SaaS business

Defining Your Product Value Proposition. Tips and Examples


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The value proposition is the basis of your marketing and business development strategy. Launching a marketing campaign before defining your value proposition is like polishing the coating of a car that has no engine installed. It just won’t make much effect.

So, What Is Value Proposition?

The value proposition is a statement that communicates to the customer why they have to choose your product. Perfect value proposition attracts customers in just a few seconds. It states clearly what are the benefits of a product that make it unique and worthy.

Vintage Motorola TV ad
Product Value Proposition. 1950s. Image credit: www.vintageadbrowser.com/

Sounds easy, but you would be surprised to find out how much time it takes to formulate the right value proposition in some cases. As a design agency, we know how important it is for an effective product design to build the basics, such as a value proposition. Some teams need a series of workshops just to define the value proposition of the product they have already been working on for a long time. Good news – every product has a value proposition. Let’s see how you can find it.

How to Write a Value Proposition for Your Product

The value proposition is often compared to a promise to the customer. To make the right promise, first of all, you need to know whom your product is addressing. Another obvious thing, you need to know all the benefits of the product that customers value, especially the ones that they refer to as unique. Starting from this point, you can ask your team and yourself the following questions:

  • How does the product satisfy the customer’s needs?
  • What are the customers' goals that the product helps to reach?
  • What makes the product different from the competitors?
  • How does the product make the customer feel?

If the answers are unclear, you may need to conduct marketing research or a series of interviews with your potential customers. Do not rely solely on the product manager or business developer in defining the value proposition. It is about customers and their relationship with the product.

Value Proposition Canvas

One of the best tools used to define the value proposition of a product is the Value Proposition Canvas, introduced by Dr. Alexander Osterwalder.

Value proposition canvas

Here is an easy step-to-step guide to using this tool:

  1. Fill in each segment of the canvas above. Analyze your customer, its pains, desired benefits, and customer jobs — what they need to perform to fulfill their needs. On the other side, investigate on products and services side: what are the products that solve customer's problems, creates gains, and how it does that. Each segment may contain a list of points.
  2. Evaluate the importance of each point for the customer. Top evaluated products that match the top evaluated customer needs are the ones that form the value proposition.
  3. Test the draft value proposition with customers. If needed, make adjustments based on the test results.
  4. Analyze the competitive advantage of the company in key elements of the value proposition. Conduct competitors' research to define the steps necessary to ensure that your value proposition is unique.

To learn more about defining the value proposition, check out this book.

Do’s and Don’ts of Product Value Proposition

This is how a good value prop should look like:

  • Clear. Go for the words that are easier to understand. When your customer sees the value proposition, it takes them mere seconds to decide if they are interested or no. You don’t want them to waste that time decrypting all those smart words. Even if your target audience consists of academics, stick to the language that an undergrad would understand.
  • Unique. An ideal value proposition has something that differs from the competitors. Uniqueness sells, everybody knows it. So take it seriously and run a thorough research on competitors. If you think that your product has no competitors, you have to think twice. It is ok for a product owner to be so passionate about their product that they can not even imagine why someone would not use it. Yet competitor analysis is crucial for defining value proposition, as well as many other stages of product development.
  • Short. Fewer words, more sense. This might be the hardest point, but a short value proposition is a sign of the integrity and uniqueness of the product. You will see it in the examples listed below.

And here is the list of things to avoid:

  • Don’t try to mention ALL the benefits of your product in the value prop. Too much information is confusing. You either write a detailed exhaustive text or a text that people will actually read.
  • Don’t make it too vague (like an inspirational slogan). The value proposition is not a list of abstract “values”. We know that people make most of their buying decisions based on their deep values, and you should consider them in your marketing strategy. While bearing that in mind, think of the tangible benefits of your product. You can make the heading slogan-ish, but the main text has to be as solid and real as possible.
  • Don’t start with the “#1 in…” That does not convince the customers in the 21st century. Instead of telling that you are the best, focus on WHY you are the best.
  • Don’t rely too much on the video. Let’s say you produced a great trailer that explains all about your product in less than 30 seconds. Your intention might be to place that video on your main page skipping all the extra text. The problem here is that most of the page visitors are not incentivized enough to click on the watch button of the video they know nothing about. So you automatically lose a huge part of your potential customers as they won't even watch it. So, don’t skip the text. It will only help to get more views of your awesome video.

