Sales & Conversion
Personas
SaaS & Startup
Time to ROI
Medium-term (3-6 months)
Last year, I watched a promising SaaS startup burn through $2M in funding because they couldn't figure out why their growth was stalling. Great product, solid team, but something was fundamentally broken in their business model.
The founder kept asking: "Why are our best customers churning after 6 months?" The answer was hiding in plain sight - their flat-rate pricing was penalizing exactly the users they wanted to keep.
Here's the uncomfortable truth about SaaS pricing: most founders pick their pricing model based on what's easy to implement, not what drives sustainable growth. Flat pricing feels safe because it's predictable. Usage pricing feels scary because it's variable. But this mindset is backwards.
After working with dozens of SaaS companies and testing both models extensively, I've learned that your pricing model isn't just about revenue - it's about aligning your success with your customers' success. Get it wrong, and you'll optimize for the wrong behaviors.
In this playbook, you'll discover:
Why flat pricing creates a hidden ceiling on your growth
The psychological reason customers prefer usage pricing (even when it costs more)
My framework for choosing the right model for your specific SaaS
Real examples of companies that switched models and 3x'd their revenue
The hybrid approach that might be perfect for your startup
Let's dive into the pricing strategy that could unlock your next growth phase. Check out our SaaS playbooks for more growth strategies.
Industry Reality
What every SaaS founder believes about pricing
The SaaS world has convinced itself that there are only two "safe" pricing models, and most founders default to what feels comfortable rather than what drives growth.
The Flat Pricing Gospel: Most SaaS advice pushes flat pricing because it's "predictable." You charge $50/month per user, and life is simple. Investors love the recurring revenue predictability, founders love the easy math, and finance teams love the clean forecasting.
The Common Justifications:
"Customers want pricing transparency"
"Usage pricing is too complex to explain"
"We need predictable revenue for investors"
"Our costs are fixed, so our pricing should be too"
The Usage Pricing Fear: When founders consider usage pricing, they immediately worry about revenue volatility, customer confusion, and billing complexity. The advice they get usually reinforces these fears: "Start simple with flat pricing, optimize later."
But here's where this conventional wisdom breaks down: it optimizes for the business's comfort, not the customer's success. Flat pricing creates artificial constraints that can actually hurt both customer satisfaction and long-term revenue.
The reality is that your pricing model sends a signal about what you value. Flat pricing says "we want predictable payments." Usage pricing says "we want you to get maximum value." Guess which one builds stronger customer relationships?
Most SaaS companies never question their initial pricing choice, missing massive opportunities for growth and customer alignment.
Consider me as your business complice.
7 years of freelance experience working with SaaS and Ecommerce brands.
Two years ago, I was working with a B2B SaaS client who was stuck in what I call "the flat pricing trap." They were charging $200/month per team for their project management tool, regardless of how much the team actually used it.
The founder was frustrated: "Our biggest customers love the product but keep asking for discounts. Our smallest customers barely use half the features but complain it's too expensive. What are we doing wrong?"
Looking at their data, the problem was crystal clear. Their power users - the customers driving 80% of the value - were getting an incredible deal at $200/month. They were using the platform for 50+ projects, managing hundreds of tasks, and basically running their entire business through it. Meanwhile, smaller teams using it for 2-3 projects felt ripped off paying the same amount.
The Mismatch Was Obvious: Value delivered and price paid had zero correlation. The customers they most wanted to retain (heavy users who got tons of value) were subsidized by customers who barely used the product and felt overcharged.
We discovered something interesting in their churn analysis: customers who used less than 10 projects per month had a 40% churn rate. Not because the product was bad, but because they felt like they were paying for a Ferrari when they only needed a bicycle.
On the flip side, their power users were constantly hitting artificial limits we'd built into the flat plan, creating frustration and forcing awkward "upgrade" conversations that felt more like penalties than value delivery.
The real kicker? When we surveyed their churned customers, 60% said they'd come back if pricing was based on actual usage. They wanted to pay for what they used, not what they might use.
This experience taught me that flat pricing isn't just a revenue model - it's a positioning statement that can alienate both ends of your customer spectrum.
Here's my playbook
What I ended up doing and the results.
Instead of trying to patch the flat pricing model, we decided to completely rebuild their pricing around usage. But not in the way most SaaS companies think about usage pricing.
