How SaaS Pricing Evolves Across Different Company Stages

SaaS pricing isn’t static – it’s a living strategy that grows with your company. In this article we dive into a playbook for pricing across different stages of company growth, inspired by Geoffrey Moore’s Crossing the Chasm. Each growth stage demands its own pricing approach, and getting it right can mean the difference between stagnation and explosive growth. From your first paying customers to enterprise domination, here’s how successful SaaS companies level up their pricing game to maximize growth and profitability at every turn.

1. The Startup Stage: Finding Product-Market Fit

The startup stage is the foundation of any SaaS company’s journey. During this phase, the primary focus is on building a product that meets a specific market need and ensuring that early users validate its core functionality. Success at this stage is measured by acquiring a base of early adopters who can provide feedback and help refine the product for broader appeal.

At this stage, startups face significant uncertainty. Early customers are often innovators and tech enthusiasts willing to try new solutions, even if the product is incomplete or buggy. Pricing in this stage focusses on:

• Experimentation: Startups test various pricing models, including free trials, freemium options, and introductory offers, to understand customer preferences and remove barriers to adoption.
• De-risking customers: Pricing focuses on getting product in the hands of customers and removing any risk from adoption or trials.

Key Objective: Build a base of early adopters and gather feedback to refine both the product and pricing structure.

Example:Dropbox initially used a freemium model to attract individual users. Users could sign up for free and get 2GB of storage, which could be expanded by referring friends. Each successful referral earned both the referrer and the new user additional storage, up to a limit. This allows users to experiment with the tool before committing.

2. The Growth Stage: The Chasm

The growth stage marks the transition from serving early adopters to targeting the early majority. This phase is often referred to as “crossing the chasm,” a concept popularized by Geoffrey Moore, which highlights the challenge of bridging the gap between the enthusiastic early market and the more pragmatic mainstream market. Companies at this stage must demonstrate that their product is not only innovative but also reliable and capable of delivering tangible value to a broader audience.

During this stage, SaaS businesses often expand their teams, invest in marketing, and refine their go-to-market strategies. The focus shifts from experimentation to execution, as companies must scale operations to meet increasing demand. Building trust with mainstream customers is paramount, as they tend to seek social proof, industry references, and assurances of long-term stability. Pricing in this stage focusses on:

• Segmentation: Companies recognize that different customers have varying needs and willingness to pay. Tiered pricing models emerge to address these differences.
• Value Alignment: Pricing starts to align with the value customers perceive, often measured in metrics such as usage, number of seats, or specific features.
• Scaling Operations: As the customer base grows, the company refines its pricing strategy to optimize customer acquisition costs and lifetime value.

This stage requires a balance between attracting a broader audience and maintaining credibility within the early market. Pricing becomes a tool to showcase the product’s scalability and value to mainstream customers.

Key Objective: Establish credibility with mainstream customers and create sustainable pricing that reflects the value delivered.

Examples: Nosto is a SaaS-based personalization platform designed for e-commerce businesses. It specializes in creating personalized shopping experiences for customers by leveraging machine learning and AI technologies. In its early stages, Nosto operated on a performance-based pricing model, charging clients a commission on sales directly attributed to its product recommendations. While this model drove adoption due to its “risk-free” nature for clients, it introduced significant revenue unpredictability for Nosto. As the company expanded its offerings, Nosto introduced modular pricing options, allowing customers to build their own plans by selecting the specific tools and services they needed. This flexibility ensured that clients paid for value-aligned features, enhancing satisfaction and retention​.

3. The Scaling Stage: Building Market Leadership

The scaling stage is where a SaaS company seeks to solidify its position as a market leader. By this point, the product has proven its value, and the company has achieved significant traction in the market. The focus now shifts to expanding market share, optimizing profitability, and differentiating from competitors. This stage often involves entering new markets, catering to diverse customer segments, and increasing operational efficiency.

Market leadership requires not only a compelling product but also strong brand recognition, robust customer support, and a scalable infrastructure. Companies invest heavily in sales and marketing to maintain momentum and fend off competitors. Additionally, this stage involves deepening relationships with existing customers through upselling and cross-selling, as well as identifying opportunities for strategic partnerships and integrations. Pricing in this stage focuses on:

• Sales Velocity: Pricing strategies adapt such that the sales team can sell faster as the market has now started to come to the company and CAC reduces.
• Strategic Bundling: Bundles and packages are created to increase average revenue per user (ARPU) by offering complementary features or services.
• Enterprise Solutions: Customized pricing agreements and solutions for large-scale customers become prominent, emphasizing high-touch sales and support.

This stage focuses on maximizing revenue opportunities, optimizing profit margins, and reinforcing a leadership position in the market.

