This blog walks through how early-stage founders can choose, implement, and iterate on B2B SaaS pricing models using trusted resources.
In the whirlwind of launching a SaaS product, one of the toughest early decisions is pricing. Recently, the founders of FlexEM, a cross-platform personalized exercise management app for gyms, approached me for help. FlexEM enable gyms to deliver a digital personalized experiences for members, making easier for members to measure their training progress and reach their fitness goals using real-time analytics.
Coming from engineering backgrounds, the founders were overwhelmed by the sea of SaaS pricing advice online — especially in today’s age of information overload. In this post, I’ll share the resources I found most helpful and walk through how we navigated pricing trade-offs together.
📚 Resources That Helped Me Learn Pricing
I’m not a pricing expert by training — no MBA, no formal experience — but as a curious product builder, I had to learn just enough to make informed decisions. These 4 resources stood out:
- Startup Business Models and Pricing by Aaron Epstein (video)
- The art and science of pricing by Madhavan Ramanujam (podcast)
- Pricing your SaaS product by Patrick Campbell (blog)
- Monetizing Innovation by Madhavan Ramanujam (book)
Each of the resources offers a different lens — from conceptual frameworks to tactical playbooks. I personally have watched and read these resources multiple times and I highly recommend them for any early-stage founder or product leaders.
💡 Key Takeaways
There are 3 principles that consistently stood out from the resources.
1. Price is a measurement of value
Pricing is an indicator of how much value your product delivers. It's important to ensure the price correlates with the tangible and perceived benefits your product offers.
There are many ways you can quantify product values. Here are some practical methods I have used, ranging from low to high effort required to implement:
- Evaluate pricing for your competitors.
- This is often a good starting point, but it assumes your competitors have a valid value-based pricing model.
- Estimate based on market research.
- Use ChatGPT and the Internet! If you are building a marketing SaaS product, estimate the average customer acquisition cost (CAC) for your target customer segment and how your product can help them reduce CAC.
- Run pilot programs with your users.
- Offer a limited trial and work with users to measure their business objectives before and after adoption.
2. You should charge your users for your product
Paying customers validates that your product solves a real problem. Free users give feedback, but paying users give proof. Early revenue is also a forcing function for focus and product quality.
Some early-stage founders are afraid to charge users, fearing user churn. However, in my experience, having paid customers signals that you have a differentiating product, instead of a pet project.
3. Iterate and experiment with product pricing
Your first pricing model will almost never be your best. You should treat pricing like a product feature: experiment, learn, and adapt based on customer behavior and feedback.
Finding the ideal price is an iterative process. A practical tactic to finding an ideal price is to keep raising the price incrementally until you get push backs from the customer.
The ideal price point is often a price where customers complain, but still pay for the product.
🏋️ Applying It: FlexEM
FlexEM helps gyms upsell by offering personalized trainer and training sessions to members. But measuring direct revenue impact was tricky because gyms often run multiple marketing campaigns in parallel.
Hence, it's important to define proxy metrics, which are indirect indicators that reflect the value your product delivers to customers when direct revenue impact is difficult to measure.
Instead of revenue impact for the gyms, we defined the following proxy metrics which our product will optimize:
- Number of training sessions booked
- Number of referrals shared through the app
These tied indirectly to gym revenue and helped guide the pricing model.
🔍 Comparing 3 Common B2B SaaS Pricing Models
For early-stage startup, the founders should focus their energy and investment on finding their product-market fit (PMF). While pricing is an essential component of PMF, avoid spending too much energy on perfecting on the pricing models.
Instead, the goal should be to pick a pricing model that aligns with your product’s value delivery, execute, then iterate on your pricing model based on customer feedback.
Rather than exhaustively listing all pricing types, I’ll compare trade-offs among 3 popular B2B SaaS pricing models: subscription, usage-based, and freemium.
1. Subscription
The subscription model charges customers a recurring fee (monthly or annually) for continued access to the product. It’s great for early-stage startups because it provides predictable revenue and the customers know exactly how much they need to pay per period. However, the subscription model can be limiting if your product's value doesn't scale linearly with time, or if customers are unsure about upfront commitment.
Example: Netflix, Salesforce Small Business
For FlexEM, a subscription model could provide predictable revenue but might not capture the varying value delivered to different sizes of gyms (which can be solved by tiered pricing).
2. Usage-based
In a usage-based model, customers pay based on how much they use the product — whether it’s API calls, volume of data storage, or number of transactions. This model reduces friction to onboard new users and naturally aligns pricing with the value delivered. But it can be harder to implement technically, makes revenue less predictable, and makes it more difficult for customers to forecast their costs.
FlexEM could charge based on number of training sessions or new memberships, directly tying revenue to value creation.
3. Freemium
The freemium model offers a free version of the product with limited features, with the goal of converting some users to a paid tier. It’s great for driving top-of-funnel growth and letting users experience value before committing. The downside is it can attract non-serious users, generate support overhead, and delay valuable pricing feedback unless conversions are carefully tracked.
FlexEM could offer gyms basic listing services for free while charging them for premium features. This could help FlexEM quickly build a two-sided marketplace.
⚖️ Trade-offs Summary
| Criteria | Subscription | Usage-Based | Freemium |
|---|---|---|---|
| Predictable revenue | ✅ High | ❌ Low | ❌ Very low |
| Predictable cost (customer) | ✅ High | ❌ Variable | ✅ Free (until upgrade) |
| Onboarding friction | ⚪ Medium | ✅ Low | ✅ Very low |
| Value alignment | ⚪ Medium; hard to quantify | ✅ High | ⚪ Medium; delayed until conversion |
| Revenue expansion | ⚪ Medium; via tiers | ✅ Built-in | ✅ Via conversion |
| Engineering effort | ✅ Low | ⚪ Medium; needs metering | ⚪ Medium; access control |
| Support overhead | ✅ Low | ⚪ Volume-dependent | ❌ High; many free users |
| Time to revenue | ✅ Fast | ⚪ Usage-dependent | ❌ Slow; conversion lag |
| Fit for PLG motion | ⚪ Okay | ✅ Strong | ✅ Strong |
🧭 What’s next
With a solid understanding of the trade-offs between pricing models, the next step for the founders is to make an informed decision on which model best aligns with their product, target customers, and go-to-market motion. There’s no universally perfect choice — what matters is picking a model that supports how their product delivers value today.
Once a model is chosen, the founders can test pricing sensitivity by presenting different options to prospect segments and measuring interest levels, even before integrating the pricing model into their product.
From there, the founders would roll out their pricing model: update pricing page, integrate pricing model into product, and begin converting users into paying customers.
Pricing is a living strategy. After choosing and implementing a pricing model, the founders are advised to monitor customer behavior closely and treat pricing as something to test and evolve. This includes experimenting with price points, packaging, and even shifts their pricing model as the product and customer base mature.
📬 How I can help
If you're tackling industry challenges and want advise on product engineering, data, and AI topics, shoot me an email — happy to chat and share insights.
If you found this blog helpful, please cite this as:
Fong, Ka Wo. (Apr 2025). How should a B2B SaaS startup price their product? kawofong.com. https://kawofong.com/blog/b2b-saas-pricing.