A workflow in 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.
-
Step 1: 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 about 79% (Benchmarkit 2024).
Open the SaaS Pricing Strategy Calculator -
Step 2: 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.
Open the Unit Economics Calculator -
Step 3: 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 about 20 months for mid-market, 12-18 months for SMB (Keybanc/Benchmarkit 2024).
Open the CAC Payback Period Calculator -
Step 4: 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%.
Open the MRR / ARR Growth Calculator -
Step 5: 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%.
Open the Churn & Retention Calculator
Questions people ask
What if I do not know my CAC yet?
Use your total marketing + sales spend divided by new customers acquired in the last 3 months. Include salaries, tools, and ad spend.
Should I price based on competitors?
Competitor pricing is a signal, not a floor. Your costs are different. Use this workflow to find YOUR floor, then position relative to competitors.
How often should I revisit pricing?
At minimum, every time your cost structure changes materially — new infrastructure costs, pricing tier changes, or significant changes to customer acquisition channels.
Part of Marketing and acquisition: Know whether your marketing spend is building value or burning cash.