How to price your first SaaS (and why not $5)

Price your first SaaS inside the range your competitors already charge, nearer the middle than the bottom, with one plan, a monthly price and a yearly option. For most small business tools that means somewhere around $15 to $49 a month, not $5. Give your first customers a founding-member discount instead of a low list price, and raise the price for new customers once about ten people have paid without arguing about it. The price you start with doesn't have to be right. It has to be high enough that a few customers add up to something, and real enough that you learn from it.

This guide covers how to pick the number, why $5 a month nearly always backfires, a worked example, and when to raise it. It picks up where validating an app idea in a weekend leaves off: you have a page, some sign-ups and a list of what people pay for today.

Why not charge $5 a month?

Because it makes every other part of the business harder. A low price feels safe, as if it removes the reason to say no. But people rarely skip a small business tool because of the price. They skip it because they don't believe it solves their problem, and $5 doesn't change that.

What $5 does change is the arithmetic. You need ten times as many customers as you would at $49 to reach the same income, and every one of them can email you for support. Card fees have a fixed part, so they take a much bigger bite out of small payments. And the customers who pick a tool because it's the cheapest are often the first to leave when something cheaper turns up.

Fifty-three customers is a number a solo founder can reach by posting in the right communities and replying to every message. Two hundred usually needs ads or a large audience, and that's a different business.

There are exceptions. Consumer apps sold through the App Store, where people compare against free, often have to start lower. But if you're building a tool someone uses for their work or their business, the low price is rarely what wins.

How do you pick the number?

Not by working out what it costs you and adding a margin. Software costs you very little per customer, so cost-plus pricing almost always lands too low. Start from what the customer pays now and what your competitors charge. If you followed how to find a SaaS idea that already makes money, you already have the competitor screenshots.

A yearly option is worth adding from day one. The common pattern is two months free (pay for ten, get twelve), which is a discount of about 17%. Yearly customers give you cash up front and can't leave every month, which matters more to a small business than the discount.

A worked example

Take the app from the validation guide: a simple tool for self-employed personal trainers to sell session packages and see how many sessions each client has left.

The market. Say your screenshots show three established trainer apps. The cheapest paid plans are $25, $39 and $59 a month, and the plans most people pick are around $60 to $100, because they bundle scheduling, workout plans, nutrition and a branded app. These are illustrative numbers; use the ones on your own spreadsheet.

What it costs them now. Your call notes say most of the trainers you spoke to either pay for one of those apps and use a fraction of it, or track packages in a notes app and lose track of who's paid. Three of them could name a client who had a free session because nobody remembered the count.

The placement. Your angle is one job done well for someone with 20 to 30 clients. That puts you below the bundles, but there's no reason to go below the cheapest of them. One forgotten session costs a trainer more than a month of your app.

The price. $19 a month, or $190 a year. At $19, 53 trainers get you to $1,000 a month. That's a list you could build from five or six active trainer communities.

The founding offer. On the validation page you asked for a refundable $20 founding-member payment. Honour it: the first 20 founding members get $12 a month for as long as they stay, with their $20 taken off. The list price stays $19, and that's what everyone else sees.

Founding price, not a low price

A founding-member price lets you reward the people who trusted you early without setting the price everyone else expects. Make it obviously temporary: a lower price locked in for the first 20 customers, or until a date. When the date passes, the list price is the only price.

Some founders sell a one-time lifetime deal to their first customers instead, which raises cash up front without investors. It works if you leave out or cap anything that costs you money per user, like AI usage. The founding-member email in how to get your first paying customer shows how to make the offer.

What to avoid is a free-forever plan. Free users cost you support time, tell you less about what's missing, and make it harder to start charging later. A free trial of 7 to 14 days does the same job of letting people try it, and ends.

When should you raise the price?

Sooner than you think. A first price is more often too low than too high, because it gets set while you're nervous and before anyone has paid. Look for these signs:

Once about ten people have paid and you see signs from the left column, raise it for new customers. Keep existing customers on the price they signed up at. It costs you little, it keeps the people who took a chance on you, and they'll tell others they got in early.

Raise in steps you can feel: $19 to $29, not $19 to $21. If sign-ups barely change, the old price was leaving money on the table. If they drop sharply, you've found the edge, and you can step back. Either way, you've learned something a spreadsheet couldn't tell you.

Mistakes to avoid

• Hiding the price. "Contact us" or no price at all on a small tool reads as expensive or unfinished. Put the number on the page.
• Too many plans. Three tiers with eleven features each is a decision you've handed the customer. One plan sells more than three you guessed at.
• Pricing for yourself. You might not pay $29 a month for it. Your customer, who loses an hour a week to the problem, might pay it gladly. The calls tell you which.
• Waiting for the perfect number. There isn't one. Pick a price you can defend from your notes, ship it, and change it when the evidence changes.

Get a second opinion on your price

Pricing is easier when someone else looks at your numbers before your customers do. Heyron members get their own AI agent, on its own always-on computer, that can keep your competitor pricing file and call notes up to date between runs and message you on Telegram or WhatsApp when a competitor changes theirs. They also get the Solo Software Studio community, where you can post your pricing page and ask people building the same kind of business whether it makes sense. See what's included.

Frequently asked questions

How much should I charge for my first SaaS?

Charge inside the range your competitors already charge, nearer the middle than the bottom. For most small business tools that's roughly $15 to $49 a month. Use what your customers pay today, in money or time, as the ceiling.

Is $5 a month too cheap for a SaaS?

For a business tool, usually yes. At $5 you need 200 customers to make $1,000 a month, card fees take almost 9% of each payment, and the price signals a minor product. Consumer apps competing with free ones are the main exception.

Should I offer a free plan?

Not at the start. Offer a free trial of 7 to 14 days instead. A free-forever plan fills your product with people who won't pay and makes charging harder later.

How do I raise prices without upsetting customers?

Raise the price for new customers only, and keep existing customers on the price they signed up at. Tell existing customers they're keeping their price; it's good news, and most will appreciate it.

Should I offer monthly and yearly pricing?

Yes. Offer a monthly price and a yearly price with about two months free. Yearly plans bring cash in up front and keep customers longer.