Examples of the Great Product Value Proposition

Finding an example of a value proposition is easy. In most cases, it is the first thing you see on the main page of a product. Here we analyze a few of them to find out what it is that makes them work.


Like Uber, Netflix is close to becoming a generic word for online movie service. Unlike Uber, Netflix still uses down-to-earth benefit statements to engage clients.

Netflix screenshot

Key elements of its value proposition are unlimited access; various gadgets supported; downloadable. And a wide variety of movies and series, of course. On the landing page, they don’t even mention it, just put all those posters in the background. If there was an Oscar for the clearest value proposition, Netflix would be the first one to get it.


Airbnb started by connecting travelers with vacation rentals directly. Now it has grown to a marketplace of experiences, both online and offline. It can be a vacation stay, guided tour to a volcano, live concert, or a cooking workshop.

Airbnb screenshot

So, what does Airbnb say now, when they offer so many different services? “Find everything you need to make your next trip memorable or start earning money as a host.” They manage to address both parts of their target audience: guests and hosts.

The next thing you see are short benefits statements, each related to a different service that Airbnb provides: rentals, live experiences, and online ones. Whenever a new service adds to the product, these statements change and the value proposition has to be revisited.



We deliver food and groceries in a flash. It’s our mission to bring everything you want, need, or crave right to your door, whether it’s a meal from your favorite local restaurant or same-day grocery delivery and cleaning supplies.

The key benefit of any delivery service is speed. “Deliver food and groceries in a flash” is a promise that Foodpanda makes at the very first moment. What else makes its value proposition? 24/7 delivery, customization, wide choice including all sorts of goods, not just food.


It has been a while since Uber became a generic word for taxi services. Now Uber does not have to convince its customers that pressing a button is the easiest way to get a ride. The products that Uber offers have multiplied. They now work with food delivery, freight, public transportation, and scooter rent. The variety of products has not changed the main idea of Uber’s value proposition: it is the smartest way to get around.

Just like Airbnb, they managed to keep a general value proposition for all the things they offer, while each one of those products has its value prop, like this one:



This is a great example of the very basic principles of value proposition: short, clear, comprehensive. We see who is the audience: business; what the product is: bulk SMS service; and what it does: sends notifications, alerts, reminders, confirmations, and SMS marketing campaigns. That’s it. No explanation needed.


Such a clear value proposition sets a perfect ground for good design. Learn more on how we designed TextMagic here.


What the company states as its value proposition is innovation and sustainability. It also says clearly that the products are for athletes, with a footnote “if you have a body, you are an athlete”. Professional athletes won’t make a huge market, especially if you consider that they are often being paid to use Nike products, not paying to get them. So, by saying that you are an athlete they appeal to the customers' desire: we buy snickers because we want to be an athlete, or at least be just like them.


Why do these value props work even when they do not follow all the rules? Reminding that you make sportswear is not necessary when you speak for Nike. Brands that are well-known and offer a wide variety of products tend to go on the “values” side of the value proposition instead of sticking to the basic tangible benefits. So, brand value is the main "secret ingredient" here.

Well, the value prop seems to be easy when you are working with a world-known brand. What if your product is not yet at Nike’s brand level? Here at Eleken, we make UI/UX design for emerging products as well. Let’s see the next example.



The product uses a clear and original definition, “distraction-free learning platform”. Why do customers need this platform? To create modern engaging content experiences. Note that the basic value proposition does not mention all the things that the platform provides: webinars, tests, interactive content, etc. You can learn it from the explanation video after the initial statement caught your attention.

Read more on the design solutions we found for PublishXI here.

Want to see more? Take a look at these landing pages that convert to see how the value proposition looks on the best websites.

Examples of the Not-So-Great Product Value Proposition

Insurance app. Too long

Insurance app

This page combines literally every mistake mentioned above. Some businesses operating in “serious” fields such as finance or insurance intentionally try to sound fancy. However, there is a fine line between fancy and incomprehensible, and phrases like “enabling platforms aimed at innovating internal procedures” are way over that line. When you see that the value proposition is over 100 words, including such as "innovating internal procedures", "ecosystem of agile digital infrastructures", it is time to stop.

