How to Raise the Prices of SaaS Services
Recently, Vercel and Gamma have raised their prices by about $5 per month, representing a 25% increase from their previous cost. Similarly, Notion actually raises its prices, as does Adobe. This is partly due to added features and the lack of alternatives, but also because certain conditions are met. Raising prices naturally leads to a decline in customers. In the short term, this decline is almost unconditional. Nevertheless, SaaS services raise their prices. Without understanding this, you're doomed to repeat foolish pricing practices. Recently, while helping with various SaaS and product projects, I've been surprised by how many people don't understand why things are done the way they are. Even when I asked why, I've seen people respond with things like, "We're cheaper than our competitors because they're doing so much." This is so obvious that I wonder if it's really necessary to tell you, but how on earth do you calculate the price? Fixed margin type (aka Cost-Plus) The simplest approach is to increase prices based on cost (cloud/labor/third-party API) + target margin. This approach borrows from a common practice in manufacturing and distribution, but it's difficult to say it's a good approach in the digital market, where value is sold without a physical counterpart. The advantage is that it's easy to calculate, giving the finance and sales teams peace of mind. The disadvantage is that it's disconnected from customer value. Customers don't care about our costs; they open their wallets for the "value of solving a problem." Therefore, fixing margins is only a minimum defense and doesn't set a price ceiling. When to use: Very early (when cost uncertainty is high), reselling structure (external API unit price transfer), B2B with strong legacy quotation practices. Note: A decrease in cost doesn't automatically lead to a price reduction. Value is an independent variable. Competition-Indexed "Our competitor's price is $30, so we're $25." This is a very common but dangerous approach. If your competitor's strategy, cost, or segment differs from yours, you'll be tied to the wrong anchor. This makes it burdensome to change your pricing policy later, and because the standard itself is highly dependent, it's more like a handshake. If someone sets prices like this, you might suspect they're a spy. When to use: When there is a clear alternative and the category battle is about 'similar specs vs cheaper'. Note: If your differentiating points (data security, localization, support SLA, ecosystem) are clear, consider premium positioning instead of follower positioning. Value-Based Type This is a classic approach: anchoring your business on the economic and emotional value your customers receive. For example, if "10 hours saved per week × $30 per employee hour = $1,200 per month," then capture a portion of that (e.g., 10-25%) in your price. Most of the methods I mentioned earlier are structured like this. How to Execute: Define core use cases → Quantify value drivers (time savings, improved conversion rates, reduced errors, regulatory risk mitigation, etc.) → Conduct segment-specific Willingness-to-Pay (WTP) research (Van Westendorf, Gabor-Granger, Conjoint, etc.) → Differentiate pricing with Good-Better-Best packages. Note: “Value delivery” storytelling and supporting evidence (case studies, ROI calculators ) are essential. Bundling/Packaging Strategy Packaging, rather than price itself, determines ARPU and NRR. While it's similar to the concept of DLC in games, using it requires several additional, more stringent requirements. If you unpreparedly tamper with packaging or bundling, you'll run into issues with fairness and valuation compared to other features.
- Haebom

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