How should we price our new SaaS product? How does our pricing model compare to our competitors? Are there other pricing models that would increase revenue and margin for our SaaS product?
These are all some of questions that can be answered by analyzing B2B SaaS industry pricing benchmarks. This is the world that Bryan Belanger lives in everyday, so who better to ask.
Bryan has been conducting pricing research for over 10 years at the Technology Business Research company. One of the challenges Bryan identified, was there is no single spot for all size SaaS companies to view the different pricing model options currently being used in the industry.
Pricing models in the SaaS industry have started to evolve dramatically over the last few years, and have been further impacted by the growing populating of Product-Led Growth and Usage-Based Pricing.
Pricing benchmarks need to cover several core areas of a pricing model including:
- Subscription type
- Product /Pricing Packaging
- Price Levels
- Discounting
- Pricing Structure
- Pricing Pages
- Trial vs Freemium usage
- Usage Metrics
- Usage Metering
The typical B2B SaaS company only invest 1-2 days per year in analyzing, enhancing and/or testing new pricing models. Far too often, pricing is still more ad-hoc and not informed by statistically valid research and benchmarks.
Subscription pricing - the secret sauce to the B2B SaaS industry is still the primary pricing model for over 80% of B2B SaaS companies. The structures of SaaS subscriptions is evolving, but subscription pricing is still the cornerstone of SaaS pricing models.
Usage-Based Pricing is a trendy pricing model in the industry today, due to it's direct impact on Growth Rates and Net Dollar Retention. Based upon the latest XaaS Pricing research, it was identified that just under 50% of a top 125 high-growth PLG company cohort were using a more basic subscription model (seat based). Usage is introduced as a "limiting function by pricing package tier" but not invoicing on usage specific variables. The pricing goal in this model was to convert accounts exceeding the "limit" into the next level pricing tier.
If you are evaluating introducing or modifying your B2B SaaS pricing model, Bryan and XaaS Pricing are a great listen and follow.