5 Value-Based Pricing Examples for SaaS
November 2024
Value-based pricing helps SaaS companies boost revenue by aligning prices with customer-perceived value. Here are 5 real-world examples:
- Salesforce: Ties pricing to business results, offering plans from $25 to $500 per user/month
- HubSpot: "Building Blocks" model lets customers choose services, serving 113,925+ users globally
- Slack: Per-user pricing starting at $7.25/month for Pro plan, scalable for all team sizes
- Zendesk: Support volume-based pricing from $55 to $169 per agent/month, with AI pricing options
- Monday.com: Customizable feature pricing, boosting revenue from $78.1M to $161.1M in one year
Key takeaways:
- Know your customers and their needs
- Offer flexible pricing tiers
- Focus on results, not just features
- Let prospects try before buying
- Share success stories
- Keep improving based on feedback
Value-based pricing can increase revenue, improve customer satisfaction, and drive product innovation when done right.
Quick Comparison:
| Company | Pricing Model | Starting Price | Key Feature |
|---|---|---|---|
| Salesforce | Tiered, result-based | $25/user/month | Enterprise CRM |
| HubSpot | Building Blocks | Varies | Customizable marketing tools |
| Slack | Per-user | $7.25/user/month | Team communication |
| Zendesk | Support volume | $55/agent/month | Customer support platform |
| Monday.com | Custom features | $9/user/month | Project management |
Related video from YouTube
Salesforce: How They Price Enterprise CRM
Salesforce is a big player in the CRM world. Let’s dive into how they price their software for big companies.
Salesforce’s Price Tiers
Salesforce has different plans for different sized businesses. Here’s a quick look at their main options:
| Plan | Price (per user/month, billed annually) | What You Get |
|---|---|---|
| Starter Suite | $25 | Basic CRM for small teams (up to 10 users) |
| Pro Suite | $100 | Sales forecasting, unlimited users |
| Enterprise | $165 | Workflow automation, advanced reporting |
| Unlimited | $330 | 24/7 support, unlimited customization |
| Einstein 1 Service | $500 | AI-powered insights, third-party integrations |
As your business grows, you can move up to fancier plans with more features.
Pricing Based on Results
Salesforce doesn’t just charge more for more features. They tie their prices to how much their software can help your business.
Take the Enterprise plan. It costs $165 per user each month. That might sound like a lot, but it comes with tools to automate your work and get better insights into your sales. For big companies, these tools can save a ton of time and money.
Here’s a real example: Azizi Developments, a real estate company, started using Salesforce. They cut their sales cycle time by 70%. That means they went from taking a week to close a deal to just a day and a half. That’s a big win!
The Unlimited plan is even pricier at $330 per user per month. But it comes with round-the-clock support and lets you customize everything. For huge companies, this can be a lifesaver.
Salesforce also knows how to play ball with big clients. One forensic engineering firm was looking at a $1.1 million deal over 5 years. They brought in some negotiation experts and ended up saving $140,000. Not bad for 36 hours of work!
Salesforce is always trying new things too. Their new Agentforce product charges $2 per conversation with a customer. This makes it easy for companies to try it out without spending a fortune upfront.
HubSpot: Building Blocks Pricing Model
HubSpot’s "Building Blocks" pricing model is a smart way to give customers exactly what they need. It’s like a buffet where you only pay for what you put on your plate.
Mix-and-Match Pricing Options
HubSpot offers six main "Hubs": Marketing, Sales, Service, Content, Operations, and Commerce. Each hub comes in three flavors: Starter, Professional, and Enterprise. This setup lets customers pick and choose what they want, without paying for stuff they don’t need.
Think of it like this: A small business might start with just the Sales Hub Starter ($20 per month per seat). As they grow, they could add the Marketing Hub Professional ($890 per month). It’s like adding Lego blocks to your business as you need them.
HubSpot’s new seats-based pricing makes this even better. You only buy "Core Seats" for people who need to make changes, and you get free "View-Only Seats" for everyone else. It’s like giving some people the TV remote and letting others just watch.
Here’s what the Sales Hub pricing looks like:
| Tier | Price (per seat/month) | What You Get |
|---|---|---|
| Starter | $20 | Basic CRM, email tracking, meeting scheduling |
| Professional | $100 | Sales automation, quote creation, sales analytics |
| Enterprise | $150 | Predictive lead scoring, advanced permissions, custom reporting |
Customer Long-Term Results
This pricing model has helped HubSpot grow big time. They now have 113,925 users in over 120 countries. That’s a lot of happy customers!