The text is long, divided into big paragraphs written in small font. It would take a highly devoted reader to go through it till the end – but after that, you can be sure that person would be a lifelong customer of the product.

CRM Product. Too abstract

Chances are you have seen lots of landing pages that hide their value behind good-looking abstract phrases.

The heading says it loud “Go do something great”. Ok, starting with a bold slogan is fine, but what goes next? Few more generic verbs, “imagine, achieve, make” and finally naming the product. If you belong to the target audience, you probably understand what “enterprise collaborative work management solution” means. What you still don’t understand is why you should choose this one out of all the other enterprise collaborative work management solutions.

Online Photo Editor. Too Generic

Which one? Literally any. All of them provide similar services and most fail to explain their unique value proposition. They all can edit photos, crop them, add filters, etc. There are a bunch of them on the market and it would take you a while to find the difference between them (if you would ever try). There are lots of online photo editors available, so the only way to stand out is to do a thorough competitor analysis and come up with the right value proposition.

4 Things to Remember about Product Value Proposition

  • The product value proposition is a statement that communicates to the customer why they have to choose your product. To define your value prop, you need to know who your target is, what are their needs, and how your product can help them.
  • The value proposition has to be clear, simple, short, and unique. Run competitor analysis to learn how your product is different from the others.
  • Don’t use positioning statements (#1 photo editor) and slogans as your value proposition. Focus on more down-to-earth things.
  • Take your time to work on the proper value proposition and remember to test it once in a while, as your product, market or customers are changing. Thorough value prop research may give you insights on how to shape your product to bring more value to the customers.

Once you have a solid value proposition, you are one step closer to having product market fit. Check out our article where we explain what is product market fit and why it matters.

Masha Panchenko


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SaaS business
min read

App Design Cost: What to Expect From UI/UX Design Vendors

When developing a new product, you have two main questions to answer: how much does it cost to hire an app developer and how much does it cost to design an app? The short but unsatisfying answer is: it depends. The average cost can span from $3000 to $30,000 and higher. But it’s probably not the answer you came for. 

Eleken is a team of SaaS product designers, so it’s our main duty to develop outstanding UI/UX design for projects of different sizes and shapes for companies from different domains. It is impossible to give a specific answer how much does app design cost without taking into account the key factors that influence the numbers. So, in this article we will shed light on the intricacies behind this wide-ranging price spectrum.

Factors affecting SaaS app design cost

When we want to buy a car, we can easily learn its exact price just by looking at a price tag. But we rarely think about how much it costs to design and produce that car. The situation with app development costs is quite similar: clients have some budget allocation and expect to receive an app prototype within this amount, but they don’t know how many design iterations and tests the project would go through before designers come up with a suitable solution.

Illustration with a ready car on the left and car assembling process on the right

Complexity of the app and design process

Not all projects are the same, and there is no one-size-fits-all design process. Still, design is definitely much more than “drawing” in Figma. It consists of many steps and depends on many variables that are difficult to foresee.

When determining the cost to design an app, complexity plays a significant role, as it directly translates into the working hours and number of iterations. App complexity refers to the level of intricacy involved in developing the user interface (UI) and user experience (UX) elements of the application. 

Generally, there are three complexity levels when it comes to designing an app

  1. Simple apps are characterized by their limited scope, typically consisting of three screens or fewer, and lacking animations and interactive design elements. Examples of simple apps include calculators and alarms, which serve basic functions without requiring extensive UI/UX features.
  2. Average complexity apps encompass a broader range of features and interactivity. These apps employ multiple interactive elements, animations, and consist of several screens. They are typically designed separately for Android and iOS platforms, adhering to platform-specific guidelines such as human interface design and Google Material design principles.
  3. High complexity apps heavily rely on mobile app design to fulfill their purpose. These apps are usually cross-platform and often incorporate numerous animations and transitions to guide users seamlessly across multiple screens, with the ultimate goal of converting them into regular users. 

