Three-tier pricing strategy for SaaS Does It Work? Perfect? -
What's the best number of subscription tiers for an SaaS company?
Study have revealed that three is the most commonly used number. But is it the most optimal?
We didn't find that when we studied the pricing policies of fifty top-of-the-line SaaS firms for our 2022 pricing pages report.
We looked at the pricing pages of 50 companies that were among the top-rated on G2 and discovered that the amount of monthly or annual plans available varied from zero to 23.
From zero to 23 plans The Best-in-Class SaaS Companies Customize Their Subscription Plans
The packaging of their products varied as.
"Keep it simple" is a common stipulation for SaaS companies regarding pricing and plans. But the subscription options offered by the majority of best-in-class companies are far from simple.
In this post we'll examine how best-in-class SaaS firms market and bundle their subscription packages, with a variety of tiered pricing models.
Three Tiers doesn't have to mean simple plans
When we look at the pricing model with three tiers generally, we find:
- It is the cheapest choice for small groups, singles and new customers who want to try out the product.
- The middle level is typically used for selling upsells. This is often referred to as the "most well-known" or "most affordable" option.
- A premium plan designed for people needing more.
While this holds true for the best companies that use the three-tiered pricing system, their packaging isn't always straightforward.
Pricing Changes Based on Number of Users
For instance, Canva uses three tiers however, the price of each tier based on the amount of users.
Three primary plans as a Jumping Off Point
Airbase offers three main plans, but their distinct bill payment option leads customers to a completely separate set of plans. Customers can select either value-based pricing or volume pricing. This is one way to give potential customers the option of choosing what they want to purchase.
It is possible that SaaS businesses could begin with a basic three-tier structure however their pricing and pricing will naturally become more complicated as their users require changes.
The New Three is Four. (But Five is Also Popular)
Based on our study our research, the median number of plans is actually four. However, there are several most common methods for businesses that have four or five pricing choices.
Three Primary Plans plus an Enterprise Plan
Why this works: The idea is to create the middle option that gives small and medium-sized customers (i.e., the non-enterprise customers) the ideal sweet spot to aim for.
Three Primary Plans and Two Enterprise Plans
A few companies, like Box are graduating to five plans, including two enterprise tiers. Why shouldn't enterprise folks have alternatives too?
Free Plan plus Three Paid Options
If you use an unpaid model, four different pricing points may be a good idea. Paid customers require room for growth to higher levels.
Free Plan plus Four Paid Options
Once again the fifth choice will give your customers greater flexibility to increase their prices. However, when you add more tiers, it needs to be very clear on what the benefits are of making the move to a more expensive price. In this instance, TalentLMS is differentiating based on the amount of users.
Think about the idea behind a Plan
While we were looking at pages on pricing for our guide, it was not always straightforward what should be taken into consideration as a month-to-month or an annual budget.
For instance, OneTrust Pro uses an A la carte approach to creating a monthly plan.
In the same way, Datadog offers a wide variety of plans that are based on their many offerings.
Instead of marketing tiers using price-based plans Instead of promoting tiers with set prices, Rippling is the only company that develops custom plans.
A sign that it's time to rethink a traditional tiered structure is if you're getting feedback from prospects or customers that they're paying for features or functionality they don't utilize. A different sign is when you've got different products which your current customers are purchasing separately.
Overall, we're seeing best-in-class SaaS companies think outside the norm when it comes to their packaging and pricing. If you're trying to optimize the structure of your pricing tiered Perhaps it's the right time for you to look outside the box as well.
Add Plans (and/or Pages) as You Target New Markets
The company ButterCMS covers the market from startups to enterprise-level companies. Every primary customer comes with their own plans. If you're trying to sell to a different audience, ensure that the target market is represented on your pricing page before you make contact or start an advertising campaign.
Take a look at different tabs or pages to target specific Markets
36% of the businesses which we researched use tabs or pricing pages with multiple prices in the event that they are serving multiple market segments or have plans for different products.
Tabs, which is similar to what Mailchimp utilizes, makes it simple to see the entire price on one single page, even though they're promoting three distinct items. The tabs offer clear differentiation between their products.
HubSpot goes one step further with two levels of tabs with tabs for various products and plans, and one that deals with bundles. Sometimes, scaling isn't necessarily about upgrading to the next tier. If you're selling several products, should it be time to bundle them together?
What else are the top-of-the-line companies Saying About Their Strategies?
The top companies can use different pricing tiers, but we found several popular ways they explain how they calculate their prices.
Some of the most popular selling features on the pricing page are:
- An FAQ section (72%)
- Plan add-ons that mention the plan (42%)
- This is the plan that has the highest popularity (36 percent)