The SaaS ecosystem continues to grow at an impressive rate; and with it, the stakes for SaaS founders and builders to price their products effectively is rising too.
As a SaaS business, your pricing strategy is one of most important (and often underrated) factors to consider. It's literally the fastest way to increase or decrease your revenue, so it's worth giving some thought.
In this article, I'll walk through a Causal-built Saas Pricing Model Template that's intended to cover the basics of a typical subscription-based revenue business. Of course, there are many variations that could be made that will be more specific to your business--but this covers the basics, and is designed to help you settle on an average price point that makes good financial sense.
You can play around with the SaaS pricing calculator variables until you land on a result you're happy with--and since the calculator is embedded inside Notion, if you're already using Notion to plan your SaaS business (say, for project management, content, marketing and documentation), then you can directly reference the pricing model without ever leaving Notion :)
This template and calculator include 3 sections of inputs:
Growth & Churn Rates
Price & Paid Conversions
Current Data
The resulting charts produced help you better understand:
Here's a little more about each section and how to make the correct inputs; along with how to read the resulting charts.
Traffic Growth Rate
Input the monthly rate of traffic growth you anticipate. SaaS businesses that are just starting out will have a higher traffic growth rate than SaaS businesses that have been around for awhile and have hit product/market fit. This will also depend, in part, on how heavily you are investing in SEO and other marketing activities.
Free Signups Rate
The signups rate is the percentage of website visitors that become signups (aka people who input their email address to start using your SaaS product). This particular input is for free signups, which can be signing up to a free trial, free plan or mailing list.
Paying Users Churn Rate
The member churn rate is the percentage of paying members that cancel their subscription each month. SaaS businesses with a higher customer lifetime value (CLV) will have a lower member churn rate than SaaS businesses with a lower CLV.
Costs Growth Rate
This is a percentage value to help you anticipate rises in costs over time. That might be costs associated with usage and storage; hiring help; or new software tools needed to help run the business.
Subscription Price (Avg. Price)
The subscription price is the monthly price you charge for access to your SaaS product. If you have multiple pricing tiers, input the average price paid by customers.
Paid Conversion Rate
The paid conversion rate is the percentage of signups that become paying members. While you may want to make your own model more complex by adding various stages in the acquisition funnel, this input is a straightforward percentage of new paid signups / website visitors (per month).
Current Traffic
Input the current monthly traffic to your website.
Current Signups
Input the current number of signups (aka people who input their email address to start using your SaaS product).
Current Paying Members
Input the current number of paying members.
Let's now take a look at the resulting charts from your inputs.
New signups and new paying members over time
This line chart plots the number of new signups and new paying members you'll have each month, based on the inputs you provided about traffic growth, signups rate, paid conversion rate and member churn rate.
The blue line represents new free signups and the orange line represents new paying members.
Monthly website traffic
This line chart plots the monthly website traffic over time.
As you can see in the example above, the SaaS business has a traffic growth rate that begins at 15% per month, and slowly decays over time. Even still, the monthly website traffic follows a strong upwards trend.
Note: If you are investing heavily in SEO, you can probably count on a strong boost in traffic 6-9 months after your initial content investments.
Monthly Recurring Revenue
This bar chart plots the monthly revenue you'll generate, based on the inputs you provided about subscription price, signups rate, paid conversion rate and member churn rate.
The green bars represent monthly recurring revenue (MRR). You'll notice that the bars are slightly 'fuzzy'. This is because they are plotting a range of values. In the input variables relating to MRR (subscription price, traffic and conversions, for example) you can either input a hard value, or you can give a range by typing '1 to 2', for example.
Total paying members over time
This line chart plots the total number of paying members as they accumulate over time, taking into account monthly churned members. This can be helpful for plotting and forecasting key milestones like 'first 100 paid subscriptions', independent of revenue.
Revenue and Churned revenue
This bar chart plots the revenue you'll generate each month, as well as the 'churned revenue' (the revenue you lose from customers that cancel their subscription). This is helpful for seeing the overall trend in revenue, and also for spotting months where customer churn is particularly high.
Revenue, Costs & Profit
This line chart plots the revenue, costs and profit for your SaaS business over time.
Tables & Statistics
The remaining sections of the SaaS Pricing Model Calculator are there to give you a more in-depth breakdown of the numbers are they progress over the stated 12-month period.
Play around with different subscription price values, conversion rates and growth rates and see how they change the chart outputs. And of course, as soon as you start to get real data coming in from your SaaS, input these into the model to get a more accurate view of how things are trending.
This calculator and SaaS pricing model template is part of the 'Forecasting' menu in Flotion, to help you better plan and forecast various sections of your business. You can learn more about the Forecasting widget, and add it to your workspace, here. Ā
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