Why an “Unlimited” plan is toxic for your SaaS
Pricing products is hard. It’s one of the most difficult decisions you’ll make when creating any type of product (SaaS or otherwise), as there’s no “easy” or “right” answer to “how much should I charge for my product?”
But there is one bit of advice that I strongly urge you to consider: never offer an “unlimited” plan.
Early on I made this mistake with other SaaS products. I had never built a business on recurring revenue before, so coming up with a good pricing table was the same as pulling numbers out of thin air. After coming up with what, I thought, was a great set of plans, I decided I’d shoot for the proverbial stars and throw on an “unlimited” plan for a whopping $99. Ha!
The temptation to give away the farm
When you’re brand new to pricing, it’s easy to think “If I can get anyone to pay me $99 a month, I’ll be set!” You’re itching to make some money, any money, and you’ll give away the farm to try to entice people to fork it over.
But stop. Stop giving it away. Chances are you’re already charging far too little, and having an “unlimited” plan just puts the nail in the coffin. Here’s why.
The value/revenue cap
When you’re creating pricing plans, you should be pricing based on value. You need to find a balance of where what they’re paying is comparable to the value you’re providing, and the more value you provide, the more money you should make.
With that in mind, does “unlimited” makes sense? No. Because they get “unlimited” value while you just capped how much revenue you can make on any given customer. Now would be an appropriate time to facepalm.
Do you realize how bad of a move that is? The type of customers who will make use of that “unlimited” plan are exactly the customers who will be more than happy to pay you exponentially more than you’re charging! They’re the ones who stand to get the most value and the more they use your product, the more value they get! Charge them accordingly.
Never offer an unlimited plan. It instantly caps your revenue while giving away the farm.
Moving to the world of “enterprise”
A lot of entrepreneurs cringe at the thought of “enterprise sales.” I know for me it conjured up images of used car sales men. But the reality is that it’s nothing like that unless you want it to be.
When you’re offering a product people are itching to use and happy to pay for, there’s no reason you shouldn’t charge more for it, and the sky is mostly the limit.
Many times that means offering “enterprise” plans…which is just a fancy way of saying “custom plans that do a better job of matching the value you’ll get with the revenue we need to keep serving you well.”
Throwing a simple “contact us if you need a different plans” link could literally mean thousands in additional monthly revenue than you otherwise would have given away for hundreds. Nobody wins then.
For Baremetrics, nearly $2000 in recurring revenue comes from our Enterprise plans, and those “Enterprise customers” are some of the greatest customers we have. They’re happily getting a lot of value and we’re able to serve them better. Everybody wins.
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