Much has been written about the various SaaS pricing models and how to choose the right strategy for your business. Each company must consider which best suits its corporate philosophy, identity, and demographics. While the choice can be intimidating, this is an important decision, as is the business model that drives it and is in turn driven by it.

The appeal of SaaS is flat-rate access versus copy and license purchases that are constantly becoming obsolete. This is a more robust and organic access lease rather than property ownership.

As a result, you need to work within idealistic constraints with your pricing system, but still take into account your demographics and the identity and attitude of the service and company you’re featuring.

With that said, let’s consider how these factors work to affect your potential decision.

Price limit:

First, you have to deal with that expected price expectation. While the prices can be high, it should be priced much lower than a traditional software model, so put an upper limit on your price range right away.

Advertising revenue deduction:

From here it depends on what you are doing with the software. First, are you using ads? If so, you must deduct the projected income from your price unit immediately. This is because if you don’t meet your revenue expectations with the pricing unit, the ads must be removed and the prices increased to match your internal price. When a model isn’t working, ads should be the first thing to go, because customers honestly don’t like them, they put up with them.

Overhead Factoring:

After this, are you freemium? If so, you need to take into account the overhead projection for your free users, calculate a difference with this overhead and advertising revenue.

Again, the ads should be the first thing to go, but if they’re the only thing offsetting your freemium overhead and you’re otherwise experiencing good conversion rates, then the ads shouldn’t be abandoned.

Multi-tier subscriptions:

If you choose the subscription route at some level, then you may need to sell more than one level account. The best way is to use a reasonable disparity of features to achieve this goal, as it will prevent the loss of freemium. You’ll probably need to use this at some point, so you might as well implement it from scratch.

Cost per unit:

Finally, it is important that some services exist in a completely different universe. Transaction interfaces for sales, resource transfers and other merchant SaaS establishments price per transaction unit or transaction return percentage.

If it looks like your service may be a merchant system, you may want to calculate your cost per unit based on the standard demographic and overhead comparison cascade.

Hopefully, you now know a little more about the dynamics of SaaS pricing models and will be able to make sound decisions on your own.