How to price your first SaaS product
George · 4 min read
The short answer: start from the value your product creates and what people already pay for the alternatives, offer two or three simple plans, pick a price that feels slightly too high, and launch. Your first price is a starting point: talk to buyers and non-buyers and adjust within a few months.
Few decisions cause first-time founders more anxiety than pricing. Too high and nobody pays. Too low and you are working for nothing. The good news is that your first price is not permanent. It is a starting point you will learn from and change.
Here is a practical way to choose one without endless research.
Start from the value, not your costs
Your hosting and tools probably cost a few dollars per customer. That is your floor, not your price. Customers pay based on the problem you solve, not on your server bill.
Ask what the problem costs your customer today. If your tool saves a freelancer two hours of admin a month, and their time is worth fifty dollars an hour, the problem costs them about a hundred dollars a month. Charging a fraction of that is easy to justify. Charging more than that needs a very good reason.
Look at what people already pay
Find the alternatives your customers use today: competitors, spreadsheets, freelancers, or doing it by hand. Note their prices and what each includes.
You do not need to match anyone. Pricing much lower than established tools can signal that your product is less serious. Pricing in the same range while offering a clear difference, like a simpler setup or a specific niche, is often a better position for a small product.
Keep the plans simple
For a first product, two or three plans are plenty:
- A free plan or trial, so people can see the value before paying.
- One main paid plan that most customers should choose.
- Optionally, a higher plan for heavier use or teams.
Base the difference between plans on something that grows with value, such as the number of projects, users, or invoices, rather than on many small feature switches. Customers should be able to tell which plan is for them in a few seconds.
Free trial or free plan?
A free trial gives full access for a limited time, such as 7 or 14 days. It works well when the value shows up quickly. A free plan gives limited access forever. It works when free users spread the word or grow into paying customers over time.
Free plans cost support time and server resources, and can attract people who will never pay. If you are unsure, start with a trial; it is easier to add a free plan later than to take one away.
Monthly, yearly, or one-time?
Monthly subscriptions are the default for software that people use continuously. Offering a yearly plan with a discount, often around two months free, gives committed customers a reason to stay and gives you cash upfront.
One-time payments can suit small tools, templates, or products used rarely. They are simple to explain, but you need a steady stream of new buyers because there is no recurring revenue.
Pick a number and test it
If you are still unsure, choose a price that feels slightly too high to you. Founders tend to underprice because they know every flaw in their product. Then watch what happens:
- If everyone buys without a question, your price is probably low.
- If many people try the product, love it, and still do not buy, ask why. Price might be the reason, or the value might not be clear yet.
- If nobody gets far enough to see the price, the problem is earlier in your funnel, not the price.
Talk to a few customers who paid and a few who did not. Their reasons are more useful than any pricing calculator.
Change prices carefully
Raising prices is normal as your product improves. A common, fair approach is to keep existing customers on their current price for a while and apply the new price to new signups. Announce changes in advance and explain what has improved.
Show the price clearly
Hidden pricing makes small products look suspicious. Put a simple pricing section on your landing page: what each plan costs, what it includes, and whether there is a trial. Answer the obvious questions, like cancellation and refunds, next to the price.
A starting checklist
- Estimate what the problem costs your customer today.
- List what the alternatives cost and include.
- Create two or three simple plans based on a value metric.
- Choose a trial or a free plan, not both at first.
- Pick a price that feels slightly too high, and launch.
- Talk to buyers and non-buyers, and adjust within a few months.
Your first price will probably be wrong, and that is fine. The goal is to start learning from real customers as soon as possible. Launching with a clear price is how you find out.