Classic 3-Tier SaaS Pricing Model
Use this as a starting point — adjust for your product complexity and segment.
Starter
$19/mo
For individuals and tiny teams. Price anchor and entry-level path. Easy onboarding, no credit card required.
Pro
$49/mo
Core revenue driver. 70% of customers should fall here. Feature-complete product, billed annually discount available.
Enterprise
Custom
For large orgs with 100+ seats. SSO, SLAs, dedicated support, custom integrations. Often 10–20% of revenue, 50% of profit.
How SaaS Revenue Growth Compounds
Three metrics compound into growth or decay. Get them right and the rest follows.
METRIC 01LTV : CAC
Your customer lifetime value divided by customer acquisition cost. Target 3:1 or higher. Below 2:1 you're burning cash; above 5:1 you could grow faster.
METRIC 02Payback Period
How many months it takes to recoup CAC from gross margin dollars. Best-in-class SaaS: 6–9 months. Anything over 18 months requires serious capital reserves.
METRIC 03Net Revenue Retention
NRR above 100% means your existing base is growing organically through expansion + upsells — even without new customers. Companies at 120%+ NRR are compounding machines.
FAQ
The most common SaaS pricing questions from founders.
What is a good LTV:CAC ratio for SaaS?+
A healthy LTV:CAC ratio is 3:1 or higher. This means a customer generates 3x more lifetime value than it cost to acquire them. Below 2:1 is risky (payback is too slow). A ratio above 5:1 means you're probably under-investing in growth and could afford more customer acquisition spend.
What is a good SaaS churn rate?+
Good SaaS monthly churn is 2–5% for early-stage startups and 1% or less for established companies. Logo churn (number of customers lost, ignoring revenue) matters more than revenue churn. Net negative revenue churn (expansion exceeds churn) is the holy grail — this is what takes SaaS companies to $100M+ ARR.
What are the best SaaS pricing tiers?+
The classic 3-tier model: Free / Starter ($0–$29/mo), Pro ($49–$199/mo), and Enterprise (custom / contact sales). Add a 'Most Popular' highlight on the middle tier for price anchoring. Also offer both a monthly option (higher price) and annual option (20–30% discount billed yearly).
How do I model SaaS revenue growth?+
SaaS revenue growth = New customers × ARPU − Churn + Expansion revenue. Model year 1 conservatively (50–200 new customers/month), year 2 more aggressively. The most important metric isn't raw growth — it's Net Revenue Retention (NRR), which shows whether your existing customer base grows or shrinks on its own.
What is a good CAC payback period?+
A healthy CAC payback period is 12 months or less for most SaaS companies. Best-in-class companies aim for 6–9 months. Payback beyond 18 months signals pricing issues or acquisition cost problems and requires large cash reserves to fund growth.
Should I do usage-based pricing or flat-rate?+
Use flat-rate for simple tools (Under $50/mo, low-touch). Use usage-based or seat-based for anything complex. The best modern SaaS pricing is hybrid: base fee + usage — this aligns revenue with customer value. Snowflake, Twilio, and Stripe are the canonical examples of usage-based models that scaled to billions.