The evolution of SaaS pricing — and what’s next
From seat-based models to smart,
value-driven monetization
When SaaS models began to scale in the early 2010s, pricing was simple: a fixed monthly fee per user or “seat.” It was easy to understand, easy to sell, and easy to operationalize.
But there was a problem: this model didn’t reflect how customers actually used — or valued — the product. Some customers paid for unused seats. Others extracted huge value from the platform without paying proportionally more. Over time, this disconnects between price and value became impossible to ignore.
Freemium and tiered pricing become the standard
To reach broader segments, SaaS companies began introducing tiered pricing — structured packages with different levels of functionality and price points.
Freemium models lowered the barrier to entry, helping products spread quickly within organizations. The logic was simple: attract users with a free version, then monetize those who grow and need more.
This model made sense. It allowed businesses to scale adoption while capturing more value from heavier users. But it also introduced new challenges. Many customers got stuck between tiers: the jump to the next package felt too expensive, even though they needed more functionality.
Usage-based pricing — more fair and scalable
In the late 2010s and early 2020s, usage-based pricing emerged as a powerful alternative. Instead of charging per user, pricing was tied to how much customers actually used the product — number of API calls, transactions, documents signed, data processed, or similar metrics.
This model aligns price with value more directly. Customers pay more as they get more value. It also creates a natural upsell motion: usage grows with adoption, and revenue follows.
But usage-based pricing comes with operational complexity. You need reliable metering, transparent billing, and the ability to handle fluctuations. Customers need clarity on what their bill will look like. Finance teams need predictability.
Hybrid models take over
Today, many of the most successful SaaS companies use hybrid models — a combination of subscription and usage. A stable base fee provides predictable revenue, while usage layers on top enable scalable growth.
Snowflake, Twilio, HubSpot, and others have shown that hybrid pricing can deliver both financial stability and revenue elasticity. It allows companies to grow with their customers rather than relying on blunt seat expansion alone.
AI and outcome-based pricing
One of the biggest shifts happening right now is the monetization of intelligence. As more SaaS products integrate AI — predictive analytics, automation, insights, copilots — a new layer of value emerges.
That value can be priced separately. AI features are often positioned as premium add-ons or entirely new pricing tiers. Some companies are even experimenting with outcome-based pricing: charging based on the actual impact delivered, whether it’s time saved, productivity gains, or revenue generated.
Outcome-based pricing isn’t easy. It requires clear value metrics, reliable measurement, and trust. But it’s one of the clearest signs of where SaaS pricing is heading: closer alignment between what customers get and what they pay.
Dynamic pricing and personalization
As pricing capabilities mature, more companies are introducing dynamic pricing. Instead of static price lists, prices or offers are adjusted in real time based on segment, behavior, usage, or deal context.
At the same time, price adjustments are becoming routine. What used to be controversial annual increases has become a natural part of the SaaS model. Most companies now run regular, smaller price increases to offset inflation, rising infrastructure costs, and growing product value.
This creates pricing models that are more adaptive, more flexible, and more data-driven.
SaaS inflation: predictable price increases become the norm
A related — and fast-growing — phenomenon is SaaS inflation. Over the past few years, many software companies have introduced systematic annual price increases, often in the range of 5–12 % per year.
This is not primarily driven by opportunism, but by real cost and value shifts:
Rising costs for cloud infrastructure, AI compute, cybersecurity, and compliance
Increased product sophistication, with more features and higher perceived value
Market normalization: customers now expect incremental price adjustments each year
These regular adjustments compound over time. A 7 % annual increase leads to nearly 40 % higher list prices after five years. For many vendors, this has become one of the most reliable levers for margin expansion without needing disruptive pricing overhauls.
However, SaaS inflation also requires clear communication. Customers will accept annual increases if they are linked to tangible improvements or market realities — but not if they appear arbitrary. The most successful companies combine transparent messaging with value storytelling, ensuring customers understand what they’re paying for.
Modularity and à la carte add-ons
Another major shift is toward modular pricing. Instead of forcing customers into pre-packaged bundles, companies let them pick and choose add-ons: AI capabilities, integrations, extra storage, analytics modules, premium support, data residency, and more.
This modularity does two things. It gives customers a sense of control and fairness. And it allows SaaS companies to increase revenue per customer without blunt price hikes.
For many, this has become the preferred way to differentiate pricing and capture more value from power users.
What this means for pricing leaders
These shifts are not just tactical — they reshape how pricing needs to be managed. For pricing leaders, it means:
Pricing must be value-driven. Cost-plus or “simple” seat pricing won’t cut it anymore.
Models are more complex — and more strategic. Hybrid, modular, and usage-based structures require stronger pricing governance, better tooling, and clear communication.
Pricing is no longer static. It must adapt to customer behavior, product evolution, and market conditions.
A look ahead — emerging models and experiments
SaaS pricing has already changed dramatically. But some of the most interesting models are only starting to take shape. Here are some early signals of where pricing might be heading:
1. Pricing per “value event”
Instead of seats or transactions, pricing could be tied to meaningful outcomes or “moments of value.” For example: a signed deal, an automated workflow, a revenue-generating transaction, a prevented security incident.
This is a more granular, value-anchored approach — harder to implement, but much closer to how customers perceive actual benefit.
2. Predictive and adaptive pricing
With better data and AI, pricing could become self-adjusting — adapting to a customer’s behavior, forecasted usage, or predicted lifetime value. Pricing becomes less about fixed plans and more about adaptive contracts.
3. Cooperative / shared upside models
Some vendors are exploring shared upside pricing, where the customer pays a base fee plus a percentage of the measurable gains achieved with the product. This blurs the line between SaaS pricing and performance-based contracts.
4. Network or ecosystem-based pricing
In platform and integration-heavy environments, pricing might shift to ecosystem participation rather than individual usage. Think pricing based on number of connected systems, data flows, or ecosystem activity rather than direct seats.
5. Pricing as a growth signal
Pricing strategy itself may become a go-to-market differentiator. Transparent, intelligent, fair pricing can signal trust and product maturity — while rigid, outdated models can become a liability.
SaaS pricing is no longer an afterthought
Ten years ago, SaaS pricing could be summarized in a spreadsheet with three tiers. Today, it’s an integrated part of product strategy, customer success, and revenue growth.
As AI accelerates and competition intensifies, pricing models will continue to fragment, adapt, and personalize. The companies that win will be those who can:
Align price tightly with value
Build flexibility into their models
Use pricing as a strategic growth lever, not just a billing mechanism.
SaaS pricing is entering its most dynamic phase yet — and that makes it one of the most exciting spaces in modern B2B.
Author: "Mr Pricing", Tobias Murray, CEO and Co-founder at VAERG vaerg.com
About the author. Tobias Murray helps B2B companies turn pricing into a scalable growth engine. With long-standing experience across industries, he specializes in structured, data-driven pricing strategies that consistently deliver 10–25% EBITDA uplift. As CEO of VAERG, he and his team transform fragmented pricing into a systematic, value-generating discipline.