Freemium Model
Use it to:
Gain market share. Let more customers use your product with essential features and load up premium features in paid plans.Test your product in a new market, by analysing the user behavior
Use it if:
Your product has the seeds of in-built virality, where a free tier is just what you need for exponential growth.
Ex. - Evernote’s Basic plan costs zilch, still adds massive value. And for people who go on to become power users, they offer two (Plus and Premium) paid plans to serve their growing needs.
Pay As You Go Model
Use it to:
Make your customers pay for exactly what they use - value based pricing.Have flexibility in your pricing - adjust usage offers according to demand and competition.
Use it if:
You can pin your product’s value down to exact figures, delivered in terms of storage capacity or a similar metric.
Ex. - Postmark’s pricing starts at $1.50 per thousand emails sent, and goes as low as $0.25 per thousand emails at higher volumes.
Fixed Pricing Model
Use it to:
Generate consistent revenue from customers, which in turn makes sales forecasting simplerCater to risk averse consumers who don't like surprises
Use it if:
You have a product that can be bundled for different customer personas, where you can align your knowledge with different fixed pricing tiers.
Ex. - Hubspot has three different pricing tiers for inbound beginners ($200/month), professional marketers ($800/month), and big teams ($2,400/month).
Pay Per User Model
Use it to:
Offer the customers a predictable cost that scales with their businessHave the customer moved up the tier automatically - the upsell takes care of itself
Use it if:
There is a clear way for you to scale with the number of users.
Ex. - Help Scout limits its free plan for 3 users, after which it starts billing them at $20/user/month.
Feature Based Model
Use it to:
Set a base price with clearly differentiated pricing tiers based on features.Identify productivity or value based features that customers would be willing to pay for and upsell them into higher tiers or as addons.
Use it if:
You can clearly identify the base features that must be a part of each plan and the specific features for which customers will be willing to pay up.
Ex. - Many Salesforce customers purchase their enterprise plan specifically to get around limitations in API in lower tiers.
You get your first $50K in invoices for FREE. Yes. No catches. No lock-ins. Nothing.
Give it a spin