In flat rate pricing, the product is offered with a set of features at a predetermined price. There are no pricing options or features to choose from. The method is basically based on the “one size fits all” pricing strategy and you charge your customers the same amount monthly/annually regardless of how many users or their usage is.
Example: Basecamp is a real-time communication tool that helps teams stay on the same page. Their core value is simplicity and inorder to synchronize with their values they’ve incorporated a flat-rate pricing for their product, which is thereby easier to understand and doesn’t confuse your customer by giving too many options.
Advantages of a flat rate pricing:
- Simple & easy to comprehend.
- Forecasting revenue is far more easier and accurate as there’s no complication or varying price points to account for.
- Helps you communicate and sell easily and focus your marketing and sales on a single, clearly-defined pricing offer.
- For a new and lean SaaS Product, following the flat price model might help gain customers faster thanks to a simple pricing structure which might cut down the decision making time.
Disadvantages of flat-rate pricing:
- Ironically, the one size fits all strategy won’t work for all customers. Appealing to businesses that require custom plans is impossible which discourages them from considering your product.
- By incorporating flat rate pricing you don’t give your customers any choice which might make them feel crippled when making a decision to buy your product. Flat rate pricing might signal a “take it or leave it” approach denying that psychological satisfaction.
- As there is no option to upgrade plans, you completely lose out on any upselling opportunities.
- If you’re scaling, acquiring users from new markets will be difficult as you’re pricing is optimized for a specific niche in the market.