Mastering SaaS Pricing Models: How to Pick the Right One for Your Product

Hey there! Building a killer SaaS product? Awesome. But let’s talk about something that doesn’t get enough hype—your pricing model. You can have the slickest UX, rock-solid code, and a feature list a mile long, but if your pricing isn’t right, scaling gets real tricky, real fast.

Don’t worry—we’ve got you. In this article, we’re breaking down the top 5 SaaS pricing models (and when to use them) so you can charge what you’re worth, attract the right customers, and grow without hitting a wall. Whether you're launching your MVP or revisiting your strategy post-Series A (next round of financing), this guide will help you price smart and scale confidently.

Let’s dive in!

Why Pricing Strategy Matters?

The right pricing model does more than just help you turn a profit. It:

• Shapes perceived value
• Drives user adoption
• Influences churn and retention
• Affects how you scale and serve different market segments

Poor pricing? That can kill conversions and stall your product’s growth, even if everything else is on point.

5 Common SaaS Pricing Models (and When to Use Them)

Finding the right pricing model is critical to your SaaS product's growth, customer retention, and revenue predictability. 

Below, we break down the five most common pricing strategies used by successful SaaS businesses—along with when to use them and what to watch out for.

1. Flat-Rate Pricing

What it is: A single product with a fixed monthly or annual price—no tiers, no complications.

Why it works: It’s incredibly simple. Users know exactly what they’re getting and how much they’ll pay each month. This model is easy to manage internally and easy for users to understand.

When to use it:

• You’re targeting a very specific market segment
• Your product has limited features or solves one core problem
• You want to emphasize ease of use and simplicity in your messaging

Watch out for:

• Lack of flexibility can alienate customers who don’t fit into your one-size-fits-all offer
• May leave money on the table if larger clients are willing to pay more

Example: Basecamp offers a single price plan for unlimited users, focused on simplicity and predictability.

2. Usage-Based Pricing (Pay-as-You-Go)

What it is: Customers are charged based on how much they use the service—this could be storage, API calls, number of transactions, etc.

Why it works: It aligns cost directly with value. Small users pay little, large users pay more, which feels fair and scalable.

When to use it:

• Your product is infrastructure-based or API-driven
• You want to encourage low-friction onboarding
• Your users' consumption varies widely

Watch out for:

• Customers may find it hard to predict costs, creating billing anxiety
• Revenue can be less predictable for your business

Example: Amazon Web Services (AWS) is the textbook case—customers pay exactly for what they use.

3. Tiered Pricing

What it is: Offering multiple plans (e.g., Basic, Pro, Enterprise), each with different features, usage limits, or support levels.

Why it works: It gives users options based on their needs and budgets. As customers grow, they can upgrade to higher tiers—making this a great model for scaling.

When to use it:

• Your product serves multiple audience types (startups, SMEs, enterprises)
• You have distinct value propositions for each user group
• You want to encourage upselling and customer growth

Watch out for:

• Requires careful feature gating—too many features in the low tier can hurt upsell, too few may affect conversion
• Overcomplicating tiers can create decision fatigue

Example: Slack’s pricing tiers scale based on team size and feature access (like admin tools and integrations).

4. Per-User (Seat-Based) Pricing

What it is: Customers pay a fixed amount for each user or “seat” added to the platform.

Why it works: It’s intuitive for collaboration or productivity tools. As usage increases within an organization, so does your revenue.

When to use it:

• Your product’s value increases with more users involved (e.g., CRMs, project management tools)
• You're targeting B2B teams or departments
• You want to drive predictable, scalable revenue

Watch out for:

• May discourage adoption if cost scales too quickly with user count
• Some companies might share accounts to save money

Example: Notion and Trello charge per active user, with pricing based on team size.

5. Freemium

What it is: Offer a free version of your product with limited features to attract users, then convert them to paid plans for more value.

Why it works: It reduces the barrier to entry and drives mass adoption, especially in crowded markets. If your product delivers strong value early, users will be more likely to upgrade.

When to use it:

• You have a viral product or strong network effects
• You want to build a large user base quickly
• You’re confident in your upgrade triggers and feature differentiation

Watch out for:

• Many users may never convert, making monetization challenging
• Supporting free users can lead to high infrastructure costs without direct revenue

Example: Dropbox and Zoom both offer freemium tiers that are great for small users but push heavy users toward paid plans.

Lizard Global’s Tip: Hybrid Pricing Models

Many successful SaaS companies combine models—like offering a freemium version with usage-based add-ons, or tiered pricing that includes per-user scaling.

The key is to keep testing and iterating. What works for your MVP stage might need to evolve as your product matures and your user base grows.

Choosing the Right Model

There’s no one-size-fits-all. The ideal pricing model depends on:

• Your target market
• Your product’s complexity
• The value you deliver and how it's consumed
• Your scaling goals (fast adoption vs. high ARPU)

At Lizard Global, we often recommend A/B testing pricing pages, gathering user feedback, and watching metrics like CAC, LTV, and churn closely.

Lizard’ Global’s Helping Businesses Choose The Right SaaS Pricing Model

“Your pricing should evolve as your product evolves. Don’t be afraid to pivot—especially if you're noticing friction in your sales funnel or user onboarding.”

The perfect SaaS pricing strategy balances business goals with user value. Whether you're building your MVP or optimizing for scale, pricing isn’t just a numbers game—it’s a product strategy.

Need expert support to find your ideal model, build your SaaS, or scale your product globally?

👉 Ready to take your app to the next level? Get in touch with us today! Visit Lizard Global to learn more about how we can support your growth and success.

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