Subscription models have become the standard for online B2B service providers wanting to build a more reliable revenue stream.
And ever more enterprise solutions have shifted away from hybrid pricing models of upfront set-up costs, combined with ongoing support costs and moved towards a pure monthly recurring revenue model.
Of course, once the tech and sales funnel are in place, it’s much easier to scale the business and provide more predictable revenue. The downside is potentially significant upfront development costs, combined with higher customer acquisition costs. There’s been a proliferation of pricing models in recent years, with variations created all the time, but most follow a similar pattern.
🔸 SUCCESS-BASED. Pricing relates to the success metrics of a customer. This model establishes your SaaS offering as a key driver of your clients’ success.
🔸 USAGE-BASED. Classic PAYG model where you pay according to the units you are using. Whether that’s the number of API requests made, reports generated, ads served or anything else.
🔸 REVENUE SHARE. Take a small percentage of the revenue flowing through the platform; similar to commissions on a purely transactional platform. Client is protected from seasonal revenue fluctuations.
🔸 FLAT-RATE AND TIERED. All you can eat, with restrictions, or different packages of features or allowances.
🔸 FREEMIUM. Basic or restricted service free of charge, which upsells to paid version(s) with enhanced features and capabilities.
🔸 (ACTIVE) USERS. Charge based on the number of seats requested – or alternatively only active users.
🔸 ROLE-BASED. Offer distinct packages for different user roles. Allows for tailored packages that cater to specific needs, enhancing perceived value.
🔸 GROWTH-FOCUSED. Adjust the cost based on the growth stages of your target. As your client’s business scales, so does their subscription.
If you’re planning to exit your business in the next few years – and you fit broadly into the SaaS model – it’s worth considering how you fine-tune your pricing structure to maximise your company value and end-valuation.