Pricing is the most consequential decision most SaaS founders make once and never revisit. You set a number early, you get busy, and you look at it again when growth stalls or churn spikes — by which point the number has been wrong for years.

On a recent episode of the SaaS Stories podcast, I had the pleasure of speaking with James Wilton, founder of Monevate, about pricing strategy, where the market is heading, and why refining a pricing model is so much harder than setting one.

Listen to the full episode of SaaS Stories with James Wilton

How you become a pricing expert by accident

James didn't plan this. He spent most of his career in consulting before moving into pricing with an internal consulting group, a role he took partly for the work-life balance after becoming a father. It turned out to suit him, and the strategic depth and creativity of pricing work caught him properly.

That took him to McKinsey, where he led the pricing service line for Fuel, the firm's unit for startups and scale-ups. McKinsey brought rigour, but its own pricing made it hard to serve smaller SaaS businesses — so he founded Monevate to give companies of any size access to serious pricing strategy without the fees of a major consultancy.

Why SaaS companies struggle here

Most SaaS companies start with a good-better-best model built on instinct rather than framework, set during the period when the business is still validating product-market fit. That's understandable. The problem is that the model rarely gets revisited as customer needs, competitive position and business goals all move underneath it.

The common failure is tweaking without structure — nudging prices up or down on short-term trial and error rather than evidence. Without a roadmap you end up undervaluing what you built, losing customers to abrupt increases, or simply never capturing the value you already deliver.

The third of those is the most expensive and the hardest to see, because nothing appears to be wrong. Customers renew, nobody complains, and the gap between the value you create and the price you charge quietly widens every time you ship something. There is no alert for that.

The five models reshaping the market

James pointed to five approaches disrupting SaaS pricing right now.

1. AI-based pricing. Many companies shipped AI capability as a free beta. As those features mature, everyone now has to work out how to charge for the value they create.
2. Usage-based pricing. Charging on actual consumption rather than per seat, which aligns cost with value and makes it far easier for customers to scale up.
3. Outcome-based pricing. Charging on results rather than inputs — Zendesk billing against successful customer service resolutions is the clearest example.
4. Hybrid models. Subscription blended with consumption, giving you a structure flexible enough to serve very different customer types.
5. Freemium with add-ons. A free core with premium modules, so paying customers get something genuinely exclusive.

What generative AI is doing to pricing

Most companies bundled AI features into standard plans at first. As those tools mature the question becomes how to monetise them without alienating the base — per use, per outcome, or as a new tier.

James raised Canva, which drew significant backlash after sharply increasing prices once AI tools arrived. The lesson isn't that the increase was wrong — the added capability was real and it cost real money to run. It's that pricing changes need transparent communication and a clear value story arriving before the invoice does. Absent that, customers fill the gap with the least generous explanation available, and read the increase as opportunism dressed up as innovation.

The mistakes that cost the most

Delaying increases. James shared an example of a company that hadn't raised prices in twelve years and was barely breaking even. Nobody decided that. It just happened.

No strategic review. Pricing should be revisited annually rather than when profit declines. An annual escalator — inflation plus two percent, say — keeps things sustainable without a difficult conversation every year.

Poor communication. "We added AI, so prices are going up" doesn't work. Frame increases around fairness and the real cost of maintaining quality.

No flexibility. Customers want choice, and the psychology matters as much as the economics. Tiered or modular pricing lets someone opt into higher value, which feels like a decision they made. A flat increase across a single plan feels like something done to them, even when the amount is identical. Same money, entirely different conversation at renewal.

Moving to a new model without losing everyone

Switching from per-user to usage-based pricing is genuinely difficult, and James is practical about it. Communicate well in advance so customers have time to understand and adapt. Offer transition pricing so the shift is gradual. Provide legacy options so existing customers can stay put with the choice to upgrade. And pilot the model with a small group before rolling it out.

Pricing as a growth lever

We talk endlessly about product-led and sales-led growth. Pricing-led growth is the one nobody names. A disruptive pricing model that matches how customers actually buy can be a competitive advantage in itself — the shift from licensing fees to pay-as-you-go changed the shape of the industry.

Companies that align price with how value is realised see better conversion and stronger retention. That isn't a pricing outcome. It's a positioning one — the model itself communicates what you believe you are worth and what you think the customer is buying, before anyone reads a word of your messaging.

It also changes who you attract. A usage-based model draws customers who intend to use the product heavily; a per-seat model draws customers optimising for seat count. Neither is wrong, but you are selecting a customer base as much as a revenue mechanism.

Going deeper

James recently published Capturing Value, a step-by-step guide to building pricing models that fit your business objectives, your customers and the market. It's available on Amazon and through leading bookstores, and it's a genuinely useful resource for founders and executives who want more than a benchmark.

Pricing isn't about numbers. It's about strategy, perception and the long game. If you haven't reviewed yours in twelve months, that's the place to start — and the annual escalator is the easiest change you'll make all year.