Like every software on the internet these days, Software as a Service is the model of choice for product owners and for most consumers for a variety of reasons. The big question that developers and product owners struggle with is the model that will fit their product or business. Sure you can say you’re licensing your product via a SaaS model, but what does that really mean? Are you tiering your product? Are you charging by the user? What makes sense for your product may not make sense for other products and vise versa.
When considering a SaaS model for your product take time to think about how the model fits the business. Tiering is a very common model SaaS developers follow. Some tiering models have the same feature set for each tier but increase the user count or size of the product. Other tiering models actually tier the product and charge by user. We’ve come up with a few examples of the common models to consider.
Tiered (features same) - Tiered SaaS model with same features is very common as previously mentioned. This model is for a product that has a size limitation or user count limitation where the consumer needs to decide how many users will access the system or how much of the product they’ll use on a monthly basis to help them determine which tier they should subscribe to.
Tiered (features different) - Different features for each tier is another common model that fits for some organizations. A great example of this would be the various help desk products on the market. Most of the help desk products offer a basic version that comes with a small select amount of features and as the tiers increase so do the cost and feature sets.
By user - In all SaaS scenarios you can incorporate a user count multiplier. A great example of this is the Google Business Apps. They offer 3 tiered options with different features and are licensed per user per month. User count will likely be a contributing factor for most SaaS models.
Add on - Add on’s have been popular as of recent when new features get introduced. Some consumers are deterred by this strategy but businesses will introduce a new feature like a new designer or management tool and tack on an fixed nominal fee to you monthly subscription. Another common practice is offering premium support as an add on to the base subscription.
One size fits all - Other companies avoid tiered pricing models all together and use a one size fits all model. Typically on the monthly basis but will offer an annual discount for those that prepay.
Free trial - In most circumstances a free trial is offered on all SaaS products allowing the potential consumer an opportunity to try out the product and see if it solves their product, is user friendly and works for their business.
Whether you’re product should be tiered and you should have a per user charger or it is a one size fits all product, the decision takes time and should be taken seriously. For each product the model may vary for an infinite number of reasons. Once you decide on how your product should be licensed, the next step of selecting a merchant account and integrating everything together is also a fun decision. Check our blog frequently as we constantly add new topics and will be covering SaaS merchant accounts in coming weeks.