SaaS Pricing: Unlimited vs Per User
Cloud computing created many disruptions. With accessible data, new services and new types of connected devices emerged. Software-as-a-Service (SaaS) business models grew out of cloud computing’s rise - leveraging on-demand software, scalable to accommodate many concurrent users.
SaaS pricing models are based on pre-cloud “in-the-box” software pricing. Most SaaS providers still charge customers on a per-named-user basis: more users = more expense. Until now. Gartner’s recent SaaS study outlines a change in SaaS pricing models. By 2025, 40% of software currently priced per-user is expected to transition to other pricing models, such as unlimited users or tiered pricing based on consumption - according to Gartner.
Why the change?
Collaboration tools and centralized data require lots of users to access and contribute information. Widespread adoption is essential for many SaaS platforms to create value - think Slack.
Per-user pricing works for some industries where only a small number of users need to access information or for essential services. However, for information-sharing platforms (collaboration, innovation, CRM), per-user pricing is the antithesis of widespread adoption. Meaning the more users, the greater the chance of success. This is due to several reasons:
- information is shared - not siloed
- data is up-to-date
- high internal engagement leads to better outcomes
SaaS was born out of a rebellion against in-the-box software - think Salesforce’s “No Software” beginnings. Now is the time for the next rebellion: No User Pricing.
What’s next?
The change from per-user to per-company pricing will be slow and nuanced. SaaS providers will bridge the shift with tiered user pricing; pricing per division; and other gimmicky ways to restrict usage.
To thrive, enterprises need company-wide, unfettered access to information and shared platforms. Negotiating budgets for additional seats discourages usage and is unnecessary. Mission-driven SaaS providers prioritize usage over incremental fees. Usage equals value. Value equals happy customers and better retention. In the end, both enterprises and SaaS providers win.
At SwitchPitch, we are ahead of the curve. We see the value in innovation collaboration and are passionate about enterprise + startup engagement. Engaging as many corporate users as possible - rather than limiting users - ensures the greatest outcomes for our clients and their startup partners.