The beauty of HubSpot’s model is that businesses can start small and grow with the platform. One HubSpot partner said their client’s conversion rate jumped by 105% after moving to the Content Hub. That’s like doubling your sales overnight!
HubSpot’s pricing also encourages customers to try new features as they need them. It’s like upgrading your phone plan when you realize you need more data. This often leads to customers spending more over time, but they’re happy to do it because they’re getting more value.
Slack: Per-User Pricing System
Slack’s per-user pricing model is simple and scalable. It matches how businesses grow and use the platform, making it easy to understand and budget for.
Features at Different Price Points
Slack offers four tiers, each for different business needs:
| Plan | Price (per user/month) | Key Features |
|---|---|---|
| Free | $0 | 90-day message history, 1:1 calls, 10 app integrations |
| Pro | $7.25 (annual billing) | Unlimited history, group calls, unlimited integrations |
| Business+ | $12.50 (annual billing) | 24/7 support, SAML SSO, 99.99% uptime SLA |
| Enterprise Grid | Custom pricing | Unlimited workspaces, advanced security |
This setup lets Slack cater to various customer segments. A small startup might start free and upgrade to Pro as they grow. A big corporation might go straight for Enterprise Grid.
Slack’s pricing is smart because it’s tied to user adoption. As more team members use Slack, its value to the organization grows exponentially. This makes it easier for companies to justify the per-user cost as they scale.
Big Company Perks
For large enterprises, Slack’s Enterprise Grid plan offers features that justify its higher price:
1. Unlimited Workspaces
Big companies can create separate, secure environments for different departments or projects while keeping overall admin control.
2. Advanced Security
Features like e-discovery and data loss prevention are crucial for companies in regulated industries.
3. Dedicated Support
24/7 priority support with a 4-hour response time for critical issues can be a game-changer for global operations.
4. Custom Integrations
The ability to build custom apps and integrations lets enterprises tailor Slack to their specific workflows.
These features tackle the unique challenges of large organizations, making Slack a must-have tool worth the investment.
"For team messaging and everyday communication, Slack remains a preferred choice among many businesses for good reasons." – Spendflo Team
This quote shows how Slack delivers value that clicks with businesses of all sizes.
Slack’s pricing model works well. In 2021, they raised prices slightly ($0.75 per user for monthly Pro plans), and it didn’t really affect their user base. This suggests that customers see high value in the product, allowing Slack to capture more of that value over time.
By focusing on active users instead of total seats, Slack makes sure companies only pay for what they use. This builds trust and encourages wider adoption within organizations.
Slack’s per-user pricing system shows how SaaS companies can price based on value effectively. By offering a range of plans with clear feature differences and scaling costs based on usage, Slack has created a pricing model that grows with its customers.
sbb-itb-4c080d3
Zendesk: Support Volume Pricing
Zendesk’s pricing is all about support volume. They’ve set up a system that grows with their customers. It’s simple: you pay based on how much support you need.
Pricing That Fits Your Business
Zendesk has plans for everyone, from tiny startups to huge companies. Here’s a quick look at their plans:
| Plan | Price (per agent/month, yearly billing) | What You Get |
|---|---|---|
| Suite Team | $55 | Basic tools, AI help |
| Suite Growth | $89 | More forms, customer surveys |
| Suite Professional | $115 | Custom roles, better analytics |
| Suite Enterprise | $169 | Unlimited light agents, 99.9% uptime promise |
You pick the plan that works for you now. Need more as you grow? Just upgrade.
Let’s say you’re a small business. You might start with Suite Team at $55 per agent each month. As you get bigger and need fancier stuff like custom reports or support in different languages, you can move up to Growth or Professional.
Growing Together
Zendesk’s pricing is built to grow with you. Here’s how:
1. Big team discounts: Got a lot of agents? You’ll pay less per person. For a 1,000-person company, prices could be anywhere from $43,700 to $100,200, depending on what you need.
2. AI pricing that adapts: Zendesk just came up with something new called "AI Dynamic Pricing." It lets you switch between human agents and AI without changing your contract. Here’s what Nikhil Sane from Zendesk says about it:
"As the industry moves toward more transparent, results-oriented business models, we are proud to lead the way with a solution that ensures companies can confidently invest in AI."
You only pay for AI when it actually helps. It’s a smart way to keep costs down as you grow.
3. Easy upgrades: Start small, add more when you need it. Maybe you begin with Suite Growth at $89 per agent monthly. When you need better analytics and custom roles, you can jump to Suite Professional at $115.
4. Save by paying yearly: If you pay for a year upfront, you can save up to 30% compared to monthly payments. It’s a good deal if you’re in it for the long haul.
