the credit will be used for all the future services. Second, they will pay when that threshold is reached, making the transaction one time process. Both of them have their own pros and cons. You have to see if they fit for you.
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UI/UX is my passion
@shvn That's actually why I added fixed $1. So that I bill at least 1$ + floating part. 1$ covers commission and behaves as minimal threshold, which allows me to bill monthly
Currently working on Procurelist
@shvn @victor_ponamariov I see. So is this not working, people are not liking it?
UI/UX is my passion
@shvn @victor_ponamariov Well, I don't have that many users, I've heard a couple of opinions that it's weird, but overall it's okay. I've realized that I don't even have a question, I'm just researching which pricing model would work the best. So I'm switching from one to another model which is time-consuming, and I decided to write a post here to listen to different opinions. The only scary thing about the model I have right now is that if I want to have $1000 revenue, it would probably mean that I'll have up to 1000 users. And this is hard to support. On the other hand, when I had pricing plans like $10 subscription, I posted on Reddit and got a lot of feedback that it is pricy, because updown.io will cost like $0.1 for a site (depending on check frequency). Hmm, maybe having a lot of users is not that hard to support? Since it's still a service which you don't use much: you've installed your sites and forget about it. Someone recommended me to switch to B2B sector, since they have a lot of sites, which is interesting idea too :)
Currently working on Procurelist
@shvn @victor_ponamariov > Hmm, maybe having a lot of users is not that hard to support? Well that depends entirely on the architecture and the team, which you can judge better for your case. In a general sense having 1000 users should not be hard.
UI/UX is my passion
@shvn @victor_ponamariov I thought that 1000 users will require full-time support. I'm a solo founder, so... Hmm. Maybe then I should go with this model then
Product Manager @ Base64.ai
This is always tricky and sometimes one size doesn't fit all. Factors like billing period and state of your service depend on the tailored solution. I'd like to share our own experience and approach: We at Base64.ai had a similar thought process and decided to put a free tier instead of free trial. Because you can try free demo without signing up and can decide to proceed right away. Based on your product or service, you can price it free and limit the "free" like "up to xxx monitoring" etc. We created 3 tiers: 1. Startup This is the free tier with all needed features and up to 1,000 requests. 2. Growth This is the second tier and per request is priced as $1 and you can use it up to 10,000 requests. 3. Enterprise This is the third tier and it's for enterprises or companies who have higher volumes than 10,000. Hope that helps. Lmk if you have any questions.
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UI/UX is my passion
@alierkurt Hi, thanks for your reply! I've checked your pricing. Do I get it right, that for Growth plan, if I send you a document and you parse it, it'll be $1 per document? I didn't quite get what's "1$ per page", what is page it this case? For me it looks like in the startup plan I can parse 1000 docs (per month?) for free, in growth 1000 docs for $1000 :) Where am I wrong? In any case, the thing is that your charge-per-action has a good cost, $1, while I might end up with $0.01 if user selects check frequency like once per 30-60 minutes. May I also write to you via email? I see that you have support email but not sure if I'll get to your inbox :) (Or drop me a line at support@pingr.io, I'm the only person here)
Product Manager @ Base64.ai
@alierkurt @pingr @victor_ponamariov growth tier is up to 10,000 requests.
co-founder at Concetto Ventures
@victor_ponamariov One should consider the value your product is adding, competitor pricing, company overheads plus profits, marketing budgets, etc., and try to provide at minimal cost as you can offer. Though one can charge more and earn more profit but at the expense of the volume of users. You can offer services in three different plans, and try offering free trails and pay-per-usage that might work.
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Optimistic and positive vibes
Growth @ https://ubiqsecurity.com
Hey @victor_ponamariov - From my experience, pricing, packaging, and customer acquisition strategies are iterative, so it's totally normal and okay to feel like you're struggling with it. You're not alone. ;) We revisit our pricing, packaging, and customer acquisition strategy every quarter and have found the following resources to be really helpful: - Pricing and packaging: https://tomtunguz.com/categories... - Pricing, packaging, and benchmarks: https://www.linkedin.com/posts/o... - A treasure trove of information spanning nearly all of the areas you mentioned: https://openviewpartners.com/blo... - Packaging and customer acquisition strategies: https://www.mykpono.com/freemium... Another tactical recommendation is to add a survey to your pricing page (on your website), so you can get feedback from visitors. You can do this for free with Hotjar. Content credit to @openviewventure, @ttunguz, and Myk Pono
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