Three-Tier Pricing Strategy for SaaS Does It Work? Ideal? -
What's the ideal amount of subscription tiers to a SaaS business?
Study have shown that 3 is the most common number, but is it the most optimal?
That's not what we found in our analysis of the pricing plans of 50 top-of-the-line SaaS companies for our 2022 pricing pages report.
We looked at the pricing webpages of 50 businesses which were among the best-rated by G2 and discovered that the amount of plans offered monthly or annually that were offered ranged from no plans from zero to 23 plans.
From Zero to 23 Plans The Best-in-Class SaaS Companies Customize Their Subscription Plans
The packaging of their products varied as much.
"Keep things simple" is the standard advice given to SaaS businesses in terms of pricing and plans. But the offerings of subscriptions for best-in-class companies are far from simple.
In this piece we'll examine how top-of-the-line SaaS firms market and bundle their subscription services, with many tiered pricing examples.
Three Tiers doesn't have to Mean Simple Plans
In the three-tier pricing strategy We typically see:
- The cheapest option for small groups, singles, or new customers trying using the software.
- The middle-tier is used to selling upsells. This is often referred to as the "most sought-after" or "most affordable" option.
- Premium-priced plans for people who require more.
Although this is the case for top-of-the-line companies using a three-tiered pricing model but their approach to pricing may not be that simple.
Pricing Changes Based on Number of Users
As an example, Canva uses three tiers however, the price of the tiers based on the amount of users.
Three Main Plans as a Jumping Off Point
Airbase advertises three primary tiers, but their standalone bill payments option takes users to an entirely different set of plans altogether. Customers can select between value-based pricing or volume pricing. This could be a way to allow potential customers to choose which price they'd like to pay for.
We suspect that SaaS companies may begin with a simple three-tier approach, but their pricing and packaging will naturally become more complicated as their users require changes.
Four is the new Three (But Five is also popular)
Based on our study our research, the median number of plans is actually four. However, there are several common strategies for companies that keep five or four pricing choices.
Three Primary Plans Plus an Enterprise Plan
Why this works: You get to promote a middle plan that gives small or medium-sized clients (i.e. those who are not enterprise customers) that ideal point to shoot for.
Three Primary Plans and Two Enterprise Plans
A few companies, like Box are moving to five plans that include two enterprise tiers. So why shouldn't business users have alternatives as well?
Free Plan plus Three Paid Options
If you use an unpaid model, the four pricing options be a good idea. Paid customers require room to grow into higher tiers.
Free Plan Plus Four Paid Options
Once again it is important to note that adding a fifth option allows your customers greater flexibility to increase their prices. When adding additional tiers, it needs to be very clear on what the benefits are of switching to a higher cost. In this instance, TalentLMS differentiates based on the number of users.
Review the concept of the Plan
While we were looking at pricing pages for the guide, it wasn't necessarily clear what needs to be classified as a annual or monthly plan.
One example is that OneTrust Pro uses an an a-la carte method of creating the monthly plans.
Similar to that, Datadog offers a wide number of plans based on the many services they offer.
Instead of promoting tiers with set prices, Rippling is the only company that develops custom plans.
A sign that it's the time to reconsider a tiered structure is if you're receiving feedback from potential customers or customers who are paying for functions or features they do not use. A different sign is when you've got different products which your current customers are purchasing separately.
In general, the top-of-the-line SaaS businesses think outside of the norm when it comes to their pricing and packaging. If you're trying to improve the structure of your pricing tiered Perhaps it's the right time for your to think outside the box as well.
Add Plans (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 is a different persona with their own strategy. If you're trying to sell to a different target market, make sure they're represented in your pricing pages before you contact them or begin your marketing campaign.
Consider Different Pages or Tabs for Specific Markets
36% of companies we studied utilize multiple pricing pages or tabs for multiple different markets, or offer separate plans for different products.
Tabs, similar to the ones Mailchimp uses, make it simple to see all prices on the same page, even though they're advertising three unique products. Tabs provide clear distinction between the three products.
HubSpot is taking this one step further by offering two different tabs with tabs for various products and plans, one for bundles. Sometimes, scaling isn't necessarily about upgrading to the next level. If you're selling several products, is it appropriate to bundle them?
How Else Are Best-in-Class Companies Explaining Their Plans?
Top-of-the-line companies might use different pricing tiers, but we discovered a number of popular methods they describe how their pricing works.
A few of the most popular price page features are:
- A FAQ section (72 percent)
- Mentioning plan add-ons (42 percent)
- This is the plan that has the highest popularity (36%)