Key Objective: Solidify market leadership by balancing competitive pricing with margin optimization.

Example: Zoom’s journey illustrates the challenges of managing pricing complexity in a mature SaaS company. Between 2014 and 2020, Zoom rapidly expanded its product portfolio, adding features like Zoom Rooms, Zoom Phone, and multiple add-on packages. This growth introduced significant pricing complexity, with a large number of SKUs and an intricate array of add-ons that overwhelmed customers and strained operational efficiency.

To address these issues, Zoom launched the “Zoom One” bundle, consolidating core functionalities and reducing the number of standalone add-ons. This simplification streamlined the buying process, making it easier for customers to understand their options and calculate costs. Zoom complemented this initiative with data-driven insights from conjoint studies and iterative testing, ensuring that its new pricing structure resonated with customer needs. The introduction of Zoom One drove a 27% year-over-year increase in enterprise customers, reinforcing the value of simplifying pricing for customer acquisition and retention​.

4. The Maturity Stage: Defending the Kingdom

The maturity stage represents a period of sustained growth and stability for a SaaS company. At this stage, the company has established itself as a trusted leader in the market, with a loyal customer base and predictable revenue streams. However, this stability comes with its own set of challenges, including market saturation, increased competition, and evolving customer expectations.

To stay competitive, companies must continuously innovate while protecting their core offerings. Customer retention becomes a top priority, as retaining existing customers is more cost-effective than acquiring new ones. Additionally, companies explore ways to expand their market reach, such as entering new geographic regions or developing adjacent products and services. Pricing strategies become increasingly sophisticated, reflecting the need to balance customer satisfaction with profitability. Pricing in this stage focuses on:

• Retention: Customer retention becomes a priority, with pricing models designed to encourage long-term commitments, such as annual billing discounts.
• Flexibility: Companies offer a range of subscription options to cater to diverse customer preferences, including hybrid models and value-add services.
• Premium Features: Mature companies often introduce higher-priced tiers with exclusive features to cater to top-tier customers.
• Global Adaptation: Pricing may be localized to account for regional differences in purchasing power and competition.

The focus shifts from acquiring new customers to deepening relationships with existing ones while maintaining profitability through strategic innovations.

Key Objective: Retain existing customers while staying ahead of market trends through innovation and pricing adjustments.

Examples: DocuSign’s pricing journey exemplifies how a SaaS company can adapt its monetization strategy to maintain market leadership amidst commoditization. Initially, DocuSign utilized a usage-based pricing model where customers were charged based on the volume of e-signatures processed. This approach aligned well with the product’s value proposition in the early stages, as each signature translated directly into operational savings and revenue generation for customers, particularly in industries like finance and real estate​. As the market matured, the e-signature technology became commoditized, with competitors like PandaDoc and HelloSign offering similar capabilities at lower price points. This commoditization presented two significant challenges for DocuSign:

1. Market Saturation: With many providers offering basic e-signature functionality, the unique value proposition diminished, reducing customers’ willingness to pay premium prices.
2. Revenue Plateau: Many customers had fully integrated e-signatures into their workflows, reaching usage limits where additional volume-based upselling was no longer feasible​​.

Recognizing these challenges, DocuSign shifted its strategy to a feature-based pricing model. Instead of charging by envelope volume, new packages emphasized advanced features such as automated workflows, document analysis, and secure storage. This move aligned pricing with value-added capabilities, ensuring customers continued to see DocuSign as a premium solution.

DocuSign employed a three-pronged strategy to transition effectively:

1. Dual Pricing Metrics: Maintaining envelope-based tiers alongside new feature-based packages allowed DocuSign to test market response without disrupting existing revenue streams.
2. Market Testing: By gradually introducing unlimited envelopes paired with feature-focused tiers, DocuSign gauged customer acceptance and iterated its pricing structure.
3. Controlled Price Adjustments: Volume discounts and flat-rate site licenses encouraged broader adoption while balancing revenue retention​

This transition allowed for continued revenue growth and greater retention in this stage of its growth.

Key Considerations Across All Stages

While pricing evolves with a company’s lifecycle, certain principles remain constant:

1. Customer Feedback: Incorporate insights from customers to ensure pricing aligns with perceived value.
2. Clarity About Goals: As companies grow, it is important to constantly understand what the current company goals are and whether the pricing needs to be updated to match the current goals. Older pricing may not match new goals.
3. Data-Driven Decisions: Leverage analytics to fine-tune pricing and forecast customer behavior.

Pricing strategy isn’t just about revenue – it’s a crucial lever for growth that must evolve with a company’s growth. The most successful SaaS companies treat pricing as a dynamic tool, continuously adapting it to meet market demands and capture value.

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