Pricing is where most SaaS founders leave the most money on the table. They either underprice (charging $9/month when customers would pay $49) or overprice (charging enterprise rates to SMBs who can't afford it). Here's how to get it right.

Start Higher Than You Think

Most founders underprice by 3–5x. They're scared of losing customers, so they charge $9 or $19/month for something worth $49 or $99. The result: they need 5x as many customers to hit their revenue targets, and they attract price-sensitive customers who churn the moment anything goes wrong.

My rule: whatever price you're thinking, double it and test that first.

Value-Based Pricing

The right price is based on the value you create, not your costs. If your SaaS saves a business 10 hours per month and that time is worth $100/hour, you're creating $1,000/month in value. Charging $49/month is a bargain — customers will pay it happily.

Ask yourself: "What would my customer lose if they didn't have this product?" The answer drives your price.

The Three-Tier Pricing Structure

Most successful SaaS products use three tiers:

  • Starter — entry-level features for small teams or individuals. Price: $29–49/month
  • Pro — full feature set for growing teams. Price: $79–149/month. This is your target.
  • Scale/Business — higher limits, priority support, team features. Price: $199–399/month

The starter tier exists to reduce the barrier to entry. The scale tier exists to anchor the pro tier as reasonable.

Build Your SaaS with Pricing Built In

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Always Offer Annual Plans

Annual plans at a 20% discount (equivalent to 2 months free) dramatically improve cash flow and reduce churn. A customer who paid annually is far less likely to cancel than one paying monthly. I include annual plan infrastructure in every SaaS I build.

Test Your Prices Like a Product Feature

Pricing should be treated as a living part of your product, not a decision made once and forgotten. After launch, test different price points with new signups — some SaaS products discover their optimal price is 3–4x higher than their initial guess. Raise prices on new customers first, then grandfather existing customers in at their original rate. A 20% price increase with zero churn is pure profit, and it is often achievable simply by asking for it.