The first pricing decision can make or break your product.
It's not just about the numbers; it's about perception, value, and growth potential.
But how to find the sweet spot?
That's what I wondered for the last 10 days. To me, settling on a perfect pricing strategy seems like an impossible challenge.
Everyone I talked with said that pricing is an iteration over time. They said to choose based on your gut instinct—something you'd pay for yourself. And I agree. I should be open to experiments and feedback.
Yet, the idea of starting with the wrong pricing model got me stuck.
Why is pricing my 1st SaaS so hard?
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Striking the perfect pricing strategy feels like walking a tightrope.
It's a guesswork between covering costs and competing in a crowded market.
Recurring? Customers hate the idea of getting another subscription. One-shot? Lifetime deals help collect money only during the early stages, while one-time purchases are ideal for info products.
As such, there's not the perfect pricing model, but the one that sucks less.
And this is what I've learned so far...
Pay once
I would love to allow people to pay once and use the product forever. This would help create a runway and encourage investment in the product. The bargain offer would also attract early adopters.
The problem with one-time purchases or LTDs is running costs. AI-powered platforms have usage-based expenses. If customers actively use the product, it's only a matter of time before the business runs out of money. Hence, long-term is not sustainable.
Flat fees
Flat fees are the most predictable business model: they cover running costs, and pricing can rise over time based on features or usage. Also, every maker would love to earn recurring revenues.
The problem with monthly subscriptions is that customers hate them (let's be honest—we have too many subscriptions). Reaching decent monthly revenue will take a while because earnings are not guaranteed upfront. And it requires continuous updates to justify ongoing costs, which might increase churn if users don't perceive enough value over time.
Credit system
Greg Isenberg talked about pay-per-usage as the future of SaaS. It is the most fair, as people pay only for what they use effectively. A credits/top-ups system might seal the deal: customers only buy when they run out of credits.
The problem with pay-per-usage is that it is unpredictable for both the maker and the customer. No one knows earnings or expenses beforehand. Plus, I'll need to send constant reminders to customers to use the platform, or revenue will drop to zero.
A mix of them
To a degree, yearly passes are a mix of one-time purchases and recurring revenues. Customers pay and commit only for a limited time.
The problem with yearly passes is their high upfront cost, as people might be skeptical about investing so much early on. A free trial would lower the barrier and seal the deal. I'll also need to deliver a lot of value over the year so people repurchase it, and those who don't will drop.
Alright. As you can see, I have yet to settle down on anything, and I'm still torn between those options.
It's not about leaving money on the table but getting it wrong.
Speaking of which, here's a tip from Daniel Vassallo I saved a while back. It's a great rule of thumb for determining how much to charge early on.
Now, I'd love to know more from you.
What's your experience in pricing your product, if any?
How would you tackle this challenge?
Have a great weekend,
Mattia
PS: this is what my Twitter friends said about this topic.
