How To Design The Best Pricing Strategy For Your Software Business

By  Zainab Agha

June 06, 2022 5:16 pm EST

Pricing is a critical component of any business, but it’s significant for software businesses. In software, many different pricing models exist that you can use to generate revenue. The model you will choose depends on your business goals and objectives.

The most common pricing models for software are subscription-based, usage-based, and feature-based.

Subscription-based pricing is charged a fixed fee on a monthly or annual basis. This model is standard for cloud-based software (SaaS) products.  

Usage-based pricing charges customers based on how much they use the product. This model is standard for products consumed in large quantities, such as data storage or bandwidth. 

Feature-based pricing charges customers based on the features they use. This model is standard for products with many different features, such as enterprise software.

Pricing your product is essential to generating revenue and growing your business. In this article, we’ll give you some tips on creating a pricing strategy for your software business.      

1. Know Your Costs     

Before you can price your product, you need to know your costs. This includes the cost of goods sold (COGS), research and development (R&D), marketing, sales, and support. 

2. Understand Your Customer 

It’s essential to understand your target customer and what they’re willing to pay for your product. To do this, create intriguing buyer personas. They are fictional characters that represent your ideal customer.

3. Consider Your Competition 

When creating your pricing strategy, you need to consider your competition. What are they charging for their products? How does their pricing compare to yours?

4. Set Your Pricing Goals 

Before you can set your prices, you need to determine your goals. Are you trying to Maximize revenue? Increase market share? Attract new customers? 

5. Test Your Prices 

Once you’ve set your prices, it’s essential to test them out. This is done through A/B testing or surveys. A/B testing is when you show two different versions of your pricing to two other groups of people and see which one performs better. Surveys are a great way to get feedback from your target customers about your prices.

6. Review Your Prices 

It’s important to review your prices regularly and make changes as needed. This will ensure that you’re generating the maximum amount of revenue possible.

7. Offer Discounts 

One way to increase sales and attract new customers is to offer discounts. This could be a percentage of the list price, a free trial, or a pay-as-you-go model. 

8. Use Price Anchoring  

Price anchoring is when you offer two different pricing options and position one as a great value. This will make the other option look more appealing by comparison. 

9. Offer Free Trials

Free trials are a great way to increase conversion rates and attract new customers. They give people the opportunity to try your product before committing to paying for it. 

10. Use Tiered Pricing

Tiered pricing is when you offer different levels of pricing based on the features or benefits each group provides. This allows you to upsell customers to a higher-priced product.


Pricing is a critical component of any software business. Understanding your costs, customer, and competition is essential when creating your pricing strategy. And finally, don’t forget to test your prices before launching your product.

Zainab Agha

Zainab started her career in advertising as a copywriter; which taught her how valuable moxie was in the boardroom and translates that in her campaigns. Building brands has led her to explore digital marketing, communication concepts, and what it takes to grow an idea from scratch. In her free time (let’s assume she is a badass with balancing work and play) she travels in heels then complains, experiments with innovative creative solutions that sell, and does stand-up comedy.

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