Wonder

B2B SaaS Pricing Models

Delivered October 15, 2019. Contributor: Dagmawit W.

Goals

To understand B2B SaaS pricing models, their psychology, and companies that use these models. 

Early Findings

PRICING MODELS1. Freemium PricingThis pricing model allows users to have access to certain features while offering the option for an upgrade.
This pricing model allows access to certain features or for a limited period of time while encouraging users to buy the paid plan for additional features.
This pricing model has been used for several years. 
AdvantagesThe psychology here is that users get to interact with a product immediately.
The adoption hurdle is easier to navigate when users have immediate access without any financial commitments.
If any issues are identified, it would be easier to revise and re-market. 
DisadvantagesThis model is not ideal for making a profit and the company's revenue may be hit hard for a while.
There is a risk that once the free period is over, users may simply discard it, increasing the churn rate. 
 Companies that offered freemium pricing successfully Hootsuite, Echosign, and Trello.
OTHER PRICING MODELS2. Per user pricing
This is one of the most popularly used models whereby the pricing is per user.
 Salesforce is one of the companies that uses this model.

3. Per active user pricing
In this model, subscribers are charged for each active user. 
 Slack uses this pricing model.
4. Flat rate pricing
This is a pricing model that charges a flat rate fee regardless of the number of users.
 Buffer uses this pricing model. It offers three plans: pro, premium, and business.
5. Per feature pricing
In this structure, the user is charged a dynamic fee depending on the features selected.
 Leadpages uses this pricing model.

Proposed next steps:

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Our research was able to identify the pricing models and provided more details on one. We propose continued research to provide more insights on each of the pricing models identified. Our insights will address the psychology around each approach from sources that address human behavior, at least 2 advantages and 2 disadvantages of each pricing model, and 2-3 examples of B2B SaaS companies that have implemented each model. For each of the companies identified, we will provide information/metrics that show that they implemented the model successfully. Our research will initially attempt to identify asset management tools. In the event that these tools are not the best examples, we will provide any other B2B SaaS companies.

Additionally, we would identify 2-3 best practices in implementing each of the pricing models above citing large B2B SaaS companies that have successfully implemented the pricing model in the past 4 years. This extended timeframe from our standard 2 years allows us to identify the most successful companies in the recent past. Our research will initially attempt to identify asset management tools. In the event that these tools are not the best examples, we will provide any other B2B SaaS companies.

Alternatively, we would provide 3-4 insights into each of the pricing models provided above. For each pricing model, our insights will address any of the following areas, as available. An overview of the pricing model, 2 advantages and 2 disadvantages of each pricing model, and 2-3 examples of B2B SaaS companies that have implemented each model.