8 principles to guide your SaaS pricing strategy

December 6, 2021

5-second summary
  • Creating a pricing model that is consistent, transparent, and easy for customers to understand can help take the friction out of purchasing decisions.
  • For startups, gaining users is more important than maximizing revenue per user.
  • It’s better to err on the side of pricing too low. You can always increase prices later.
  • If you must increase prices for current customers, give them plenty of notice first.

This article is part of our series on using the flywheel model to grow your business.
Pricing is one of the most critical strategic maneuvers for any business. For that reason, it can also be one of the most contentious areas for your teams. Finance, marketing, sales partners… there are countless stakeholders you need buy-in from, and no shortage of discussion along the way.

When I look at Atlassian’s always-evolving pricing strategy, it’s clear that the way we’ve sidestepped many headaches is by leading with the most important teammate in mind: the customer.

1. Make it easy

  1. Make it easy to start: Jira was available online for everyone to try for free.
  2. Make it easy to buy: All pricing and purchasing information was available online, and the entire purchase experience was self-serve.
  3. Make it easy to afford: Jira was affordable for any team and easily justified within a department’s existing budget.

2. Price for volume

The key to building a flywheel is to always optimize for volume. Once Jira was up and running, Mike and Scott did something that went against the advice given to most startups; they launched a second product called Confluence.

3. Be consistent

Naturally, customers will compare the prices of new products from a company to the products they already own. Part of Atlassian’s “land and expand” strategy has been that all our products are priced as similarly as possible.

4. Give everyone the best price

Want to know how much Jira costs? Look right here. This approach may not sound too revolutionary until you visit any of the top enterprise software companies’ sites and try finding their pricing info.

5. Simple > flexible

Pricing strategies tend to have their own version of entropy. We settled on an editions-based approach to pricing our products. These editions are:

  • Free → Provides the core set of features limited by the number of users a company can add.
  • Standard → Same set of core features for teams with greater than 10 users.
  • Premium → Enables a set of advanced features for organizations with more complex use cases.
  • Enterprise → Provides additional scale, security, and sophisticated administration features.

6. Make entry inexpensive

It’s impossible to know whether you priced a new product correctly until it’s in the market. For example, the price of $800 for Jira was later reduced to attract more customers.

7. Beware of price increases

Regardless of a customer’s size, Atlassian gives lots of advance notice to help businesses stay afloat anytime there’s a change in prices. Keeping this in mind is key to retaining customers when prices change.

8. Trust your gut, not the spreadsheet

Remember: no one knows your business as well as you. Lead with what you can confidently explain to your customers.

Don’t f@$% the customer

Price can be more than an indicator of your product’s value. Fees that are high or sudden or hidden tell a customer they’re not respected as an equal partner – which means they probably won’t be your partner much longer.