Depending on the project, the number of steps needed to complete the scope of work may differ, so the number of hours that the designer will spend doing your project differs as well. And that’s one more thing that makes the cost to design an application vary. 

Below is the list of the most common steps of the product design process that may influence the project’s price: 

List of common app design process steps: research, UX design, UI design, branding

In some cases your design team will have to undergo all the above-mentioned stages, in others they can omit some. But in summary, the complexity of an app and the process that your team has to undergo to come up with a user-friendly design solution affects the general product design cost.

Cost depending on the location of a team

In addition to app complexity, the location of the design team is another crucial factor that affects app design costs. Different regions and countries have distinct market rates and cost of living, resulting in variations in hourly rates and overall project costs. To hire a UI/UX designer from the US or Western Europe, for example, you will generally have to pay more than for teams located in Eastern Europe, Southeast Asia, and South America due to taxes and higher cost of living. By considering the location of the development team, businesses can assess their budget constraints and explore opportunities to collaborate with skilled professionals in locations that provide competitive pricing while maintaining a high level of expertise. 

Take a look at how UI/UX designer salary varies from country to country.

Table of UI/UX designer salary depending on the country

Custom design vs UI kits

When it comes to app UI design cost, the approach taken in creating the visual elements can significantly impact the overall cost. Two common approaches to discuss here are custom design and utilizing UI libraries and kits.

Custom design involves creating high-quality unique visual elements specific to the app's branding and requirements. This approach offers a high level of flexibility and allows for a personalized user experience. However, it often requires more time, effort, and expertise from the design team, which can increase the mobile app design cost. Custom design is commonly employed when businesses aim to differentiate their app and create a distinctive visual identity.

UI libraries and kits, on the other hand, provide pre-made UI components, templates, and design elements that can be easily integrated into an app. These libraries and kits offer a wide range of options and styles, saving time and effort in designing from scratch. They can lower mobile app UI design cost, especially for simpler apps with standard UI requirements. However, they may not provide the same level of uniqueness and customization as custom design.

Example of UI Kit
Source: InVision

The choice between custom design and UI libraries/kits depends on factors like budget, timeline, app complexity, and desired level of uniqueness. Custom design is preferable for apps that require a distinctive look and feel, while UI libraries and kits can be suitable for projects with tighter budgets or shorter development cycles. Understanding the trade-offs and discussing the options with the design team can help businesses make an informed decision that aligns with their goals and resources.

The type of design team

The form of collaboration and how much the team charges for UI/UX design services will also affect the overall app designers cost. There are several popular forms of collaboration, including hiring in-house designers, partnering with freelancers, or working with design agencies.

In-house designers 

Hiring in-house designers is a common option, especially for businesses with ongoing projects or the need for regular product design updates. With this approach, you pay a flat rate and onboard a new team member who can contribute to your projects for an extended period. But hiring in-house designers comes with additional costs. One-time expenses include providing necessary equipment such as computers and tablets. Additionally, you would need to cover costs like insurance and sick leaves for the designer. There may also be unexpected expenses if overtime or outsourcing becomes necessary due to a larger workload. And of course don't forget about taxes and benefits. Mandatory payments will vary depending on the country, but in general, according to the U.S. Bureau of Labor Statistics, benefits account for 29.6% of the average cost per private industry employee. 


Working with freelancers involves paying an hourly rate, which varies depending on their qualifications and experience. While freelancers may not charge less than their full-time counterparts, you can save money on benefits and equipment costs. But it is important to be cautious when hiring freelance designers, particularly if you lack experience in managing them. Inexperienced freelancers can pose risks to your project, potentially leading to the need for redesigning and rebuilding your product if something goes wrong. 

Design agencies

Design agencies typically charge based on the scope of the project, making it difficult to estimate cost of mobile app design without requesting a personalized quota. While the cost may be higher compared to other options, working with an agency can save time on searching, hiring, onboarding, and project management when compared to hiring in-house designers. It provides access to a skilled team of designers with diverse expertise.

Keep in mind that location may play a vital role here, and a local US agency will undoubtedly cost you far more than outsourcing to an overseas partner. 

Project-based fee is not the only way to cooperate with a design agency. At Eleken we tailored a pricing model that works the best for the industry. 

