Three-tier Pricing Strategist for SaaS is It the Best? -
What's the best amount of subscription levels for the SaaS company?
Studies have shown that 3 is the most popular number, but does it really matter?
This isn't what we discovered in our analysis of the pricing strategies of 50 best-in-class SaaS firms to create our 2022 pricing pages report.
We looked at the pricing pages of fifty companies that were among the highest-rated in their market on G2 and saw that the quantity of annual or monthly plans that were offered ranged from no plans from zero to 23 plans.
From Zero to 23 Plans Top-of-the-line SaaS Companies Customize Their Subscription Options
Their packaging also varied the same.
"Keep it simple" is the standard advice given to SaaS businesses when it comes to pricing and plans. However, the subscription options offered by the majority of top-of-the-line companies aren't easy to understand.
In this post we'll examine how top-of-the-line SaaS firms market and bundle their subscription packages, with a variety of tiered pricing models.
Three Tiers Don't Need to be a Simple Plan
In the three-tier pricing strategy generally, we find:
- The cheapest option for small groups, singles or customers that are new to trying out the product.
- The middle-tier is used to upsells. This is often referred to as the "most popular" or "most affordable" option.
- A premium plan designed for people looking for more.
This is true of top-of-the-line companies using a three-tiered pricing model however, the way they present their pricing isn't always that simple.
Prices Changes Based On the Number of Users
In this case, Canva uses three tiers and changes the prices of each tier based on the amount of users.
Three Primary Plans as a jumping off Point
Airbase advertises three primary levels, however their separate bill-pay option will take users to an entirely different set of plans altogether. Effectively, prospects choose either value-based pricing or volume pricing. This can give potential customers the option of choosing the price they would like to purchase.
We suspect that SaaS businesses could begin with a simple three-tier approach however their pricing and packaging are bound to become more complicated as their users require changes.
Four is the new Three (But Five is also popular)
According to our analysis our research, the median number of plans available is in fact four. However, there are several common strategies for companies that maintain four or five pricing options.
Three Primary Plans Plus an Enterprise Plan
The reason this is effective: It allows you to market a middle plan that gives small or medium-sized clients (i.e. those who are not enterprise customers) that sweet spot to target.
Three Primary Plans as well as Two Enterprise Plans
Certain companies such as Box are moving to five plans, including two enterprise tiers. Why shouldn't enterprise folks have choices as well?
Free Plan plus Three Paid Options
If you're using a freemium model, then four different pricing points may seem reasonable. Paid customers need room to move up into higher levels.
Free Plan and Four Paid Options
Another time, adding a fifth option allows your customers more room to scale. However, when you add more options, you must be very clear on what the benefits are of moving to a higher price. In this case, TalentLMS differs on the number of users.
Think about the idea behind the Plan
When we were analyzing price pages to create the guide, it was not always straightforward what should be taken into consideration as a month-to-month or an annual price.
One example is that OneTrust Pro uses an a la carte approach to creating an annual plan.
In the same way, Datadog offers a wide range of plans built around their many offerings.
Instead of advertising tiers that have set prices instead, Rippling is the only company that offers customized plans.
A sign that it's time to rethink a traditional tiered system is when you're getting feedback from prospects or clients who are paying for functions or features they do not make use of. A different sign is when you've got several products your current clients are buying in separate installments.
All in all, we're witnessing top-of-the-line SaaS companies think outside the box with regards to pricing and packaging. If you're having trouble trying to make your tiered pricing structure Perhaps it's the right time to to to think outside the box as well.
Create Plans (and/or Pages) as You Target New Markets
A company like ButterCMS offers a range of services all the way from start-ups to enterprises. Each primary persona is a different persona with their own strategy. If you're trying to sell to a different target market, make sure the target market is represented on your pricing page before making contact with them or launching your marketing campaign.
Think about different pages or tabs for Specific Markets
36% of the companies we studied utilize multiple pricing pages or tabs when they serve several markets or have separate plans for different products.
Tabs, similar to the ones Mailchimp uses, make it easy to still see the entire price on the same page, even though they're selling three different items. Tabs clearly differentiate between the three products.
HubSpot takes this a step further with two tabs levels that offer different services and plans, as well as one that deals with bundles. Sometimes, scaling isn't necessarily about upgrading to the next level. If you're selling several items, when is the right time to bundle them together?
How Else Are Best-in-Class Companies Explaining Their Plans?
The top companies can use various pricing levels, however we discovered a number of popular methods to explain the way they structure their pricing.
Some of the most popular price page features are:
- An FAQ section (72 percent)
- Mentioning plan add-ons (42%)
- Highlighting the most popular plan (36%)