The Obvious Flaw In The SaaS Pricing Model.

Do you remember getting an allowance?

The Obvious Flaw In The SaaS Pricing Model.
Photo by Matt Hearne / Unsplash

Imagine You’re 9 Years Old Again.

You’ve just been told by your parents they’re going to give you this thing called an allowance. Every week you’re going to do the 5 chores listed on the fridge, and if you do them, they’ll give you $100.

However, they give you a choice.

You’re allowed to choose between the following:

Allowance One.

Each month you get paid a maximum of $100 if you do the 5 chores listed on the fridge. Extra effort isn’t rewarded if you exceed the target and you can’t add any chores to the list. If you’re bad, your parents might dock your allowance by half, or not pay at all for a couple of weeks.

Allowance Two.

Each month you get paid a minimum of $50 but for every chore, you do beyond the 5 on the fridge you get an additional $10. The amount of chores you can think up is uncapped and your parents promise you that whatever you think up will be rewarded. You’re encouraged to think of new chores to add, and you’re allowed to add them to the list to complete month after month.

It’s Obvious Right?

Then why do so many SaaS companies choose the first style of pricing?

How many SaaS companies, startups, and solopreneurs do you see that use the Good/Better/Best pricing setup? How many companies offer less than a handful of products?

Because They’re Copying Each Other.

If people would stop and think for five seconds, they’d see how stupid the current trend of pricing is. It doesn’t make a lick of sense. Why would you structure yourself as a good/better/best service and offer no upsells?

Instead, you pursue a massive, unrealistic TAM for salvation and hope that you get enough funding and capital to get you there.

Fact: There Are Endless Ways To Make Money.

Build a business, not an “economic arbitrage machine” as Gary Vaynerchuck likes to call it. You do that by creating a ton of products, that solve a ton of problems for a prospect, over their entire life.

Unless you are an absolute UNICORN – and although we’ve forgotten now, there’s a reason we use that word: they don’t exist – you don’t build one product and cap your earnings into a corner.

Yet that is what 99.99999% of SaaS companies are doing.

It’s the opportunity of a lifetime.

My Answer To This Problem?

Full Spectrum Pricing. Learn it in <15 mins in my free book: Triple Your Prices.

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