SAAS Companies - Tiering Their Pricing: Best Practices
Some best practices on how SaaS companies that have large enterprise clients are tiering their pricing for their platform are exemplified by companies DropBox and HubSpot. These two SaaScompanies were singled out because they have both been recently featured in industry reports as top examples of price tiering. They employ the best practices of limiting data usage across tiers and of providing access to certain features at certain tier levels.
DropBox — DATA USAGE LIMITING
- DropBox is a cloud storage company that has experienced massive growth in the number of registered users and revenue in 12 years of its existence.
- The company has recently been featured in an industry report as one of the most successful B2B SaaS companies.
- The company has a large client base. Some of their prominent clients are Under Armour, Hewlett Packard, Spotify and National Geographic.
- 56% of the Fortune 500 companies have at least one Dropbox team within their organization.
- Businesses are offered the following pricing tiers: Standard, Advanced and Enterprise.
- Dropbox limits data usage for the first tier and then limits certain features for the second tier, so the company actually employs a combination of the two best practices.
- The main difference between the first two tiers is that Standard tier users only have access to 3TB of storage space, while Advanced tier users have unlimited storage space access.
- The main difference between the Advanced and Enterprise tiers is that Enterprise tier has a higher level of customer support and it offers individualized solutions to teams.
- Overall, these tiers are designed based on the needs and the budget of potential customers. For example, the Advanced tier includes everything that the Standard tier does, plus other perks, such as advanced admin controls, tiered admin roles and advanced user management tools.
- The Enterprise tier includes everything that the Advanced tier does, but it also covers EEM support, 24/7 phone support and advanced training for end users and admins.
HubSpot — Limiting of features
- HubSpot is an award-winning SaaS company that offers software solutions to companies interested in transforming their online business.
- HubSpot has recently been featured in an industry report as an example of best practices in tiered pricing.
- The company's big client base includes large companies such as ADP, Expedia and Intuit. Some clients, like SAP, are Fortune 500.
- The main advantages of their price tiering system include an appeal to multiple personas and a clear upselling route.
- HubSpot offers three options, based on the needs of a client and their budget: Starter, Professional and Enterprise.
- The best practice of the limiting of features is beautifully employed by HubSpot, because the additional features are closely aligned with the size of the enterprise customer. Larger enterprises need greater integration options across products and they also appreciate additional reporting capabilities.
- The Professional tier represents an upgrade from the Starter tier mainly because of additional marketing strategy tools and phone support.
- The Enterprise tier is the most comprehensive, and it offers integration and reporting options that the other two tiers don't include.
- The Professional tier includes everything that Starter tier does, plus other perks, such as SEO and content strategy, standard SSL certificate and marketing automation.
- On top of services included in the Professional tier, Enterprise tier includes: up to 500 custom marketing reports, predictive lead scoring, content partitioning and CMS membership.
To select the best practices in the industry, we searched through multiple credible industry analysis reports. There is a wealth of general data on the topics, both from general technology websites like TechCrunch and from industry-specific researchers like Process Street. Price-Intelligently, for example, recently created a 140-page report on SaaS pricing. We narrowed down the list of best practices by selecting only those mentioned in at least two industry-related sources. Then, we further narrowed down our list by selecting only best practices that are clearly adopted by certain companies to address how companies are employing the best practices. When identifying the companies, we selected Dropbox because it works with a number of Fortune 500 companies and we have selected HubSpot because the company is already used for a case study in a related response. So, the best practices presented above are those practices listed as best by numerous experts that are adopted by successful businesses that work with Fortune 500 companies.