How to turn your pricing strategy into a growth lever ?

In the SaaS world, pricing is often an undervalued and underutilized lever, especially in a contracting market. Yet, this parameter is a true catalyst for growth when it is designed in coherence with market behavior.

Let's learn from the experiences of Gilles Bertaux (CEO of Livestorm) and Lucas Bédout (CEO of Hyperline) to understand the challenges related to pricing and implement the right strategy.

Fundamentals of Pricing Strategy

The main pricing models

To better understand the multiplicity of models and pricing strategies in SaaS, Hyperline experts have built a pricing explorer based on over 1,000 models. In summary, we observe 3 main categories in the pricing structure of SaaS:

• Platform access: Monthly subscription, often in tens or hundreds of euros, ideal when targeting "price-sensitive" consumers.
• Licenses: A price set based on a variable (number of users or projects for example). This is the model often adopted by collaboration tools like Figma, Notion, Linear, or Canva.
• Usage-based pricing: The price is set according to a metric that reveals the value customers have for the product. For example, the volume of contacts in a CRM or in a marketing automation tool. 

To limit risks and be part of a growth dynamic, more and more companies are choosing a hybrid pricing model.

The hybrid model: the recipe chosen by most companies 

SaaS companies often opt for a pricing model based on platform access or licensing to secure a steady revenue stream. To this, they add usage-based pricing to incentivize upsells and foster organic growth.

However, relying only on usage-based pricing lacks predictability and fails to satisfy investors, financiers, or entrepreneurs who require visibility. This can directly impact a company's valuation and erode the primary advantage of the SaaS model: recurring and predictable cash flows.

As Lucas Bédout aptly put it, "I price based on what the customer buys at that moment, it's almost like e-commerce or retail where you buy what you consume.”

How to arbitrate between the different models?

License-based pricing is commonly used for collaboration tools. The goal is to encourage businesses to integrate the software into their workflows and foster a product dependency.

For other tools, license-based pricing is not as virtuous. It's more appropriate to consider the company's maturity level and long-term performance objectives when selecting the right pricing model.

In the early stages of a company, usage-based pricing is often adopted, and this typically continues until the company reaches a certain level of maturity (e.g., Series B funding).

Gilles Bertaux has identified three key challenges at this stage with Livestorm :

1. The marketing team struggles to reach all customers.
2. It becomes increasingly difficult to differentiate the product in the market.
3. High-value customers compensate for the losses incurred by less profitable customers.

When sales teams can no longer individually contact all customers, it becomes necessary to implement mechanisms to incentivize customers to purchase additional features (upsells). The most effective approach is to integrate additional features into the product to gradually increase prices without proactively soliciting customers.

Of course, by increasing prices, companies risk losing a portion of their customer base. This is a risk that must be taken to gain a competitive edge.

Visit our blog to learn how Livestorm successfully implemented this pricing change.

Focus on add-ons 

Can add-ons be used as growth levers?

Add-ons are often supplementary features sold independently of the SaaS. While not essential for using the product, they allow users to fully exploit its potential and represent an upselling opportunity.

As Lucas pointed out, add-ons should not overshadow the sale of the main product. To establish an effective add-on strategy, several prerequisites must be met:

• the core functionality of the SaaS provides sufficient value ;
• add-ons are not essential for using the product ;
• add-ons are subject to constant evaluation: should this feature remain an add-on, or should it be integrated into the core product?

How to choose which features to develop? The role of competition

To make informed decisions about which features to offer as add-ons, it's essential to analyze your market and competition. Are you in a price war or a quality/feature war?

• If price is the primary differentiator in your market, it's probably best to integrate add-ons directly into your product to stand out from competitors (assuming similar product scopes).
  
  
• On the other hand, if quality, brand, or features are the key differentiators, it's likely better to develop features alongside your main offering and propose specific access prices through options or differentiated plans.

Professional Services: How do they work?

What about professional services? How do they impact your pricing strategy? It all depends on the needs induced by your product.

For example, Hyperline's solution requires implementation. The platform therefore offers several solutions to the customer:

• A free guide that allows the customer to be autonomous in the implementation.
• A configuration solution by Hyperline experts, billed by the hour.

Ideally, these set-up fees should be contracted from the beginning of the implementation to enhance credibility.

On the Livestorm side, implementation is done autonomously by the customer. The platform has therefore developed other professional services:

• training (including as an add-on);
• integration and customization options;
• shadowing, an expert who accompanies clients during important events.

Professional services are therefore also real opportunities to explore to develop your pricing strategy.

A well-thought-out pricing strategy can be a powerful growth lever for a SaaS company. The key is to stay aligned with customer needs and market dynamics. The challenge is to find a balance between revenue predictability, customer satisfaction, and flexibility to encourage upselling and competitiveness.