The Hidden Levers of SaaS Pricing: Why 85% of Your Customers Will Never Upgrade and What to Do About It

The Pricing Blind Spot Every Founder Misses

You’ve spent months refining your product, obsessing over features, and perfecting your sales pitch. But here’s the uncomfortable truth: your biggest revenue leak isn’t churn or CAC—it’s your pricing structure. It's the silent killer of expansion revenue. It's the system that most SaaS founders only glance at once, then forget—until it's too late.

Most founders fixate on one question: "Should we charge $29 or $49?"

The better question is: "Is our pricing system designed to grow with our customers?" And if not, what's stopping it from doing so?

Because here’s what happens when you get it wrong:

• Customers outgrow your plans but don’t upgrade (because switching feels risky, confusing, or not worth the trouble)

• Heavy users pay the same as light users (leaving margin and expansion revenue on the table)

• Your sales team spends cycles managing upgrade questions instead of landing new logos

Let’s fix that.

Why Your Price Point Doesn’t Matter (As Much As You Think)

Pricing isn’t about picking the perfect number—it’s about building a flexible system where:

• Customers naturally spend more as they get more value

• Expansion happens automatically and transparently

• Margins improve as usage increases

As Hermann Simon puts it: "There is no such thing as a good or bad price—only a price aligned or misaligned with perceived customer value."

Pricing is perception, and perception is shaped by experience, context, and fairness. A flat price tag ignores all three.

The Three Structural Leaks Killing Your Growth

1. Misaligned Value Metrics

If you’re charging per seat but the real value comes from usage, you’re capping your upside and making it hard for customers to correlate your price with their success.

• Failing example: Zoom charging per seat, despite meetings often being cross-functional and team-based.

• Winning example: Twilio charging per API call, ensuring the bill rises only when value is delivered.

In value-based pricing, the metric is everything. Get it wrong and even a great product feels overpriced.

2. Tiering That Doesn’t Match Reality

Up to 85% of customers never voluntarily upgrade. Why? Because they make their plan choice once—on day one. Any change feels risky.

• Failing example: Dropbox’s storage tiers that feel arbitrary for most non-tech-savvy users.

• Winning example: Notion’s usage-based model that scales organically with team growth.

Instead of "forcing" upgrades, great pricing encourages them by aligning cost to value at every level.

3. Pricing Cliffs That Scare Users

Drastic jumps in price (e.g., from $49 to $149 for a critical feature) scare away mid-market customers who are ready to grow but not triple their spend.

• Winning example: Slack’s hybrid pricing model that includes a base fee and active user charges reduced churn by 27%.

Smooth ramps outperform sharp cliffs. Pricing transitions should feel like steps, not leaps.

The Five Levers of a Scalable Pricing System

1. Value Metric: Charge for What Actually Matters

Ask yourself: "What unit of success do our customers care about—and are willing to pay for?"

• Winning metrics: API calls (Twilio), documents signed (DocuSign), gross revenue managed (Stripe)

• Failing metrics: Static seat counts, feature bundles with no clear ROI

Rule: If your pricing doesn’t scale with how customers define success, your monetization is misaligned.

Great value metrics are:

• Aligned with usage

• Easy to measure

• Easy to predict (for the customer)

2. Packaging: Strategic Exclusion, Not Feature Dumping

Tiers should match customer jobs-to-be-done, not your product roadmap or internal feature sets.

Red flag: If over 60% of your customer base is stuck in one tier, your segmentation logic may not reflect real-world use cases.

3. Pricing Model: Pick the Right Growth Engine

Your pricing model should map to how your product delivers value, and how predictable you want your revenue to be.

• Usage-based (e.g., AWS): High scalability, high variability

• Hybrid (e.g., Slack): Base fee + usage component. Balances predictability and upside.

• Outcome-based (e.g., ProfitWell): Pricing tied to actual delivered results (emerging and ideal for AI or ML-powered tools)

Data point: Hybrid models drive 32% higher net revenue retention compared to flat-rate pricing.

Your pricing model isn’t just a billing mechanic—it’s a growth model.

4. Plan Design: The Silent Upsell

Most customers never initiate upgrades on their own. But they will expand—if the product nudges them smartly and clearly.

• Auto-scaling plans: Stripe quietly upgrades you after you exceed a usage limit.

• On-demand feature unlocks: Canva allows you to pay $1 for a premium asset without upgrading tiers.

• Overage notifications: “You’ve used 90% of your storage. We’ll auto-bump you next cycle.”

These are invisible upsells. They compound revenue without friction or human intervention.

5. Intra-Tier Expansion: Monetize the Middle

Most customers will never change tiers. But all of them want something more at some point.

• Webflow offers $2/1K CMS items inside existing plans

• Loom lets you add HD video capability for $5/month

• Shopify uses volume-based discounts (e.g., lower payment fees at higher GMV)

Airtable grew expansion revenue 19% just by enabling record-based pricing within tiers.

Don’t leave your largest segment (the 85% that stay in their initial tier) untapped.

Build Your Scalable Pricing Canvas

Use these five levers as your new operating model for monetization:

1. Value Metric → Tied to customer-perceived success

2. Packaging → Segmented around outcomes, not features

3. Pricing Model → Reflects usage and growth intent

4. Plan Design → Built-in mechanisms for passive upsell

5. Intra-Tier Expansion → Capture value within every cohort

This isn’t just a pricing strategy—it’s a system for revenue scalability.

Audit Your Pricing in 10 Minutes

Want a fast reality check? Run this audit:

• ✅ What’s your true value metric? → Ask customers: "What do you measure to know our product is working for you?"

• ✅ Are your plans aligned to outcomes? → Watch for orphan tiers or plans with bloated feature sets.

• ✅ Could you layer in a hybrid element? → Experiment with adding light usage overlays ($29/month + $0.05 per use)

• ✅ Are customers quietly churning at usage caps? → Monitor who hits limits and doesn’t upgrade.

Bonus: Track expansion yield—the revenue growth per customer over time.

The New Pricing Playbook

• Stop obsessing over average selling price (ASP). Instead, measure expansion efficiency.

• Stop designing for new customers only. Build pricing systems that support and scale with the existing 85%.

• Make fairness a feature. Customers should understand and trust how pricing evolves.

• Let your North Star Metric influence your pricing model. If it grows, revenue should too.

Final Thought

Pricing isn’t static. It’s not a sticker. It’s a system.

A good system grows with your users. A great one makes them want to pay more—because they’re winning.

If your product scales with usage, your pricing should scale with success. And if your customers grow? You grow with them.