Three-tier Pricing Strategy for SaaS Does It Work? the Best? -
What's the ideal number of subscription tiers for the SaaS company?
Study have shown that 3 is the most common number, however does it really matter?
We didn't find that as we analyzed the pricing strategies of 50 top-of-the-line SaaS firms in our pricing pages for 2022 report.
We analyzed the pricing pages of fifty firms that were among the highest-rated on G2 and found the number of monthly or annual plans available varied from zero up to 23.
From 0 to 23 plans, Best-in-Class SaaS Companies Customize Their Subscription Options
The packaging of their products varied as much.
"Keep the basics simple" is the standard advice given to SaaS companies when it comes to pricing and plans. However, the subscription offerings for most best-in-class companies are far from simple.
In this post we'll examine the best practices used by top-of-the-line SaaS companies promote and package 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 We typically see:
- It is the cheapest choice for small groups, singles, or new customers trying out the product.
- The middle level is typically used for upsells. This is often referred to as the "most sought-after" or "most economical" choice.
- The premium-priced plan for those who require more.
Although this is the case for top-of-the-line companies using a three-tiered pricing model however, the way they present their pricing isn't always that simple.
Price Changes based on the number of Users
As an example, Canva uses three tiers and changes the prices of each tier based on the number of users.
Three Main Plans as a jumping off Point
Airbase promotes three primary plans, but their distinct bill-pay option will take users to an entirely separate set of plans. In essence, customers can choose either value-based pricing or volume pricing. This could be a way to let potential buyers choose the price they would like to purchase.
We believe that SaaS companies may begin with a basic three-tier structure however, the pricing and packages are bound to become more complicated as their users need change.
Four Is the New Three (But Five is Also Popular)
According to our analysis The average amount of pricing plans actually is four. And there are a few common strategies for companies that keep five or four pricing choices.
Three Primary Plans plus an Enterprise Plan
Why this works: It allows you to market middle plans, which gives the small and medium-sized customers (i.e., the non-enterprise customers) that sweet spot to shoot for.
Three Primary Plans and Two Enterprise Plans
Some companies like Box are moving to five plans that include two enterprise tiers. What's wrong with enterprise users having choices also?
Free Plan and Three Paid Options
If you're using a freemium model, then 4 different pricing levels might make sense. Paid customers must have the ability to grow into higher tiers.
Free Plan and Four Paid Options
Another time, adding a fifth option gives your clients the ability to grow. But when adding more levels, it should be clear exactly what benefits you will gain by switching to a higher cost. In this instance, TalentLMS differs on the amount of users.
Review the concept of a Plan
While we were looking at price pages to create the guide, it was not necessarily clear what needs to be classified as a annual or monthly price.
For instance, OneTrust Pro uses an an a-la carte method of creating the monthly plans.
Similar to that, 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 does not promote tiers with set prices, but offers customized plans.
A sign that it's the time to reconsider a tiered system is when you're getting feedback from prospects or clients that they're paying for different functions or features they do not utilize. The other is if you're selling multiple products that your existing customer base are paying for in separate installments.
In general, the top-of-the-line SaaS companies think outside the box when it comes to their packaging and pricing. If you're having trouble trying to make the structure of your pricing tiered Perhaps it's an appropriate time for your to think outside the box as well.
Plan Additions (and/or Pages) as You Target New Markets
An organization like ButterCMS covers the market starting from small businesses to large enterprises. Each persona's primary has their own plan. If you're selling to a brand new customer, be sure they're represented on your pricing page before you contact them or begin your marketing campaign.
Consider Different Pages or Tabs to target specific Markets
36% of the businesses we studied utilize tabs or pricing pages with multiple prices in the event that they are serving multiple markets or have separate pricing plans for different items.
Tabs, which is similar to what Mailchimp makes it possible to view all pricing under the same page, even though they're promoting three distinct items. Tabs provide clear distinction between the three products.
HubSpot is taking this one step further with two tabs levels that offer different services and plans, as well as one for bundles. Sometimes, scaling isn't necessarily about upgrading to the next level. If you're selling multiple products, is it the right time to combine them?
How Else Are Best-in-Class Companies Explaining Their Plan?
The top companies can use different pricing tiers, but we discovered a number of popular methods to explain the way they structure their pricing.
The most well-known price page features are:
- An FAQ section (72 percent)
- Mentioning plan add-ons (42 percent)
- The most widely-used plan is highlighted (36 percent)