How we charge at Eleken

Eleken specializes in designing SaaS products solely and works on a time-based retainer pricing model. This means you pay a fixed fee for a set amount of time and receive UI/UX designers working on your project remotely and on full-time basis. That’s why the application design cost depends on the amount of time needed to perform a scope of work. 

To better understand our principle of work, think of Eleken as a software-as-a-service product. 

  • We are a subscription-based service. You can buy a monthly subscription and have access to product designer/s working exclusively on your project from Monday to Friday, 8 hours per day during the whole month.   
  • We have a free-trial period. You can use our “product” for three days free of charge to feel all the advantages of this collaboration and decide if Eleken satisfies their needs. 
  • You clients can prolong, cancel, upgrade or downgrade your subscription. Similar to SaaS services, the trial period can help you decide whether to buy a full monthly subscription or not. As well, if needed, you can add more designers or ramp the team down.
  • It’s up to you how to manage our designers. Here we can again compare Eleken with a SaaS product. For example, when two different people subscribe to Netflix, one of them watches just one movie during the whole month, and another watches TV series every day. But they both pay the same price for a subscription. Similarly, when you hire a UI/UX designer at Eleken, it’s up to you what they will do during the subscription term.

Now, let’s see what influences the project duration by analyzing what design processes are included in app design at different stages of product development (based on our experience).

How long it takes Eleken to design an app

And again, we start with a statement that was already mentioned (not once): All projects are different, all products are different, and a time spent working on them influences app UX/UI design cost. The steps to design an MVP, and the steps needed to redesign app are not the same, therefore they can’t be done in the same time period.

The second point is that we don’t estimate a specific deliverable (wireframe, moodboard, user flow, and so on) but the process you need to undergo to create a suitable design solution.

With this in mind, let’s take a look at two projects we’ve worked on and see how long it took us to design them. 


Ricochet360 came to us for a product redesign. It’s a cloud phone system and CRM platform. Since CRM platforms are usually bulky, complex, have a lot of functions, and integrations, our task was to simplify the product design-wise, making it intuitive and easy to use for sales teams. Not a one-week task, right? 

It took our designer two months to complete the scope of work. Here are the steps of Ricochet’s design process:

  1. Visual concept validation. We created several variants of one screen with different typography, colors, and buttons, and our client chose the one that served us as a direction for further designs.
  2. Design audit. We analyzed the existing product to identify the flaws of the current design and develop a plan on how to fix them.
  3. Screen restructuring. During the third phase, common for redesign projects, we disassembled old screens on basic elements to understand what steps users take to complete tasks, and what elements we can add to make it easier for them to achieve the desired results.  
  4. Designing new screens. Based on visual concepts approved with our client at the beginning of the redesign process, our designer created final mock-ups.

Key points that influenced our work speed were effective communication and the fact that Ricochet360’s team came to us prepared: they defined objectives, had a clear product vision, knew what they wanted to refine in their product.

Screenshot of Ricochet app
Screenshot of Ricochet app redesign

Ricochet360 “Add a new lead” page redesign

This way, the cost of Ricochet360 app redesign was equal to the sum of two monthly subscriptions.


Gamaya app screenshot

Now Gamaya, a data analysis platform, is our regular customer that keeps returning for additional design services. But when they came to us for the first time for a product redesign, Gamaya didn’t have a clear understanding of what exactly they needed: a complete UI/UX overhaul or just refreshing the visual part. For that reason, we turned to the design thinking method:

  1. Empathize. We conducted research to better understand the product, the user, and the market.
  2. Define. Based on the research, we analyzed the current Gamaya’s product to understand what needs to be refreshed and refined.
  3. Ideate. We brainstormed various solutions to highlight opportunities for innovation and understand what Gamaya’s team expects to get as the result.
  4. Prototype, test, and implement. We used the UI component library to reduce the software development time and adapted our design to this library. As well, we thought out a convenient UI for a mobile app.

It took us almost a month to ideate and create a concept to find the right direction for further design solutions. That’s why our first collaboration with Gamaya was equal to the sum of the monthly subscription. 

