How to price a SaaS product

Your competitor isn't only the tool that looks like yours. It's whatever your buyer currently spends money or hours on to solve this — including doing nothing, which is free and therefore genuinely competitive.

Build a table with a row per alternative and these columns: price, what it scales on, what's in the cheapest tier, what forces an upgrade.

Include:

• Direct competitors, with the price on their site today, not the one you remember.
• The manual alternative. A VA at £15/hour for four hours a month is a £60/month competitor with a real budget line.
• The generic tool they're bending to fit — a spreadsheet, a Notion template, an agency retainer.

The upgrade trigger column is the one people skip and it's the most useful. It tells you what each competitor decided the value metric was, which is a decision they've already tested with far more customers than you have.

If everything in your category sits between £20 and £50, that's a corridor formed by real customer behaviour. You can price outside it, but you need a reason you could say out loud to a buyer.

"What would you pay for this?" produces a number people invent to be polite. It correlates with nothing.

These two do better, and they come from the Van Westendorp method:

1. "At what price would this be so expensive you wouldn't consider it?"
2. "At what price would you start to doubt the quality?"

The gap between them is your viable range. Ask ten people and the clustering is usually clearer than you expect.

Then the question that beats both, when you can ask it:

3. "What are you spending on this problem right now — in money or hours?"

This is a fact rather than a hypothesis, and facts survive contact with a payment page. Someone spending four hours a month on a manual workaround has told you what your product is worth to them without either of you speculating.

Write the answers down with names. When you set your price you'll want to know exactly who said what, because your first ten customers will come from this list.

The value metric is what the price scales on. Get it right and pricing becomes almost self-correcting; get it wrong and you'll renegotiate forever.

A good value metric:

• Grows as the customer gets more value. More ventures, more seats, more sends.
• Is easy to predict before they buy. A metric they can't estimate creates anxiety and stalls the purchase.
• Doesn't punish the behaviour you want. Charging per user in a collaboration tool suppresses exactly the adoption that makes you sticky.

Common metrics and when they fit: per seat for collaboration; per unit of work (projects, ventures, campaigns) when value is lumpy; per volume (messages, API calls, storage) for infrastructure; flat when usage barely varies and simplicity is worth more than optimisation.

Whatever you pick, it should be legible in one line on the pricing page. If explaining your metric takes a paragraph, buyers will assume it's designed to surprise them — and often they'll be right.

Three. Not four, not one.

• Entry — solves the problem for one person, priced so that a card can be pulled out without asking anyone.
• Recommended — where most people should land. Mark it clearly. Most buyers would rather be told than choose.
• Upper — for the customer whose usage or team has grown past the middle.

Price the middle first. It's the one you're actually selling; the other two exist to make it obviously correct.

Then, before you launch it, grade the page against the checklist below. The heaviest single check is whether a real price is visible at all — hidden pricing filters out every self-serve buyer, and at this stage self-serve buyers are the business. The rest of the checks are ranked by what they cost you, so work the unchecked ones top down.

Your first price is a hypothesis, and almost always a low one. Founders underprice because rejection at a low price feels like rejection of the product, while rejection at a high price feels survivable — that's a psychological reason, not a commercial one.

The test: if nobody has ever pushed back on your price, it's too low. A healthy price gets occasional resistance. Zero resistance means you're leaving money on the table and, worse, attracting the customers who churn hardest and demand most.

How to raise it without drama:

• Grandfather existing customers, permanently, and tell them so. It costs little and buys real loyalty.
• Announce it plainly with a date. "Price goes to £X on the 1st" is fine. No apology; you're not doing anything wrong.
• Change one thing. Raise the price or restructure the tiers, not both, or you won't know what moved.
• Watch conversion for a month. If it holds, raise it again. Most founders stop one raise too early.

Underpricing doesn't buy growth. It buys the wrong customers and removes the margin you need to serve anybody well.