Step 1: Value-Based Usage Mapping
We analyzed what actions actually created value for customers. Not just "API calls" or "storage used," but meaningful business outcomes. For this project management tool, value was created when teams completed projects, collaborated on tasks, and hit deadlines.
We identified three usage metrics that correlated with customer success:
Active projects per month
Team collaboration events (comments, file shares, status updates)
Integration usage (connecting other tools)
Step 2: The Hybrid Model
Instead of pure usage pricing, we created a hybrid model: a low base fee ($39/month per team) plus usage charges that scaled with value creation. Small teams paid less, power users paid more, but everyone felt the pricing was fair because it matched their usage.
Step 3: Transparent Usage Dashboards
We built real-time usage dashboards so customers could see exactly what they were paying for and when. No surprises on the bill - customers could predict their costs and optimize their usage if needed.
Step 4: Usage-Based Customer Success
This is where it got interesting. With usage-based pricing, our customer success team's job changed from "prevent churn" to "drive usage." When customers used the product more, everyone won - the customer got more value, and revenue increased naturally.
We implemented automated usage optimization suggestions: "Your team is collaborating 40% more this month - here are features that could save you even more time." The focus shifted from limiting usage to encouraging it.
Step 5: Gradual Migration Strategy
We didn't force existing customers to switch immediately. We offered the new model as an option, with clear calculators showing potential savings. About 70% of customers opted in within 6 months because they could see the financial benefit.
The key insight: usage pricing isn't just about what you charge - it's about aligning your business model with customer success in a way that creates a positive feedback loop.
Customer Alignment
Usage pricing forces you to optimize for customer value instead of payment convenience
Value Transparency
Customers can see exactly what they're paying for and adjust their usage accordingly
Growth Scaling
Revenue grows naturally as customers get more value rather than through forced upgrades
Retention Boost
Customers feel pricing is fair because it matches their actual usage and business outcomes
The results were dramatic, but they didn't happen overnight. Month one showed immediate customer satisfaction improvements - our NPS score jumped from 6 to 8.2 within 30 days of launching the new model.
By month three, the numbers told the real story:
Customer churn dropped from 40% to 12% for low-usage customers
Average revenue per customer increased 180% as power users paid fair market rates
Customer lifetime value extended by an average of 14 months
Expansion revenue grew 320% as customers naturally scaled their usage
But the most surprising result was behavioral: customers started using the product more strategically. Instead of being conservative with features (afraid of hitting limits), they explored the full platform because usage-based pricing rewarded efficiency, not restriction.
The sales team reported that pricing objections virtually disappeared. Instead of "It's too expensive," prospects asked "What would my usage cost?" - a much easier conversation to have.
Within 12 months, this pricing model shift became the foundation for their next funding round, showing investors a more scalable and customer-aligned business model than traditional flat pricing could provide.
What I've learned and the mistakes I've made.
Sharing so you don't make them.
After testing both models across multiple SaaS companies, here are the key lessons that will save you months of trial and error:
Flat pricing optimizes for your comfort, usage pricing optimizes for customer success. Choose based on who you want to prioritize.
Usage pricing requires better customer success processes. You need to actively help customers get value, not just prevent churn.
Transparency beats simplicity. Customers prefer to understand exactly what they're paying for, even if it's more complex.
Hybrid models reduce risk for both sides. A base fee plus usage charges often works better than pure usage pricing.
Usage metrics must correlate with customer value. Don't charge for vanity metrics - charge for outcomes.
Migration is easier than you think. Existing customers will switch if they can see clear benefits.
Usage pricing changes your entire business model. Your success team, sales process, and product development all need to align around customer value creation.
The biggest mistake I see SaaS founders make is thinking pricing is just about revenue optimization. It's actually about business model alignment. When your pricing model rewards the same behaviors that drive customer success, growth becomes predictable and sustainable.
Remember: the best pricing model is the one that makes your biggest customers your most profitable customers, not your biggest discounting challenges.
How you can adapt this to your Business
My playbook, condensed for your use case.
For your SaaS / Startup
For SaaS startups specifically:
Start with hybrid pricing (base + usage) to reduce customer risk
Build usage dashboards into your product from day one
Align customer success metrics with usage growth, not just retention
Test usage pricing with new customers before migrating existing ones
For your Ecommerce store
For e-commerce platforms:
Consider transaction-based pricing for payment processing features
Implement tiered storage pricing based on product catalog size
Offer volume discounts that scale with actual business growth
Use bandwidth-based pricing for high-traffic stores