Introduction

Costco goods are a great deal for customers because they sell in bulk. SaaS companies using volume pricing adhere to the same philosophy, if a customer uses more of the product, they get a discount according to that usage.

Overview

PROS
  • Encourages product adoption
  • Differentiates from competition
CONS
  • Volume price sheets can be confusing
  • Usually, only larger customers reap the benefits of volume discounts

Breakdown of the Pros

Encourages larger deals

When dealing with bigger customers, oftentimes discounts must be applied in order to make deals happen. One of the best ways to do this is through a volume discount.


Breakdown of the Cons

Volume price sheets can be confusing

Oftentimes volume pricing is reserved only for larger deals mainly because reading the price table is not the simplest thing in the world to do.

Usually, only larger customers reap the benefits of volume discounts

This is pretty self-explanatory, in order to get discounts a customer needs to spend more, meaning only those willing to invest a large amount of money into a product will reap the benefits of volume discounts.


WHO SHOULD USE IT

SaaS companies should consider volume-based pricing if:

  • Deals are worked out in terms of a specific metric, allowing for deep discounts for larger deals
  • A company is looking for a way to stand out compared to its competitor's pricing
  • Targeting upmarket, generally, this strategy is mostly utilized in enterprise deals
  • Customers are hesitant to use more of a product because of costs

The User Interface

SUBSCRIPTION MANAGEMENT
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Examples

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