Now you see, that two projects with the same task (to redesign) can have two completely different design processes and can’t last the same amount of time. Thus, the time needed to perform the scope of work depends on:

  1. Type of project
  2. The level of preparation of our client

Finally, it’s important to mention that the way our agency works doesn’t suit every design project, but it perfectly fits the clients we serve.

5 ways to reduce your budget

Dealing with UI/UX design for more than six years already helped us understand how business owners can reduce the cost to design a mobile app. Here is some advice.

  1. Define the scope of work before hiring designers. Don’t neglect the discovery phase. When you understand what you want to achieve with the design, have a rough plan of actions, and a vision of a future product you will save time (and consequently, money) needed to design an app. Otherwise, a design team will have to spend time developing and offering you a variety of concepts to choose the right direction, before they can start actual work.
  2. Prepare all the content and visuals beforehand. Designers are not content creators, you have to take care of copy, texts for inputs, images, videos, and the like. 
  3. Be involved in the design process. Communicating and providing feedback on time helps designers work faster and more effectively. If your team has to wait several days for each approval, the whole process will take twice as long as it could be. Share your opinion about each aspect of the project as soon as possible.
  4. Hire professional product designers. The more experienced and involved a designer is, the less you're going to pay, as it takes less time for experienced designers to cope with design challenges.
  5. Hire Eleken. Eleken is a team of experienced SaaS product designers. We don’t charge for PMs, QAs, or account managers. As we are a remote team, you don’t have to pay for office rent, work equipment, additional compensation – we care about all these overhead costs. You only pay for the actual design. 

To sum up

The cost of app design is influenced by a multitude of factors that are often difficult to determine upfront. Variables such as app complexity, the location of the development team, the type of design approach, and the chosen form of collaboration all contribute to the final cost. Additionally, factors such as project scope, timeline, and specific requirements can further impact pricing. 

Due to the inherent complexity and unique nature of each app project, it is challenging to accurately predict the cost from the beginning. However, by understanding these key factors and working closely with experienced professionals, you can navigate the app design process while making informed decisions that align with their goals and budgetary constraints.

Need help with designing your SaaS application? Contact us.

SaaS business
min read

Subscription vs Usage-Based Pricing: Choosing the Perfect Pricing Model for SaaS Success

In general, SaaS companies spend only six hours to decide on pricing. And as research by OpenView shows, 4 in 5 have to change their pricing at least once yearly. Choosing the right pricing model becomes a significant challenge for many SaaS companies, starting from finding the balance between customer affordability and profitability for the company to adapting their pricing models as they scale and introduce new features or services, and more. 

When looking at stats, 98% of SaaS companies attribute their success to the choice of their pricing models. From our experience of working with SaaS businesses, most companies choose between two models: subscription-based or usage-based. By the way, we at Eleken use a subscription-based model ourselves and will cover it in more detail later. 

Below, we will compare subscription and usage-based pricing models to help you determine which one fits your business needs better. And when you’d like to learn more about ways to price your SaaS, consider watching our video below.

What is usage-based pricing?

The usage-based pricing, also known as “pay as you go”, is a model when customers pay only for their actual usage, like the number of requests, scheduled posts, transactions, data used, issued invoices, and so on. According to the report, 46% of SaaS businesses adopted a usage-based pricing model in 2022, and the index is expected to reach 61% by the end of 2023. Businesses that chose usage-based pricing experienced an average of 137% net dollar retention.

Usage-based pricing

SaaS businesses choose this model for many reasons. One of them is slightly lower prices compared to the monthly payments or prices that enterprises pay. Thus, there is no commitment to start using a product, such as a requirement to pay in advance, which motivates potential customers to select the SaaS service.

For example, our client  TextMagic, an all-in-one text messaging service for mobile marketing, operates using the usage-based pricing model. TextMagic customers can create a free account and use all the features, including email campaigns, live chats, and reports, and only pay for the number of SMS text messages at the end of the billing period. Inbound messages are free. Such a transparent pricing model allowed our clients to avoid miscommunication with users, as the latter were liable for all charges. 

TextMagic pricing page
TextMagic pricing page

What is subscription-based pricing?

