Three-tier pricing strategy for SaaS is it a perfect strategy? -

Apr 13, 2022

What's the ideal number of subscription tiers for an SaaS firm?

Study studies have found that three is the most popular number. But is it really important?

It's not what we found as we analyzed the pricing practices of the 50 most aggressive SaaS firms for our 2022 pricing pages report.

We studied the pricing webpages of fifty companies that received the highest ratings from G2 and saw that the number of plans that were annual or monthly available varied from zero up to 23.

From 0 to 23 plans the best-in-class SaaS Companies Customize Their Subscription Options

Packaging of their goods varied as.

"Keep simple" is the most common instruction given to SaaS companies regarding prices and plan options. However, the subscription plans that are offered by most high-end companies can be difficult to grasp.

In this piece we'll discuss how best-in-class SaaS firms market and package their subscription packages, with several examples of tiered pricing.

Three Tiers don't mean Simple Plans

In the three-tier pricing strategy It is typical to see:

  1. This is the most economical option for smaller teams, individual users, or new customers trying to experience the services.
  2. The middle tier used to sell and increase sales. The middle tier is usually cited as the "most popular" or "most economical" option.
  3. The premium plan is designed specifically to meet the needs of those who need more.

It is the case for top companies who use an underlying pricing structure that is three-tiered, however their approach to pricing isn't always straightforward.

Prices are adjusted based on quantity of users

In this case, Canva uses three tiers and changes the cost for each one based on the amount of users.

Canva pricing page showing that the pricing changes when you select number of users

Three plans that can be used as a Jumping Off Point

Airbase offers three levels of service, however their separate bill payment plan takes users to a different set of pricing plans. The basic idea is that customers are able to select between value-based pricing and price-based pricing. This could be one method to give potential customers the option of choosing which cost they'd like to pay.

Airbase pricing page shows three tiers, then below it is a single standalone option

We are of the opinion that SaaS companies may begin using a three-tier model however, the pricing and packages are bound to get more complicated as their customers require modifications.

Based on our study, the median number of pricing options actually is four. But, there are many commonly used methods which have five or four pricing options.

Three Primary Plans as well as an Enterprise Plan

Why this works The reason is that it lets you sell middle-level plans, which gives small or medium-sized clients (i.e., the non-enterprise customers) that ideal point to aim for.

Three Primary Plan as well as two Enterprise Plans

A few companies, like Box are shifting to five plans that include two enterprise tiers. Why shouldn't business customers have alternatives too?

Free Plan plus Three paid Options

If you're using a no-cost plan, four distinct pricing levels could be a good idea. Paid customers must have the ability to grow to higher levels.

Free Plan Plus Four Paid Options

A fifth choice gives your clients the possibility of growing. However, when you add new tiers of service, it is important to be very clear on the advantages of moving towards a higher cost. It is because TalentLMS differs by the number of customers.

Consider the concept that lies behind an Idea

As we looked over the pricing information for our Guide, it wasn't always straightforward what should be considered either a monthly or annual rate.

One example is that OneTrust Pro uses an A-la-carte approach to creating an annual plan.

OneTrust pricing page

Similarly, Datadog offers a wide range of plans built on the numerous services offered by Datadog.

Instead of marketing tiers using fixed prices Instead of promoting tiers with fixed prices, Rippling does not promote the tiers at fixed prices however, it provides plans that are customized.

A sign that it's the moment to review a tiered system occurs when customers are complaining or are users paying for different options or functions they don't make use of. A different sign is that you have different products which your current clients are buying independently.

It's common for top-of-the-line SaaS businesses think outside of the norm when it comes to pricing and packaging. If you're struggling to improve the structure of your pricing, it's the perfect time to think outside of the norm as well.

Plan additions (and/or Pages) should You Target New Markets

A company such as ButterCMS provides market coverage right from startups up to large corporations. Each individual's initial comes with their own plans. If you're trying to sell to a new target audience, ensure you've listed their names on your pricing page before making contact with them or starting an advertising campaign.

Take a look at different tabs or pages designed for particular markets

36% of the businesses that we examined have tabs or pricing pages that have multiple prices that cover multiple markets or separate pricing plans for different items.

Tabs, like the ones Mailchimp allows you to view the entire price on one page -- even though they're selling three different products. Tabs clearly differentiate between the products they sell.

HubSpot is taking this step ahead with two tabs levels that offer different services and plans, one for bundles. It's sometimes not necessary to upgrade to the following step. If you're selling several products are they appropriate to combine the products?

What else are the most reputable companies explaining their plans?

The top companies can use different pricing models, however we have found a variety of popular methods to explain how they calculate their prices.

Some of the most well-known features on the price page are:

  • A section on FAQs (72%)
  • Additional plans to the plan are included (42 percentage)
  • Highlighting the most popular plan (36 percent)

What do you want from this Subscription Management Solution?

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