All SaaS companies dream of catching bigger-sized accounts.
It’s a no-brainer; they bring more revenue and provide your SaaS business with more stability. But how do you charge these customers if you’re going to provide them with a more premium product and service? Creating the right enterprise SaaS pricing structure could be a game-changer for your business, allowing you to drive more revenue from fewer accounts.
As a full-service SaaS SEO agency, we’ve collated our experience and knowledge to bring you the ultimate enterprise SaaS pricing guide to maximize ROI.
What We'll Cover:
What is an Enterprise SaaS?
In the past, enterprise software used to be purchased outright by companies and installed on their servers and computers. Those times have changed. SaaS vendors now provide reliable enterprise software via the cloud.
Enterprise SaaS is generally more expensive as it’s used by many employees. It also has certain customized or premium features made available at scale.
Most SaaS companies offer premium onboarding and after-sale support to enterprise customers so they can succeed with the new software.
Here are the benefits of enterprise SaaS that you can communicate via your content campaigns and pricing pages.
What is Enterprise SaaS Pricing?
Enterprise SaaS pricing denotes the price you charge to offer your customers the best products and services. It’s common for SaaS companies to display custom pricing on their pricing page for enterprise companies. Why? They need to determine their specific needs and then set an appropriate pricing structure.
If it is too low, you will fail to attract the right customers and get good revenue.
If it's too high, you’ll deter customers from signing up.
The key to enterprise software pricing is making your product look lucrative for the price you’re quoting (i.e., make it look like a steal).
Why Do You Need an Enterprise SaaS Pricing Strategy?
When trying to sign new clients, you can’t quote any random figure to your enterprise customers and hope it works for them.
Here are five key reasons you should have an enterprise SaaS pricing strategy in place.
#1 Scalability and Growth
The right enterprise SaaS pricing can help you attract more customers and convert them. A well-defined pricing strategy will enable seamless scalability as your SaaS business scales. It will provide flexibility to adjust pricing tiers, add features, or introduce new plans that cater to a wider customer base.
#2 Competitive Positioning
In the competitive SaaS market, your pricing strategy is pivotal in positioning your product against competitors. Pricing allows you to highlight unique value propositions, giving your brand a competitive edge.
#3 Revenue Optimization
You don’t want to lose out on revenue because you’re charging less for your enterprise plans. An effective pricing strategy allows you to maximize revenue by:
- Strategically pricing your offerings
- Upselling premium features
- Communicating the value of your product in a compelling manner
- Enticing customers with well-defined packages
#4 Customer Retention and Loyalty
The longer your customers stay with you, the better your customer lifetime value and the stability of your SaaS business. Pricing transparency and fairness contribute significantly to customer satisfaction. A sound strategy helps retain customers by ensuring they perceive the value they receive is commensurate with the pricing they pay, fostering long-term loyalty.
#5 Adaptation to Market Changes
Markets are dynamic, and customer needs often evolve with time. An effective SaaS pricing strategy takes that into account and allows flexibility when it comes to market changes. It also helps you pivot when necessary and stay responsive to shifts in customer demands and industry trends.
Types of Enterprise SaaS Pricing Models
There are many enterprise software pricing models and pricing strategies to choose from. In this section, we’ll cover all the most popular ones here and help you determine which is the best for your business.
#1 Flat-Rate Pricing
This is one of the simplest pricing models. You set a single price for the product, which is usually billed per month. The enterprise plan comes with a fixed set of features and no flexibility for add-ons or customizations.
The main benefit is that it keeps things simple for your sales team and customers. But it also has a glaring drawback. Enterprise customers often want flexibility, and this pricing model only allows you to cater to a specific customer segment.
If the price is too low, many customers may perceive your product to be low value. If the price is too high, you’ll drive smaller businesses who might have subscribed to your product if there was room for some discounts.
#2 Per-User Pricing
The per-user pricing strategy is transparent and straightforward, as companies know how much they are paying for each employee to use the SaaS product and if the investment is worth it. Potential customers can calculate monthly costs, and your sales team can make accurate revenue projections.
