How to Price Your SaaS: Models, Mistakes, and What to Charge at Launch

Most founders spend six weeks perfecting their product and six minutes picking a price. Then they pick £9/month because it "feels right", anchor their entire business on it, and spend the next two years discovering they left most of their revenue on the table. Pricing is the single highest-leverage number in your SaaS — a 20% price increase usually drops almost straight to the bottom line — and yet it's the decision founders agonise over least. Here's how we'd approach it.

How should you price your SaaS at launch?

Price your SaaS on the value it delivers, not the cost to build it. At launch, pick a single value metric (per seat, per usage, or per outcome), offer one or two paid plans — no free tier, and set your price higher than feels comfortable. You can always discount to close an early deal; it's far harder to raise a price you anchored too low. Most early-stage B2B SaaS underprices by 2–3×.

The reason cost-plus pricing fails: your customer doesn't care that the feature took you three weeks to build. They care that it saves them ten hours a month or wins them a £5,000 client. Price against their number, not yours.

The three pricing models

Almost every SaaS pricing page is a variation on three models. Pick the one that aligns price with the value your customer actually gets.

| Model | How it works | Best for | |---|---|---| | Per seat | Charge per user per month | Collaboration tools, anything used by teams daily | | Usage-based | Charge per unit consumed (API calls, GB, emails) | Infrastructure, AI features, anything with variable cost | | Flat tiers | Fixed price per feature/limit bracket | Simple products with one primary user, SMB tools |

You can combine them — a per-seat base plus usage overage is common — but don't ship a combined model at launch. Start with the simplest one your customer understands at a glance, then add complexity once you know what they value. A pricing page that needs a paragraph to explain has already lost.

How to actually pick your number

Three inputs, in order of importance:

1. Your value metric. What grows as your customer gets more value? If it's "number of projects managed", price on projects. The right value metric means the customer's bill rises naturally as they succeed with you — the healthiest kind of revenue growth there is.
2. Willingness to pay. Ask 10–15 target customers two questions: "At what price would this be so expensive you wouldn't consider it?" and "At what price would it be so cheap you'd question the quality?" The gap between those answers is your viable range. You'll almost always be surprised how high it goes.
3. Competitor anchors. Your prospects compare you to whatever they use today — even a spreadsheet. Know what the nearest three alternatives charge, then decide whether you're positioning above (premium) or below (challenger). Don't just match the middle; that's a position, not a default.

The mistakes that quietly cost you revenue

| Mistake | What it costs you | |---|---| | Underpricing at launch | The hardest number to fix later; trains your market to undervalue you | | Too many tiers | Choice paralysis; three is the ceiling for most SaaS | | Free tier before product-market fit | Attracts non-buyers and inflates support load | | Discounting to close every deal | Signals your list price is fiction; erodes margin | | Never revisiting price | Your value grows over time; a price set at launch is stale within a year |

The free-tier trap deserves a special mention. A free tier is a distribution strategy — it only works when free users convert paid users (product-led growth) or refer them (virality). Before product-market fit, a free tier mostly attracts people who will never pay and buries your real signal under noise. We cover this in more depth in the first 90 days after launch.

When to raise prices

Raise prices when any of these is true:

• You've added meaningful value since you set the price (almost always true after 6–12 months)
• Your close rate is suspiciously high (>40% of demos convert — you're too cheap)
• Nobody ever pushes back on price (a little resistance is healthy)
• Your costs to serve have risen (usage-based infra, support)

Grandfather existing customers for a cycle or two — it builds enormous goodwill — but charge new customers the new rate immediately. The fear of raising prices is almost always bigger than the actual churn it causes.

A simple launch pricing recipe

For a typical UK B2B SaaS launching this year, here's the default we'd reach for:

Plans:        Two — a "Starter" and a "Pro" (no free tier yet)
Model:        Per seat, billed monthly and annually
Annual:       ~2 months free vs monthly (locks in cash + reduces churn)
Starter:      Priced to clear procurement without a meeting (£20–£50/user)
Pro:          Priced for the buyer who needs the outcome (£80–£200/user)
Enterprise:   "Contact us" — no number, real conversations only

It's deliberately boring. Two plans, one value metric, a clear annual incentive, and an enterprise tier that's really a sales conversation. Ship that, watch how customers behave, and iterate from real data instead of guesses.

The bottom line

Price on value, not cost. Pick one value metric, ship one or two paid plans, skip the free tier until you have product-market fit, and set your number higher than feels comfortable. Then revisit it every 6–12 months as your product gets more valuable.

Pricing is iterative — the goal at launch isn't the perfect number, it's a defensible starting point you can learn from. Get to paying customers, listen to how they react, and adjust.

Building the product those customers will pay for? Book a free scoping call — fixed-price MVPs from £15K, shipped in 8 weeks, with a dedicated PM throughout. And once you've got early traction, read how to get your first 100 users next.