How many pricing tiers should a SaaS have?

Most SaaS products do best with 3 tiers. Two tiers make the choice too binary. Four or more creates decision paralysis. The classic is: Starter (entry), Growth (most features, most popular), Business/Enterprise (full features + support).

What is the decoy pricing effect?

The decoy effect uses a middle tier priced just below the top tier to make the top tier look like better value. Most customers choose the middle option when given three choices — "price to anchor" the top tier.

How do I price my SaaS product?

Start with value-based pricing: what outcome does your product create, and what is 10–20% of that value? Validate against competitive alternatives. Never start with cost-plus pricing (build cost + margin) as it disconnects you from customer willingness to pay.

Should I offer annual billing?

Yes. Annual billing (discounted 15–20%) reduces churn, improves cash flow, and increases LTV. Offer it as the default or highlighted option. Most SaaS companies get 30–60% of new customers to choose annual when it is prominently featured.

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Free SaaS Pricing Calculator — Model Tiers and Forecast MRR

SaaS pricing strategy determines blended ARPU (Average Revenue Per User) and total MRR based on how customers distribute across plans. This calculator lets you define up to 5 pricing tiers, set expected customer counts, and instantly see blended ARPU, total MRR, ARR, and the revenue contribution per plan.

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How It Works

How to use SaaS Pricing Calculator

Define your pricing tiers

Add up to 5 plans with names (Starter, Growth, Business) and monthly prices.

Set customer distribution

Enter how many customers you expect at each tier, or use percentages of total customers.

See revenue breakdown

View blended ARPU, MRR per tier, total MRR and ARR, and revenue concentration by plan.

FAQ

Frequently asked questions

Blended ARPU (Average Revenue Per User) is total MRR divided by total active customers. If you have 50 customers at $29 (=$1,450) and 20 at $99 (=$1,980), total MRR = $3,430, customers = 70, blended ARPU = $49.

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References

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Free SaaS Pricing Calculator — Model Tiers and Forecast MRR

How to use SaaS Pricing Calculator

Frequently asked questions

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