Introduction

Flat rate pricing is a very simple strategy with a single tier charging a flat rate subscription to unlock all features within a product. Oftentimes this strategy is used to differentiate a product in a saturated market.

Overview

PROS
  • More straightforward to sell since price doesn't change in any circumstance
  • Easier to understand by customers, making them more willing to buy
CONS
  • Hard to target multiple customer personas
  • Revenue doesn't scale as customers get more value out of product

Breakdown of the Pros

More straightforward to sell since price doesn't change in any circumstance

For every pricing strategy discussed, the amount the customer pays goes up based on the amount of value they are getting out of the product, except this one. Flat pricing is very appealing to a customer for the apparent reason: it won't get any more expensive if they use it more. 

Easier to understand by customers, making them more willing to buy

Customers prefer simple pricing, the more options they have, the harder it is for them to make a decision. With flat pricing, it doesn't get any more simple, and a single flat fee subscription goes a long way as a strategy.

Breakdown of the Cons

Hard to target multiple customer personas

Typically when using a flat fee pricing strategy, a business is targetting a single customer persona who they know well enough to understand their perfect price point. When it comes time to try and target other customer personas, it becomes trickier because those personas often either want to spend more or less, for more and less features then your current offering is providing. 

Revenue doesn't scale as customers get more value out of product

This is the greatest issue with flat-rate pricing. If a massive company starts using a product, they do not have to pay more even if they are willing to. This causes major problems for support, infrastructure, and growth.


WHO SHOULD USE IT

Companies should consider charging at a flat rate if some of the following applies to them: 

  • The product is at a very early stage, and the SaaS company just wants to start charging customers
  • The product is in a very saturated market and needs a way to stand out amongst the competition
  • The product targets a particular customer persona that can have a price tailored for them

The User Interface

SUBSCRIPTION MANAGEMENT
See Live Example

Examples

Own a Subscription SaaS Product?
Use the UI/UX Toolkit for Stripe Billing