Three-Tier Pricing Strategy for SaaS is It Ideal? -
What's the ideal amount of subscription tiers to a SaaS company?
Research studies have shown that 3 is the most commonly used number, but do you think it's the best?
We didn't find that when we studied the pricing plans of 50 top-of-the-line SaaS businesses to create our 2022 pricing pages report.
We analyzed the pricing webpages of 50 businesses that were among the highest-rated on G2 and saw that the quantity of annual or monthly plans offered varied from zero plans from zero to 23 plans.
From 0 to 23 plans Top-of-the-line SaaS Companies Customize Their Subscription Options
Their packaging also varied as much.
"Keep it simple" is a common stipulation for SaaS businesses when it comes to pricing and plans, but the subscription options offered by the majority of top-of-the-line companies aren't simple.
In this post we'll discuss how best-in-class SaaS firms market and bundle their subscription packages, 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:
- It is the cheapest choice for small teams, individual users and new customers who want to try using the software.
- The middle level is typically used for selling upsells. It's often highlighted as the "most sought-after" or "most affordable" option.
- The premium-priced plan for those needing more.
Although this is the case for top-of-the-line companies using an underlying three-tiered pricing structure but their approach to pricing may not be that simple.
Prices Changes Based On the Number of Users
For instance, Canva uses three tiers and changes the prices of the tiers based on the number of users.
Three primary plans to be a Jumping Off Point
Airbase offers three main plans, but their distinct bill payment option leads customers to a completely different set of plans altogether. Effectively, prospects choose between volume pricing and value-based pricing. This can let potential buyers choose the price they would like to purchase.
We believe that SaaS businesses could begin with a basic three-tier structure however their pricing and packaging, by necessity, grow more complicated as their users need change.
Four Is the New Three (But Five Is Popular Too)
Based on our study The average amount of pricing plans actually is four. And there are a few most common methods for businesses that have four or five pricing choices.
Three Primary Plans plus an Enterprise Plan
What's the reason? The idea is to create middle plans, which gives the small and medium-sized customers (i.e., the non-enterprise customers) that ideal point to shoot for.
Three Primary Plans and Two Enterprise Plans
A few companies, like Box have shifted to five plans, including two enterprise plans. So why shouldn't business users have alternatives too?
Free Plan and Three Paid Options
If you use a freemium model, then the four pricing options be a good idea. Paid customers require room to grow into higher tiers.
Free Plan plus Four Paid Options
Another time it is important to note that adding a fifth option gives your clients greater flexibility to increase their prices. When adding additional tiers, it needs to be very clear on what you will gain by moving to a higher price. This is because TalentLMS differentiates based upon the number of customers.
Rethink the Idea of a Plan
As we analysed price pages to create the guide, it was not often clear what was classified as a annual or monthly plan.
For instance, OneTrust Pro uses an A la carte method of creating an annual plan.
Similar to that, Datadog offers a wide number of plans based on the many services they offer.
Instead of advertising tiers that have set prices instead, Rippling is the only company that creates customized plans.
One sign it might be time to rethink a traditional tiered model is if you're receiving feedback from potential customers or clients who are paying for options or functions they don't utilize. The other is if you're selling several products your current 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 pricing and packaging. If you're having trouble trying to make the tiered pricing structure you have Perhaps it's an appropriate time for to to think outside of the box, too.
Create Plans (and/or Pages) in the event that You Target New Markets
An organization like ButterCMS offers a range of services from startups to enterprise-level companies. Every primary customer has their own plan. If you're trying to sell to a different customer, be sure you've got them in your pricing pages before you contact them or begin a marketing campaign.
Consider Different Pages or Tabs for Specific Markets
36% of the companies that we examined have tabs or pricing pages with multiple prices when they serve several markets or have separate plans for various products.
Tabs, like Mailchimp uses, make it simple to see the entire price on one page -- even though they're promoting three different product. Tabs provide clear distinction among their offerings.
HubSpot goes one step further with two different tabs that offer different services and plans, and one for bundles. Sometimes, scaling isn't necessarily about upgrading to the next tier. If you're selling multiple products, is it the right time to combine them?
What else are the top-of-the-line companies Explaining Their Plans?
Best-in-class companies may use very different pricing tiers, but we found several popular ways to explain how their pricing works.
Some of the most popular pricing page features include:
- A FAQ section (72 72%)
- Plan add-ons that mention the plan (42%)
- The most widely-used plan is highlighted (36%)