Decision workflow · 5 steps
How to Price Your SaaS Product — A 5-Step Framework
SaaS pricing affects every other metric in your business. Get it wrong and you burn cash acquiring customers who never pay back their acquisition cost. This workflow walks you through setting a defensible price in five steps.
Set your price floor
Your price floor comes from COGS, gross-margin targets, and CAC payback constraints. Price below this and every new customer costs you money.
Benchmark: B2B SaaS median gross margin is 75% (OpenView).
Validate unit economics
Does your business model work per customer? LTV:CAC ratio, payback period, and contribution margin in one view. If unit economics are negative, scaling just scales losses.
Benchmark: Healthy LTV:CAC is 3:1 or higher.
Check CAC payback timing
Even if LTV:CAC looks great, cash flow depends on payback speed. Under 12 months is healthy for B2B SaaS. Over 18 months means you are funding growth from your balance sheet.
Benchmark: B2B SaaS median CAC payback is 14 months.
Project revenue growth
With your price set, project MRR/ARR growth at 3, 6, and 12 months. Check Net Revenue Retention — if it is below 100%, your existing customers are shrinking.
Benchmark: B2B SaaS median NRR is 105%.
Stress-test churn impact
Even small churn improvements compound dramatically. See how reducing monthly churn by 1% affects retained revenue over 12-24 months.
Benchmark: B2B SaaS median monthly churn is 3.5%.
Frequently asked questions
What if I do not know my CAC yet? +
Should I price based on competitors? +
How often should I revisit pricing? +
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