What are the cons of a pay-per-user SaaS pricing model?

The pros are that the revenue is highly predictable, and most SaaS applications are still priced this way.

The cons are that it the one-size-fits-all approach to subscription pricing is a bit … dated … in SaaS. And does not always reflect the way customers use applications anymore.

Why:

  • Can’t a customer pay in part based on usage, if they want to?
  • Does my price automatically go up, even if I just add 1 or 2 users to my account?
  • Does every type of user “cost money”?
  • Is it so hard to downgrade?
  • Do I have to manually downgrade if I use less?
  • Do I have to figure out now how many users I need for the best pricing, when I don’t really know?
  • Do you push me to pre-pay annually, if I also have to pay per user? Isn’t this sort of the worst of all worlds, if you think about it? I lose all the flexibility in SaaS?

Start with a presumption of pay-per-user. But be more flexible in 2019/2020. Let customers buy more the way they want to buy. Do this right, you will close faster, and in the end, close more.

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Published on July 8, 2019

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