Monday.com: Custom Features Pricing
Monday.com’s pricing model is as flexible as its platform. Let’s look at how they’ve set up their pricing to fit different customer needs.
Pricing Based on Options
Monday.com offers plans that grow with your business:
| Plan | Price (per user/month, annual billing) | Key Features |
|---|---|---|
| Individual | $0 (up to 2 users) | Basic task management |
| Basic | $9 | Unlimited free viewers, 5GB storage |
| Standard | $12 | Timeline & Gantt views, automations |
| Pro | $19 | Private boards, time tracking |
| Enterprise | Custom pricing | Advanced reporting, tailored onboarding |
Roy Mann, co-founder of Monday.com, explains:
"We’ve designed our pricing to reflect the value teams get as they scale. It’s not just about more features; it’s about enabling better collaboration and efficiency at every level."
This value-based pricing shows up in several ways:
The jump from Basic to Standard unlocks timeline views and automations. These tools help manage more complex projects as teams grow.
The Pro plan adds private boards and time tracking. These features help larger organizations manage sensitive info and track billable hours.
For big companies, the Enterprise plan offers tailored onboarding and advanced security. These are must-haves for large-scale operations.
Market Success
Monday.com’s pricing strategy is working. In 2021, they served over 100,000 teams across 200 different verticals globally. Their valuation hit $1.9 billion.
Some hard numbers:
- Revenue jumped from $78.1 million in 2019 to $161.1 million in 2020 – a 106% increase.
- Customers paying more than $50,000 in annual recurring revenue grew by 204% from 2019 to 2020.
- By focusing on teamwork and openness, Monday.com boosted user willingness to pay by 10-15%.
Patrick Campbell, co-founder of ProfitWell, says:
"Monday.com’s success in a fragmented market comes from understanding the value differential. They’ve built a lot of features, but more importantly, they’ve tied those features to specific user needs and priced accordingly."
This pricing lets Monday.com capture value at different levels. Small teams can start small and upgrade as they grow. Big organizations can go straight for the Pro or Enterprise plans, getting features that fit their complex needs.
What Works in Value-Based Pricing
Value-based pricing is a game-changer for SaaS companies. It’s all about matching your prices to what customers think your product is worth. Let’s look at what makes this strategy tick and how to show customers your product’s real value.
Keys to Success
Here’s what you need to nail value-based pricing:
1. Know Your Customers Inside Out
You can’t just guess what your customers want. You need to dig deep. What keeps them up at night? What do they really need?
Take Adobe. They didn’t just wake up one day and decide to switch to Creative Cloud subscriptions. They saw that customers wanted the latest tools without breaking the bank. The result? Happier customers and steadier cash flow for Adobe.
2. Tailor Your Offerings
One-size-fits-all? Not in SaaS. You need to slice and dice your market.
Look at Slack. They’ve got plans for everyone – from lone wolves to big corporations. This way, they can squeeze value out of every corner of the market.
3. Keep Your Ear to the Ground
What customers value today might be old news tomorrow. You need to stay on your toes.
HubSpot’s always tweaking their pricing and packages. They listen to what customers say and watch how they use the product. It’s no wonder they’re killing it with over 100,000 customers worldwide.
4. Spell Out Your Value
It’s not enough to create value. You need to shout it from the rooftops.
Salesforce doesn’t just sell you software. They sell you a better business. More sales, happier customers, fatter profits. That’s why they can charge premium prices and get away with it.
How to Show Value to Customers
So, you’ve got a great product. Now what? Here’s how to make sure your customers see its worth:
1. Focus on Results
Don’t bore people with a laundry list of features. Tell them what your product can do for them. Monday.com doesn’t just talk about task lists. They show you how teams can work smarter and faster.
2. Let Them Try Before They Buy
Nothing beats hands-on experience. Zendesk lets potential customers take their platform for a spin. It’s a great way to show how it can make support teams more efficient.
3. Show Real Success Stories
People love to see how others are winning with your product. Trello‘s website is packed with stories from big names like Kickstarter and Google. It shows how these companies use Trello to get stuff done.
4. Help Them Do the Math
Create tools that help prospects see the dollars and cents. HubSpot has a calculator that shows businesses how much money they could make using HubSpot’s marketing tools.
5. Teach, Don’t Just Sell
Share your knowledge. It builds trust and shows you know your stuff. Drift‘s blog is a goldmine of information about conversational marketing. It positions them as experts and subtly shows the value of their product.
