Tiered pricing is very popular amongst SaaS companies, in particular.Įxample: A graphic design software prices its offerings on a tiered plan, in which upgrading your plan means more storage, graphic options and capabilities. Tiers are generally designated as basic, standard and premium.īest for: Companies that may have many product features and a diverse customer base with varying needs, budgets and usage norms. This allows sellers to segment the prices of their products and services based on specified target markets. An offering that tends to be used in similar fashions and levels across the customer base.ĭefinition: Packages with various features and product combinations are available at various price points.Frees up time for companies to focus on monetization, acquisition and retention instead of tailoring pricing strategy (due to one-size-fits-all approach).Easier and more predictable billing process, simplifying accounts receivable and other accounting functions.Simple to understand, communicate and sell.This is an instance of flat-rate pricing because there are no other options or levels at which to purchase the tool, nor are there any additional fees.Īdvantages of the flat-rate pricing model: This cost includes unlimited projects and users and every feature the tool offers. Flat-rate does not work well for companies in which resource costs might vary significantly from user to user, which is why flat-rate pricing does not generally work well for B2B (software-as-a-service) SaaS companies, for example.Įxample: A project management tool charges $150/month for the use of its platform. Simply put: Flat-rate is a single product and a fixed set of features at a fixed price per month.īest for: companies with a product that has limited features and a single buyer persona. Customers are charged the same amount each billing cycle. Subscription Pricing Models Flat-Rateĭefinition: Flat-rate, also known as fixed pricing, offers users a single price for all features of the offering. With models ranging from simple and fixed (e.g., flat rate) to complex and variable (e.g., usage-based), the options allow you to optimize your subscription offering for your target market. In the first of our three-part series on pricing subscriptions, we will address the first question of choosing the subscription pricing model that best serves both the company’s and customers’ needs. Which pricing method should we use to calculate the price of our product or service?. Which pricing strategies can we implement to attract and retain customers?.Instead, the pricing question becomes three-pronged: Congratulations! Now, a follow-up: How exactly will you price your new subscription?Īs tempting as it might be to “go with your gut,” that approach will likely prove a less-than-optimal strategy for monetization, as well as for customer acquisition and retention.
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