How SaaS Companies Price Their Products: Insights from an Industry Study
Pricing is one of the business and product strategy elements to achieve both financial performance and competitive advantage. The transition towards the Software-as-a-Service model has unlocked new opportunities for pricing software products. Conflicting recommendations from existing studies and industry experts make it challenging for SaaS providers to design and implement the pricing of their services. SaaS providers have come a long way in adapting their pricing practices to the new paradigm that assumes the offering of service instead of selling software as a product. This paper explores how SaaS providers package and price their products by reviewing the pricing information of 220 SaaS providers. The study reveals that SaaS companies are relatively heterogeneous in the way they price their products and the pricing practices of SaaS providers within the same size and product type could differ sufficiently.