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Working out a price along with a pricing model is an important stage in a product’s development. These decisions will often determine whether the startup will bring revenue and achieve success.
In this article, we will explain what is so important about choosing a software pricing model, what models there are, and which may be the most advantageous for your particular project.
In SaaS products with subscription-based access, the pricing model determines how customers see value, how revenue covers cost-to-serve, and whether the service remains scalable as demand grows. It has to work for both customers and the business.
A pricing strategy sets an amount, while a pricing model defines how customers pay. In SaaS pricing, customer segments, willingness to pay, value metric, and cost-to-serve shape both. A forecast tests whether the model still covers cost-to-serve as the product scales. Map your revenue streams before estimating development cost. PricingSaaS’s Q1 2026 report examines packaging and AI monetization changes in 2025.
A software pricing model defines how customers are charged for a product. In software as a service, or SaaS, subscription pricing separates billing periods and subscription fees from charge units such as seats, features, transactions, and consumption-based usage.
| Model | Charge unit | Fits | Main trade-off |
| Flat-rate | Fixed recurring fee | Similar needs | Limited segmentation |
| One-time license | Product license | Standalone tools | Maintenance funding |
| Per-user | Seat | Team products | Adoption friction |
| Feature-based | Capability | Distinct needs | Packaging complexity |
| Tiered | Package | Multiple segments | Plan clarity |
| Freemium | Free limits, paid upgrades | Self-service entry | Free-user cost |
| Commission-based | Transaction | Marketplaces | Off-platform leakage |
| Usage-based | Measured consumption | APIs, storage | Variable bills |
| Hybrid | Base fee plus variable unit | Mixed consumption | Billing complexity |
Flat-rate and one-time licensing differ. Flat-rate subscription pricing charges the same subscription fee for recurring access, while a one-time license grants product access after an upfront payment.
Guitar Rig 7 Pro costs $199 as a one-time example. Basecamp’s $99 Business plan is a historical flat-rate example, not a current price.
Per-user pricing, also called a per-seat pricing model, charges for each person with access. It fits team products and small businesses, but the bill rises with adoption.
Help Scout’s monthly Standard and Plus plans cost $25 and $45 per user, respectively (checked October 3, 2026).
Freemium provides an ongoing free tier with limits on features, capacity, or usage. A free trial ends after a defined period.
Google Drive has 15 GB of free storage. Teams can compare app monetization strategies before defining paid upgrades.
Feature-based pricing charges for access to selected capabilities, so customers can choose a plan that matches their needs.
Commission-based pricing takes a platform fee from each transaction. Clear payment flow and fee rules give participants transparency. Fiverr’s historical 20% seller commission and Daiokan illustrate marketplace revenue models.
Tiered subscription pricing groups features into clear packages at different prices, so each customer segment can choose a suitable plan.
Usage-based pricing, also called pay-as-you-go pricing, charges for measured consumption, such as API calls, storage, or processing time. This consumption-based pricing model works when customers get more value as they use more of the product, but it needs usage metrics, clear limits, and a forecast for usage spikes so invoices remain understandable.
Hybrid pricing combines a base subscription with charges tied to seats, features, or usage. It works for a subscription business with a predictable core service alongside variable consumption, but customers need to see which part of the bill is fixed and which part changes.
Use this checklist to evaluate the model before setting the price:
Once the charge unit is chosen, the next decision is how to determine the subscription price.
The checklist separates charge structure from the amount. No single pricing model works best for every product.
Implementation starts with product rules, not a provider choice. The billing system turns plan entitlements into a billing workflow and records whether subscription access is active, paused, canceled, or overdue. It also collects usage events for consumption-based usage, creates each invoice, and handles subscription renewals consistently.
Stripe, Braintree, and CloudPayments are payment providers: they collect and process payments. Subscription billing software such as Chargebee sits above a provider to manage plans, billing cycles, invoices, and renewals. The right setup depends on the product’s billing logic and integration requirements.
Sometimes, people come to Purrweb when they have only the concept of a startup, the basic kernel idea, and the rest develops as we look after the seed together. That was so with Contentplace â a video content marketplace.
Coming to us, this customer was indecisive for a long time, unable to choose between models. What to do, leave platform access free, or set a fixed price? What would bring better income? Eventually, the developers agreed to go with a per-function model and present users with a choice of packages with different scopes and prices. Their original list of options was too long, however, about 30. The audience would have been confused and discouraged by this pointless abundance.
We decided to chime in with our own suggestions, and the result was to reduce it to three. Given the platformâs capabilities and the audienceâs needs, as we envisioned them, it was resolved that a multi-level system would work best. There would be two payment options, for 25 and 100 GB of data, along with a special offer for new clients only â upgrade to the full-featured option for the price of the basic choice.
As for the payment system, we went with Stripe because of the wide variety of payment choices for consumers and the ease and quickness of implementation â just what the doctor prescribed for MVP and the testing to follow.
We can also look back on the case of Daiokan, a photographerâs marketplace. The situation was similar, with no clear plan and software pricing model when the company came to Purrweb, so we got to have a say in that. A commission model was chosen, where photographers would upload their photo sessions, users would pay for them and Daiokan retained a certain something. It was more difficult to choose a payment system.
Our original choice, PayPal, turned out to have no presence in Hong Kong, where the customer decided to register the company. We tried to circumvent this issue with an API, but PayPal did not support credit card payments.
Then, we turned to Braintree which already worked in Hong Kong at the time, however, the service ruled the business too risky and blocked the account. As the marketplaces' MVP was rolled out, we had to stick to a credit-card-unsupported PayPal â not a perfect solution, to be sure, but at least it was on time and people could pay.
Startups on occasion run into suspicion from payment systems. To avoid this eventuality, begin by reading startupsâ reviews and comments about the different systems out there and choose something appropriate for your release timeframe, country of registration, functionality, and other important aspects.
A clear pricing page explains the charge unit, subscription fee, and rules behind each invoice. Customer behavior and usage metrics then show whether the pricing model supports scaling or needs refinement.
It is important to select a software pricing model before product release, but remember that you can always change it during testing or after the big event, once you gauge customersâ reactions. We had cases when MVP models turned out to be poor choices, and testing led to their replacement. It is never too late to improve the product and thus your revenue.
➡️ Need help choosing a pricing model and building billing logic? Get a free project estimate.
A pricing model defines how a customer is charged, such as per user, per transaction, or by usage. A pricing strategy determines how the price is set, for example from customer value or competitor comparisons. The same model can support different strategies.
Freemium provides an ongoing free plan with limits on features, capacity, or usage. A free trial provides temporary access and ends after a defined period. Both can help customers evaluate a product, but they require different upgrade rules, support budgets, and billing logic.
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