Pricing your SaaS product

Patrick Campbell, CEO of ProfitWell, argues that pricing is an ongoing strategic lever rather than a one-time number, and that early on the exact price matters far less than the value metric and the customer segments. He explains that charging by a value metric (or a good proxy for it) lets revenue grow with customer usage and reduces churn, compared with flat monthly fees or simple feature tiers. He recommends quantified customer segments validated through research, then iterative experimentation each quarter, prioritized from foundational choices to growth accelerators. The post closes with rapid-fire benchmarks on localization, freemium, discounting, and design. It matters because many SaaS teams delay pricing for years and then optimize the wrong variables.

01Key takeaways

• Get the value metric right before fine-tuning the exact price; a good metric often matters more than anything else.
• Prefer usage- or value-based pricing over flat fees, since revenue then grows with customers and churn drops.
• If true value is hard to measure, build a short list of proxy metrics and test them with customers and prospects.
• Turn persona guesses into quantified segments and validate the riskiest assumptions with research before committing.
• Experiment with pricing or packaging every quarter, starting with foundational and core decisions before optimizations.
• Avoid discounts above roughly 20%, since deep discounts correlate with higher churn; use whole-dollar offers over percentages.

02Key sections

Pricing is more than the price

Price is the exchange rate on the value a company creates, and it is shaped by segment, positioning, packaging, and the price itself. Changes across these areas are all part of monetization.

Choosing a value metric

A value metric is what the customer is charged for, such as seats, contacts, or usage. Metrics that scale with delivered value tie revenue to growth and lower churn compared with flat tiers.

Finding a proxy metric

When the true value is hard to measure, teams should list candidate proxies, test them with customers, and pick the one that grows with customer size and encourages retention. HubSpot's contact-based pricing is the example.

Quantified customer segments

Personas should be turned into spreadsheets with profiles, features, willingness to pay, LTV, and CAC, then validated with research. Hypotheses about segments are often wrong and need testing.

Experimentation and priorities

Monetization is never finished, so teams should experiment regularly, working through foundational items, then core, optimization, and growth accelerators. Freemium is presented as a scalpel that works best once conversion is well understood.

03From the post

“If you’re not a paid subscriber, here’s what you missed this month: 1. Moving from IC product manager to manager of product managers 2. Top 5 most interesting things about Booking.com's early growth strategy 3. The most important bottom-up SaaS metrics to track (and how to best visualize them) Q: I'm building a SaaS product and don't know where to start when pricing it. How should I approach my pricing strategy? When this question came in, I took to Twitter to find the smartest person in the world on SaaS pricing… Many suggestions came though but one name came up again and again: @Patticus, aka Patrick Campbell. I cold DM’d Patrick and asked him if he’d be up for writing a guest post. He instantly agreed 🙌🙌🙌 For those that don’t know Patrick, he is CEO of ProfitWell, and generally regarded guru on anything SaaS. Unrelated to this post, I started using ProfitWell a couple of months back to track my newsletter metrics, and the amount of insight you get into your subscription business is unreal. AND IT’S FREE. If…”

04Frameworks mentioned

Summary and takeaways written by PM Atlas; quotes are short excerpts. © the original author.