If your marketing game is strong, you can encourage more people to sign up for each enterprise subscription and make more money.
The only drawback is that many customers will try to avoid adding new users as they might see the amount getting more expensive. Companies may also try to share a single login for multiple users, which can pose a threat to your business.
#3 Usage-Based Pricing
Also known as pay-as-you-go pricing, this defines a pricing structure where the customer pays only for the product or service elements they use. This could mean the number of emails being sent, the number of pictures being edited, or the number of projects being created.
Usage-based pricing is going mainstream, with 45% of companies using the model, which is twice its adoption rate in 4 years. It is expected to reach 56% in 2023, and to rise further in 2024.
It’s a fair pricing strategy as why should the customer pay for elements they aren’t using? You can also market this plan as a “pay more as you grow” strategy, as it doesn’t involve higher upfront costs, and businesses are more likely to pay more once they start growing.
The one downside of this model is that billing amounts may vary a lot, so you won’t be able to make accurate projections.
#4 Tiered Pricing
This is one of the most popular pricing models. You can target different customer segments and offer various packages with a different set of features and a different pricing point. Instead of offering a lot of pricing tiers and confusing potential customers, it’s best to stick to three or a maximum of four pricing tiers.
Setting up this model may take some time as you need to decide the features that will go in each pricing tier. You can bring all your teams on board to make this decision so you get relevant input.
One potential disadvantage of this plan is that the top-tier users may exhaust their usage, but there would be no way to charge them extra.
#5 Freemium Model
This model is growing more popular in the SaaS industry. The freemium pricing model is free to use to a certain extent. If the customers wish to try the premium features or exhaust their usage limit, they need to start paying.
The model appeals to startups or non-profits who have limited budgets. That’s why you’ll not see many SaaS companies adopting this pricing model for enterprise customers. It can devalue your product, and enterprise companies do not look favorably towards plans that are provided for free. Many customers may not even opt for your paid version and keep using the free elements.
#6 Per-Feature Pricing
Like tiered pricing, the per-feature pricing model charges for different features within each tier. The premium packages offer exclusive features like more integrations, advanced analytics and reporting, and opportunities to achieve more success.
The major focus of this model is to encourage more people to go for the top-tier packages to unlock more functionality and growth. The main advantage of this model is you can customize the pricing structure based on individual needs.
If you adopt this model, ensure that your basic features are available in each tier and limit the top features to the premium tiers.
#7 License-Based Pricing
This is similar to the per-user pricing model but differs in that customers must pay based on the number of licenses they need. This model is ideal for SaaS companies offering complex products and serving large vendors.
The customer knows exactly the price they will be paying. The sales team can also make accurate projections of monthly and annual revenue.
One thing to consider while adopting this model is that it has limited scalability for businesses with variable license requirements. For example, they might not want to deal with SaaS companies who charge per license and instead might want to opt for a pricing structure that is fixed or custom.
#8 Custom Pricing
Many SaaS companies now offer custom pricing. They feel enterprise customers' needs are specific, and they might not want to opt for pre-packaged plans. The pricing is fixed, factoring in variables like customer requirements, type of company, and number of users and negotiations.
This provides SaaS businesses the flexibility to target different customer segments and personas. But this model is also time-intensive and will require your sales team to be highly trained in negotiating and coming up with the final price. You will also have to select the right personnel responsible for making all the pricing decisions.
#9 Contract-Based Pricing
As the name suggests, contract-based pricing is when you set a fixed price depending on the time period your enterprise customer wants your product. It involves providing long-term contracts with discounted rates for extended commitments. This encourages more customers to stay with your SaaS business for a long period of time.
It enhances customer loyalty and ensures predictable revenue. The only disadvantage is that during the contract period, this plan does not allow for more flexibility. To avoid this, many SaaS companies allow for some flexibility by charging premium prices for the addition of some features.
#10 Value-Based Pricing
Value-based pricing involves setting prices based on a product's perceived value to customers. In this model, pricing reflects the impact the enterprise solution has on the customer's business outcomes and the value it adds in terms of efficiency, revenue generation, or cost savings.
