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Software as a Service (SaaS) is an increasingly popular model for companies to attract customers to their platforms. Instead of downloading a single application, customers are typically able to access a suite of platform tools on the internet. One crucial piece of this model that companies often do not put enough thought into is the pricing strategy. The path to profitability is more complex in the SaaS world and companies need to have a mature and well-designed pricing strategy if they want to beat the competition and turn a profit while doing it.
Understanding Costs
Your platform costs money to build, maintain, and run. That might be obvious, but what’s less obvious is understanding those costs at a fine granularity. In order to start developing a comprehensive pricing strategy, you’ll first need to fully understand what costs go into your platform and how customers may impact those costs. Let’s look at some common costs and explore how your customer volume may impact them.
Storage Costs
Your platform likely requires data storage, and that storage costs money whether you’re hosting your own database servers or if you’re using a cloud provider like AWS or GCP. If you’re running your own server then you’re paying for hardware, software, and likely fees for wherever your server…
