---
title: Subscription and SaaS Pricing — Pricing & Positioning Module 3 — RGM Training
url: https://realgrowthmatters.com/training/pricing-positioning/positioning-fundamentals-dunford-framework/
updated: 2026-06-10
source_html: https://realgrowthmatters.com/training/pricing-positioning/positioning-fundamentals-dunford-framework/
---

RGM° · Training

# Subscription and SaaS Pricing

Subscription pricing has its own dynamics: recurring revenue, churn risk, expansion revenue, retention math. This module covers tier design, pricing dimensions, the freemium playbook, and the metrics that drive modern SaaS pricing.

### What you will learn

1. Subscription pricing as a distinct discipline
2. Good/Better/Best tiering
3. Per-seat, per-usage, and outcome-based pricing
4. Hybrid pricing models
5. The free tier and freemium
6. Trials: free trial, reverse trial, paid pilot
7. Annual vs monthly pricing
8. Pricing-page optimization
9. Expansion revenue and the upsell architecture
10. Pricing changes for existing customers
11. SaaS pricing metrics

## 1. Subscription pricing

Subscription pricing has its own dynamics: recurring revenue, churn risk, expansion revenue, retention math. The pricing decision affects every part of the business.

## 2. Good/Better/Best

The three-tier structure is the dominant SaaS pricing model. Tier design principles:

- Tiers should map to customer segments and use cases.
- Best tier is the anchor; sets willingness-to-pay reference.
- Mid tier should be the target tier (often 50 - 70% of customers).
- Entry tier should be limited enough that mid-tier upgrade is logical.

## 3. Pricing dimensions

| Dimension | When to use |
| --- | --- |
| Per seat | Tools used by individual users |
| Per usage | Metered consumption (API calls, storage, compute) |
| Outcome-based | Clear measurable outcome (transactions, conversions) |
| Flat fee | Simple SaaS with one main use case |
| Tiered by company size | B2B with strong size-based capacity-to-pay |

## 4. Hybrid models

Most modern SaaS pricing is hybrid: base subscription + usage overage + add-on features + custom enterprise. Snowflake, Datadog, MongoDB Atlas show the genre.

## 5. Free tier and freemium

Free tier purposes: top-of-funnel, network effect, viral loop, distribution. Free tier risks: conversion drag, support cost, brand association with "free." Strong freemium examples: Dropbox, Slack, Notion, Loom. Operating principle: the free tier must provide real value but bump into a clear upgrade trigger.

## 6. Trials

- Free trial (14 - 30 days, then convert or churn).
- Reverse trial (paid features unlocked for trial period, then collapse to free tier or convert).
- Paid pilot (enterprise-style, 60 - 90 day paid evaluation).

## 7. Annual vs monthly

Annual billing reduces churn and improves cash flow but slows conversion. Discount for annual is typically 10 - 25%. Most SaaS companies promote annual aggressively but maintain monthly for new-customer acquisition.

## 8. Pricing-page optimization

- Above-the-fold tier comparison.
- Anchoring with high tier.
- "Most popular" callout on target tier.
- Annual default with monthly toggle.
- Social proof (logos, customer count).
- FAQ at the bottom.
- Enterprise/custom option.

## 9. Expansion revenue

Expansion revenue (NRR > 100%) is the modern SaaS metric. Sources:

- Tier upgrade.
- Seat expansion.
- Usage overage.
- Add-on features.
- Cross-sell products.

## 10. Pricing changes for existing customers

The most fraught moment in SaaS pricing. Operating principles:

- Grandfather existing customers on the existing rate when possible.
- Provide notice (60 - 90 days minimum).
- Frame in value terms.
- Offer alternatives (annual lock, smaller tier).
- Communicate in person for top customers.

## 11. SaaS pricing metrics

- ARPA (Average Revenue Per Account).
- NRR (Net Revenue Retention).
- GRR (Gross Revenue Retention).
- ACV (Annual Contract Value).
- Conversion rate by tier.
- Time to expand.
- Discount discipline.

**How to use this module:** The dimension table (Section 3), the freemium principles (Section 5), and the metrics list (Section 11) are the planning artifacts.

### Sources & further reading

- [Price Intelligently](https://www.priceintelligently.com/)
- [OpenView SaaS pricing benchmarks](https://openviewpartners.com/blog/topic/pricing/)
- [Recurly blog](https://www.recur.ly/blog)
- [Chargebee blog](https://www.chargebee.com/blog/)
- [Stripe Atlas guides](https://stripe.com/atlas/guides)
- Books: Patrick Campbell, *SaaS Pricing* (ProfitWell); David Cancel, *Conversational Marketing*; Aaron Levie, *The Box Story*
- [Not Boring (Packy McCormick on pricing strategy)](https://www.notboring.co/)
- [a16z SaaS](https://a16z.com/category/saas/)
- [Dave Kellogg blog](https://kellblog.com/)
- [SaaStr](https://www.saastr.com/)
- [Tomasz Tunguz blog](https://tomtunguz.com/)
- [Bessemer Atlas](https://www.bessemer.com/atlas)

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Part of the [Pricing & Positioning](/training/pricing-positioning/) series · RGM Training