Startup Funding Espresso -- Per Seat vs per Use Pricing

Per Seat vs per Use Pricing

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

Many SaaS businesses use either per-seat or per-use pricing.

Per seat pricing offers a fixed price for the customer making it easy to budget.

It also provides a consistent revenue stream for the provider especially when applied with annual contracts.

Per-use pricing works best for the provider whose cost scales with the product usage.

Usage pricing is often used in a ‘land and expand’ strategy in which customers can start with a low price but limited use.

As the customer uses more of the product, the price increases. 

It also works well when customers don’t use the product consistently.

This type of customer will consider the product to be too expensive if paying per seat.

Combining the per-seat and per usage price could create a new pricing model.

In this case, the provider could charge a base price for the platform and then charge a variable amount based on the usage.

Consider combining pricing strategies into new revenue models for your business.

 

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

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