Software Pricing and SaaS

July 23, 2012 • #

Jeff Lawson of Twilio gave this talk on SaaS pricing at the Business of Software conference last year:

Everyone in the SaaS product business should watch this. Great approach to thinking through putting prices on your SaaS service.

The key is to understand all the facets of your product and what things cost you as the creator, in addition to slicing and dicing options for your customers to buy what they need. Facets like:

  • Quantities (How many gigabytes? What kind of bandwidth is allowed?)
  • Features (Can I do push notifications and alerts? What about management dashboards?)
  • Support (24 x 7 phone support?)

These things on their own are even sometimes difficult to figure out. What are all the variables you can tweak and change about your offerings? And those are thing that you can control, properties of your own product? I still maintain that the hardest part, bar none, of building pricing models (though it seems obvious) is understanding what your potential customers are willing to pay for your service, and then making sure you can serve them a product cheaper than that.