Pricing Is the Most Powerful Lever in SaaS—And the Most Ignored

Let’s be honest: most SaaS founders have no idea how to price their product.

They pick a number that “feels right,” copy a competitor’s model, or worse—default to “let’s just start cheap and raise prices later” thinking it will somehow work itself out.

But here’s the brutal truth: pricing is not just a number—it’s psychology, positioning, and business strategy rolled into one. Get it wrong, and it doesn’t just hurt revenue—it destroys your entire business model.

If you’re undercharging, you’re signaling that your product isn’t valuable. If you’re overpriced, you’re creating friction before users even try your software. And if your pricing isn’t structured properly, you’re leaving millions on the table in lost expansion revenue.

I’ve seen SaaS companies kill their own growth because of bad pricing decisions. But I’ve also seen companies triple their revenue—without adding new features—just by restructuring their pricing model.

Here’s how to do it right.

Why Most SaaS Pricing Models Fail

There are three ways SaaS companies typically screw up pricing:

1. Charging Too Little

The #1 pricing mistake I see is undervaluing the product.

Many founders set a low price because they think affordability will drive adoption. What actually happens? They attract price-sensitive, high-churn customers who constantly complain and leave at the first sign of trouble.

Low pricing doesn’t win markets—it signals weakness.

• Superhuman charges $30/month for email. And they have a waitlist.

• Gong charges tens of thousands per year. And their users love them.

• Salesforce never apologizes for high prices. Because they dominate their category.

If your product delivers value, price it like it does. Customers don’t just pay for features—they pay for outcomes.

2. Making Pricing Too Complicated

Nobody wants to read a novel just to figure out how much your software costs.

A bad pricing page is full of “if this, then that” conditions, hidden fees, and upgrade traps. It confuses users, slows conversions, and makes them second-guess signing up.

Your pricing should be instantly understandable. The best pricing pages follow two rules:

• Less than 3 tiers. Too many choices create decision paralysis.

• Clear differentiation. If users can’t see the difference between plans, they’ll default to the cheapest one.

Complex pricing = higher friction = fewer customers.

3. No Expansion Revenue Strategy

If your pricing doesn’t grow with the customer, you’re capping your own upside.

Look at the most successful SaaS companies: they all have expansion revenue built in. HubSpot, Slack, Zoom, Snowflake—they make more money from existing customers over time than from new ones.

The secret? Value-based pricing.

Instead of flat fees, price your product based on:

• Seats (Slack, Salesforce) – The more people use it, the more they pay.

• Usage (AWS, Snowflake) – The more they consume, the higher the bill.

• Revenue Share (Stripe, Shopify) – The more they make, the more you make.

If your customers grow and your revenue doesn’t, you’ve built a leaky pricing model.

How to Price SaaS the Right Way

Here’s how to set pricing that makes users happy while maximizing revenue.

1. Price Based on Value, Not Features

Stop selling features. Sell results.

Users don’t care how many integrations you have or whether your dashboard has a dark mode. They care about outcomes. Your pricing should be tied to how much value you create.

Ask yourself:

• Does your software save time? Charge based on usage.

• Does it increase revenue? Take a percentage.

• Does it grow with teams? Charge per seat.

If you price based on what customers gain, they won’t question the cost.

2. Create a “No-Brainer” Entry Price

Your lowest-tier plan should be a no-brainer decision—not free, but so valuable that users feel stupid for not buying it.

• Spotify’s $9.99/month plan is an easy yes.

• Figma’s free tier hooks users, but Pro is an obvious upgrade.

• ChatGPT Plus at $20/month makes free users feel like they’re missing out.

Free trials work. Free plans work. But free forever with no upgrade path? That’s just bad business.

Pricing isn’t just math—it’s psychology.

Your middle-tier plan should feel like the best deal. Most people won’t buy the cheapest option (too basic) or the most expensive (too premium), but they will gravitate toward the one that feels like a steal.

The trick? Price anchoring.

• Apple makes the mid-tier iPhone the default choice by making the cheapest one underwhelming.

• Netflix puts its most popular plan in the middle and visually highlights it.

• SaaS companies like Notion & Dropbox push users toward “Pro” with subtle design tricks.

Don’t just list prices—guide users to the right choice.

4. Keep Raising Prices (But Keep Existing Users Happy)

Most SaaS founders are terrified of raising prices. But the best companies do it all the time—and customers barely notice.

The key? Grandfathering.

When you raise prices, keep your existing customers on the old plan. Reward loyalty while charging new users more. Companies like Netflix and Basecamp have done this successfully for years.

Price too low, and you never get those dollars back. Price too high, and you can always adjust later. But if you don’t test higher prices, you’ll never know what customers are truly willing to pay.

Pricing is Strategy, Not Guesswork

SaaS pricing isn’t about being “affordable.” It’s about being irresistible.

• If people don’t blink at your price, you’re too cheap.

• If people get confused on your pricing page, you’re overcomplicating it.

• If your revenue doesn’t grow with customers, you’re leaving money on the table.

The best SaaS companies engineer their pricing to maximize conversions, expansion revenue, and customer retention. And once you do the same, you’ll never struggle with growth again.

Because when you price SaaS the right way, customers don’t just buy.

They stay.