Summary
Value-based pricing is a game-changer for SaaS companies. It aligns pricing with product value, benefiting both the company and its customers. Let’s look at what we’ve learned from our case studies and how to put this approach into action.
What We Learned from Real Companies
1. Salesforce
They tie pricing to customer results, justifying higher rates for their enterprise CRM. Their tiered model ($25 to $500 per user/month) works for businesses of all sizes.
2. HubSpot
Their "Building Blocks" model lets customers pick and choose services. This flexibility has helped HubSpot grow to over 113,925 users in more than 120 countries.
3. Slack
Slack uses per-user pricing, starting at $7.25/month for the Pro plan. This model works well for teams of all sizes, from startups to big corporations.
4. Zendesk
Their pricing is based on support volume, ranging from $55 to $169 per agent/month. They’ve also introduced AI Dynamic Pricing, showing how value-based pricing can evolve with tech.
5. Monday.com
They let customers customize features. This approach has paid off big time – their revenue jumped from $78.1 million in 2019 to $161.1 million in 2020.
How to Use Value-Based Pricing
Here’s how to make value-based pricing work for your SaaS business:
1. Know Your Customer
Do your homework. Find out what your customers need, what problems they face, and how much they’re willing to pay. Group your customers to create the right offers for different types and budgets.
2. Show Your Value
Create tools that help potential customers see how your product can help them. HubSpot, for example, has a calculator that shows how much more money you could make using their marketing tools.
3. Offer Choices
Create different pricing tiers for different types of customers. This lets businesses start small and pay more as they grow. Zenefits does this well with three main plans and clear pricing for extras.
4. Talk About Results
Don’t just list features. Talk about what your product can do for the customer. Salesforce doesn’t just sell software – they sell better business results like more sales and happier customers.
5. Let People Try It Out
Give potential customers a chance to see how great your product is. Zendesk offers a free trial so teams can see how it makes support easier.
6. Keep Improving
Regularly check and update your pricing based on what customers say and what’s happening in the market. HubSpot’s pricing has changed over time to meet customer needs better.
7. Show Off Success Stories
Share real examples of how your product has helped other businesses. Trello’s website has case studies from companies like Kickstarter and Google, showing how different businesses benefit from their product.
What Value-Based Pricing Can Do
When done right, value-based pricing can:
- Boost Revenue: Companies can make more money from what they offer. Monday.com saw a 204% increase in customers paying over $50,000 a year from 2019 to 2020.
- Keep Customers Happy: When pricing matches the value customers get, they’re more likely to stick around. Drift creates plans for specific roles (like marketers or sales pros) to make sure the product fits customer needs perfectly.
- Stand Out from the Crowd: Value-based pricing helps companies be different in busy markets. Intercom’s AI chatbot, Fin, charges $0.99 for each successful resolution, mixing usage-based and outcome-based pricing in a new way.
- Drive Improvement: This pricing model pushes companies to keep making their product better. Riskified only charges for transactions that are approved and fraud-free, which motivates them to keep improving their system.
Value-based pricing isn’t just about setting prices. It’s about putting customer success first in your business. By focusing on giving and showing value, SaaS companies can build stronger relationships with customers, make more money, and keep improving their products and services.
FAQs
What is performance-based metrics in pricing?
Performance-based pricing links what customers pay to the results they get. It’s all about tying the price to specific value metrics. Think leads generated or money saved.
For SaaS companies, this pricing approach can be a game-changer. It matches the service cost to the value delivered. Here’s why it’s a big deal:
1. Risk sharing
The provider takes on more financial risk. This pushes them to deliver top-notch results.
2. Measurable outcomes
Success is defined by agreed-upon KPIs. This makes it easier for customers to see what they’re paying for.
3. Flexibility
This model works well in industries where you can clearly measure success.
Let’s look at some real-world examples:
Hitachi Rail charges based on train usage time and on-time performance. This motivates them to keep trains running on schedule and boost customer satisfaction.
Novartis ties payments for certain drugs to patient health outcomes. This ensures their products deliver the expected value.
Rolls-Royce offers airlines a "power per hour" model. Instead of just selling engines, they focus on keeping them running optimally.
This pricing model sounds great, but it needs careful planning. Chris Hopf from PricingWire puts it this way:
"Performance-based pricing is a pricing model in which customers are charged based solely on the results they achieve."
To make it work, SaaS companies should:
- Define outcomes and metrics clearly to avoid confusion.
- Set up a solid system to track and verify results.
- Keep the lines of communication open with customers about how the pricing works.
Performance-based pricing can be a win-win, but it’s not a one-size-fits-all solution. It requires thought, planning, and ongoing management to get it right.