Despite the growing popularity of usage-based pricing, many companies still opt for subscription-based model because it provides a higher degree of predictability to the revenue stream and ensures better business stability. The idea behind this model is very simple: users pay a regular fixed amount monthly or annually to use the service. By the way, that’s why we chose it as our own pricing model

For example, Eleken is a UI/UX design agency, but not a typical one. Our clients pay a monthly fee (time-based retainer model) for product design done by experienced UI/UX designers. We can help design from scratch, redesign existing applications, or create a responsive design for any type of product. Cooperating with us is easy. It’s like hiring an in-house designer remotely but without the operational burden and overhead costs. Here are some benefits of buying a subscription at Eleken:

  • No need to educate new employees.
  • Getting the best talent without spending time on hiring with an option to change the number of designers you hire whenever you need.
  • No payments for sick/vacation leaves or any other overheads. It’s on Eleken’s side.
  • Full commitment to your project as a responsible designer works only on one project at a time.
  • A three-day free trial period to help you test how we work and make an informed decision without any payment information upfront.
  • The subscription can be canceled anytime.

Our model has shown great results in many SaaS companies. Check out our case studies to learn more.

Subscription vs. usage-based pricing: A comparison matrix

Now, let’s compare subscription and usage-based pricing in terms of characteristics and advantages for specific business sectors and industries.

Usage-based pricing Subscription pricing
Description Customers pay only for their actual usage Customers pay a regular fixed amount monthly or annually to use the service
Sales performance management Lack of revenue predictability as businesses charge the customer based on variables like time, distance traveled, and so on. Businesses generate a predictable revenue stream.
Choose when businesses - sell services that include direct costs for SaaS companies (for example, cloud storage)
- there are demand fluctuations
- it is possible to break down service offerings into chunks (for example, SEO tools, marketing automation platforms, cloud computing, and such)
- have clear usage metrics that capture the value customers get from using the SaaS products
- be ready for unpredictable revenue
- want consistent regular revenue
- need a holistic and easily predictable approach to handling all aspects of product training and support
- have an accurate plan for product capacity within the available funds
- want to avoid constant searching for the technology and tools needed for improvements and innovations as well as attracting and retaining users
Preferred business sector Infrastructure services, middleware, cloud computing, API-based products Software, eCommerce, streaming, music, video services
SaaS business examples Amazon Web Services (AWS), Azure, Uber, Airbnb, Dadadog, Twilio, Snowflake Quickbooks, BarkBox, Spotify, Dollar Shave Club, Netflix

Subscription + usage-based pricing. Benefits of the hybrid approach

Both pricing models have their pros and cons and can be suitable for various scenarios. Very often, SaaS companies even adopt a hybrid approach, when both models are combined to address different needs and enhance revenue potential. Based on the OpenView study, 46% of companies use a hybrid approach, offering their customers usage-based plans alongside traditional subscriptions. 

For example, let’s consider our client Astraea, an AI platform that allows to acquire, discover, and analyze satellite data at scale, offers flexible pricing, catered to users’ specific needs. It is subscription-based pricing with an additional Pay-as-you-grow imagery ordering option. The company has benefited from hybrid pricing as flexible contracts allowed it to attract almost all types of businesses across various industries and sizes, including Fortune 500 companies, NGOs, and early-stage startups. 

Astraea pricing
Astraea pricing

So, how to choose the right pricing model for SaaS?

While the choice of the pricing model is completely up to you, as you have to consider many nuances we tried to cover in this article, there are still some steps you can take when deciding on the pricing model for your SaaS company: 

  1. Do thorough market research to identify the prevailing pricing models in your industry and assess their effectiveness. 
  2. Analyze competitors, why they choose this or that model, as well as try to answer how effective it is for them.
  3. Understand the target users' needs, preferences, purchasing behaviors, and pain points.
  4. Identify what customers value more, such as predictability, flexibility, customization, or other specific pricing attributes.
  5. Assess the cost structure and your pricing strategy, whether it should have fixed costs, reward and incentivize loyal and existing customers, or generate profits.
  6. Think about your SaaS pricing page design and learn more about SaaS pricing page design principles.

And if you need help in designing an effective and appealing pricing strategy for your SaaS business, Eleken is ready to become your design partner.

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