Understanding customer needs, industry benchmarks, and the unique features of the SaaS offering helps determine a price that aligns with the perceived value. By delivering and enhancing value, SaaS providers can justify premium pricing. It creates a win-win situation where customers receive benefits, and the provider achieves sustainable growth.
7 Steps to Set Up an Enterprise SaaS Pricing Strategy
Now that you know the different pricing models, it’s time to set up your enterprise SaaS pricing strategy.
Here are seven simple steps on how successful SaaS companies do that.
#1 Understand Your Market and Audience
You need to know your audience to set the correct pricing. Would they be able to pay the price you’re suggesting? Would they be able to pay a little more if nudged? Which kind of pricing model would they be more comfortable with? These are some questions that audience research would help you answer.
You can develop detailed buyer personas to identify their pain points and tailor your pricing strategy to suit them.
Pro-tip: Conduct a competitor analysis to understand the pricing techniques and tactics working well for the same target audience.
#2 Define Clear Value Propositions
What are the unique features and functionalities that set your SaaS product apart? Including these aspects will help you create a compelling and clear value proposition and showcase your offering as being superior.
You should articulate how your product solves specific challenges and pain points and the value it can deliver to customers. This might take some time, but the return will be well worth it as your team will not have to spend as much time showing prospects the benefits they can get from subscribing to your tool.
#3 Choose the Right Pricing Model
The right software pricing model will bring more leads and revenue for your business. While selecting one, ensure the model aligns with your business objectives, product complexity, and customer preferences.
You may even want to evaluate the pros and cons of each model and how different companies in your niche are setting their pricing strategy.
Pro-tip: Ensure the model you choose allows for scalability and changes as your SaaS company and the market evolve.
#4 Establish Clear Tiers and Features
If you’re following the tiered pricing model, communicate which feature lies in which tier and how customers can make the selection between tiers. The better you can communicate this, the more easily the prospect can make a decision and sign up.
Look how ClickUp shows a detailed comparison on their pricing page.
When aligning features with each tier, ensure a logical progression from basic to advanced functionalities.
We have also seen many SaaS companies help users make a decision by displaying a detailed FAQ on the pricing page where common queries about pricing tiers are answered.
#5 Consider Trial Periods or Freemium Options
Most customers today want to try the product for a few weeks or get a freemium option to utilize all the basic features. You can offer your enterprise customers a limited-time trial that allows them to experience the full range of your SaaS product.
You can also implement free pathways for converting free trial users or freemium subscribers into paid users.
While utilizing this strategy, ensure you send them the right marketing material that helps them get the most out of the tool during the trial period.
#6 Implement Pricing Transparency
Being transparent about your pricing structure builds trust and credibility in your business. After all, you don’t want to have hidden charges or fees the customer discovers later and feels disgruntled about.
You can even provide educational resources on your website to help users understand the value they receive at each pricing tier. Many SaaS companies now have chatbots on the pricing page that allow users to ask pricing-related questions.
You can even encourage customer feedback to refine your pricing strategy, addressing any concerns or confusion.
#7 Regularly Review and Adjust
You should regularly assess the performance of your pricing strategy against business goals. See if the revenue you’re getting from your enterprise customers can be optimized further. You can also seek customer feedback regarding pricing satisfaction and adjust strategies accordingly.
Also, stay informed about market changes, competitor movements, and technological advancements, and adjust your pricing strategy to remain competitive.
Know How to Put Up a Price on Your Enterprise SaaS
A well-executed pricing strategy can maximize ROI and help you convert enterprise leads.
Getting your pricing strategy right will take a lot of time and effort, but once you do, you’ll see the difference it brings to your business. Instead of making these decisions in silos, ensure all relevant teams like sales, marketing, and finance share their inputs and collaborate on this strategy.
If you need help conveying the value of your business via content marketing and SEO, you can reach out to us at MADX, or explore additional insights on MadX's blog.
