SaaS Pricing Models Explained: Tiered, Freemium, and More

SaaS pricing can make or break your business.

Pick the wrong model, and you leave money on the table. Pick the right one, and growth becomes way easier.

Let’s break down the most common SaaS pricing models, their pros and cons, and how you can handle upgrades, downgrades, and flexible pricing with FastStartup.dev.

Popular SaaS Pricing Models

Flat Rate Pricing

One price. One plan. Simple.

This is great if you have a single product with no complexity. Customers love it because they don’t have to think too much.

Example: Basecamp charges $99/month, no matter how many users you have. It works because it’s simple and appeals to teams that don’t want to count seats.

Pros:

• Easy to understand
• Predictable revenue
• Simple marketing

Cons:

• Not flexible
• Might leave money on the table if you have different customer segments

Tiered Pricing

Most SaaS companies use tiered pricing. You offer multiple plans with different features, so customers can pick what fits them best.

Example: Notion has a free plan, a personal plan, a team plan, and an enterprise plan. Each step unlocks more features.

Pros:

• Lets you serve different customer types
• Can upsell customers as they grow
• Maximizes revenue from different segments

Cons:

• More complex to manage
• Customers might struggle to pick the right plan

Usage-Based Pricing (Pay-As-You-Go)

You charge based on usage. The more the customer uses, the more they pay.

Example: AWS charges for compute power, storage, and data transfer. The more you use, the more you pay.

Pros:

• Fair pricing for customers
• Revenue scales with customer growth

Cons:

• Hard to predict revenue
• Customers might be hesitant if they don’t know their costs upfront

Freemium

Give away a basic version for free. Charge for advanced features.

Example: Slack lets you chat for free, but you pay if you want unlimited message history and integrations.

Pros:

• Huge user base potential
• Easy to attract new users
• Free users can turn into paying customers

Cons:

• You need a plan to convert free users
• Free users still cost you money in server and support costs

Hybrid Pricing

Many SaaS companies mix these models. You might have a free plan, a tiered structure, and usage-based pricing all in one.

Example: Zapier has a free plan, paid tiers, and usage-based pricing for extra tasks.

Handling Upgrades and Downgrades

Customers will change plans. Some will upgrade, some will downgrade, and some will churn. You need to make this easy.

• Self-serve upgrades: Let customers upgrade instantly from their dashboard.
• Pro-rated billing: If a customer upgrades mid-month, charge them only for what they used.
• Easy downgrades: Make downgrading simple. If you make it hard, they’ll just cancel.
• Cancellation recovery: Offer a discount or pause option when they try to cancel.

FastStartup.dev handles upgrades and downgrades for you. It integrates with Stripe and handles proration automatically, so you don’t have to worry about billing headaches.

Real-Life SaaS Pricing Strategies

• Netflix: Flat-rate pricing. Simple. Everyone pays the same (unless you share your password).
• Figma: Freemium. Free for personal use, paid for teams.
• HubSpot: Tiered pricing with a free CRM and paid add-ons.
• AWS: Usage-based pricing. You pay for what you use.

Each of these companies optimized their pricing to match their audience. Your job is to do the same.

Implementing Flexible Pricing with FastStartup.dev

If you’re building a subscription SaaS, FastStartup.dev makes pricing easy.

• Supports multiple pricing models: Flat-rate, tiered, usage-based, and freemium.
• Stripe integration: Handles payments, invoicing, and taxes automatically.
• Upgrade & downgrade logic: Customers can switch plans anytime without billing headaches.
• Discounts & trials: Offer free trials, coupon codes, and limited-time discounts.
• Customizable pricing pages: Pre-built templates so you don’t have to design from scratch.

Final Thoughts

SaaS pricing isn’t just about picking a number. It’s about finding a model that matches your customers and business goals.

Start simple. Test different models. Adjust as you learn.

With FastStartup.dev, you can implement flexible pricing fast and focus on building your SaaS—not wrestling with billing systems.