Three-tier pricing strategy for SaaS Does It Work? Ideal? -
What's the best number of subscription tiers for a SaaS company?
Studies have shown that 3 is the most common number, however does it really matter?
This isn't what we discovered when we studied the pricing plans of 50 top-of-the-line SaaS firms to create our 2022 pricing pages report.
We analyzed the pricing pages of 50 companies that were among the top-rated by G2 and saw that the quantity of annual or monthly plans available varied from zero from zero to 23.
From Zero to 23 Plans The Best-in-Class SaaS Companies Customize Their Subscription Plans
Their packaging also varied as.
"Keep things simple" is a common stipulation for SaaS firms in terms of pricing and plans. But the subscription offerings for most top-of-the-line companies aren't simple.
In this piece we'll examine the best practices used by top-of-the-line SaaS businesses market and package their subscription services, with a variety of tiered pricing models.
Three Tiers Don't Need to mean simple plans
In the three-tier pricing strategy generally, we find:
- A great option for smaller teams, individuals or customers that are new to trying out the product.
- The middle tier used for selling upsells. It's usually referred to as the "most sought-after" or "most cost-effective" alternative.
- A premium plan designed for people needing more.
Although this is the case for the best companies that use the three-tiered pricing system, their packaging isn't always straightforward.
Prices Changes Based On the Number of Users
In this case, Canva uses three tiers but changes the pricing of each tier based on the number of users.
Three Primary Plans as a jumping off Point
Airbase advertises three primary plans, but their distinct bill-pay option will take customers to a completely different set of plans altogether. In essence, customers can choose between volume pricing and value-based pricing. This could be a way to let potential buyers choose the price they would like to buy.
It is possible that SaaS businesses could begin using a three-tier model however their pricing and pricing are bound to become complex as their customers require changes.
Four is the new Three (But Five is also popular)
According to our analysis The average amount of plans available is in fact four. There are some typical strategies that companies employ to keep five or four pricing options.
Three Primary Plans plus an Enterprise Plan
What's the reason? It allows you to market the middle option, which gives the small or medium-sized clients (i.e. those who are not enterprise customers) that ideal point to shoot for.
Three Primary Plans as well as Two Enterprise Plans
A few companies, like Box are moving to five plans, including two enterprise tiers. What's wrong with enterprise users having choices as well?
Free Plan Plus Three Paid Options
If you use an unpaid model, the four pricing options seem reasonable. Paid customers need room to move up into higher levels.
Free Plan Plus Four Paid Options
Again it is important to note that adding a fifth option gives your clients more room to scale. However, when you add more tiers, it needs to be extremely clear what you gain from switching to a higher cost. In this instance, TalentLMS differs on the number of users.
Think about the idea behind a Plan
As we analysed price pages to create the guide, it was not necessarily clear what needs to be classified as a annual or monthly plan.
For instance, OneTrust Pro uses an A la carte approach to creating an annual plan.
Similar to that, Datadog offers a wide variety of plans that are based on their many offerings.
Instead of promoting tiers with fixed prices, Rippling does not promote tiers with set prices, but develops custom plans.
A sign that it's an opportunity to review a tiered structure is if your prospects are expressing concerns or users who are paying for functions or features they do not utilize. The other is if you're selling different products which your current customer base are paying for in separate installments.
In general, the top-of-the-line SaaS businesses think outside of the box with regards to pricing and packaging. If you're having trouble trying to make the tiered pricing structure you have It's time to your to look outside the box too.
Plan Additions (and/or Pages) as You Target New Markets
A company like ButterCMS provides a wide range of products from startups to enterprise-level companies. Every primary customer is a different persona with their own strategy. If you're selling to a new target market, make sure the target market is represented in your pricing pages before you contact them or begin your marketing campaign.
Take a look at different tabs or pages to target specific Markets
36% of the businesses which we researched use multiple pricing pages or tabs in the event that they are serving multiple different markets, or offer separate plans for different products.
Tabs, similar to the ones Mailchimp uses, make it easy to still see all pricing under one page -- even though they're selling three distinct items. The tabs offer clear differentiation between their products.
HubSpot takes this a step further with two different tabs: one for different products and plans, and one that deals with bundles. Sometimes scaling doesn't mean upgrading to the next level. If you're selling multiple products, should it be the right time to combine them?
What else are the top-of-the-line companies Explaining Their Plans?
The top companies can use diverse pricing structures, but we have found a variety of ways to explain how their pricing works.
The most well-known pricing page features include:
- An FAQ section (72 percent)
- Add-ons to the plan that are mentioned (42 percent)
- Highlighting the most popular plan (36%)