How to Price Your SaaS Product

2026-02-19 · 23 min read

Your SaaS pricing strategy can make or break your business. Price too high and you scare away customers. Price too low and you leave money on the table while struggling to sustain operations. The right price communicates value and fuels growth. Here's how to find it.

The Golden Rule: Price on Value, Not Cost

Your costs are irrelevant to your customers. What matters is the value you deliver. If your tool saves someone 10 hours per month and their time is worth $50/hour, you're creating $500 in value. Charging $50/month is a no-brainer for them — that's a 10x return.

Common SaaS Pricing Models

• Flat rate — One price for all features (simple, easy to communicate)
• Tiered pricing — Multiple plans with different feature sets (most common)
• Per-seat pricing — Charge per user (scales with team size)
• Usage-based — Charge based on consumption (API calls, storage, etc.)
• Freemium — Free tier with paid upgrades (great for viral growth)
• Lifetime deal — One-time payment for permanent access (great for launches)

How to Research Your Price Point

Don't guess — research. Look at competitor pricing, survey potential customers (ask "at what price would this be too expensive?"), and analyze the value you deliver. The Van Westendorp price sensitivity analysis is a useful framework for finding the optimal price range.

Start Higher Than You Think

Almost every founder underprices their product. Starting higher gives you room to offer discounts, test different price points, and avoid the trap of attracting low-quality customers who churn quickly. You can always lower prices, but raising them is harder.

The Psychology of Pricing

Pricing isn't just math — it's psychology. Anchor high with your top tier, use odd pricing ($49 instead of $50), highlight the most popular plan, and show the annual discount prominently. Social proof (customer count, logos) next to pricing reduces purchase anxiety.

When to Change Your Pricing

Review pricing every 6 months. If your close rate is above 80%, you're probably too cheap. If it's below 20%, you might be too expensive (or selling to the wrong audience). Track the ratio and adjust accordingly.

Pricing is a lever you can keep pulling. Don't agonize over getting it perfect — get it reasonable, launch, and optimize based on real data from real customers.