Pricing Foundations

The Three Pillars of SaaS Pricing

The Ceiling
Value-Based Pricing
Price at 10–12% of the annual economic value delivered. When your price reflects the buyer's economic reality, the conversation shifts from cost to payback period.
+20–30% revenue vs cost-plus
The Floor
Cost-Based Pricing
Not a strategy — a constraint. LTV:CAC must hit 3:1 minimum. CAC payback within 6–12 months. Below this floor, no pricing strategy saves you.
LTV:CAC target: 3:1 → 5:1
The Anchor
Competitive Pricing
Use competitor pricing to understand the market, not to copy it. Companies that anchor to competitors leave 25–40% of potential conversion unrealised.
Position, don't copy
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