Customers today are more conscious than ever about getting value for what they pay. In SaaS, a flat monthly subscription often leaves users asking, “Am I overpaying for what I actually use?” This disconnect can lead to dissatisfaction or even cancellations that are commonly referred to as subscription fatigue.
To address this, many SaaS businesses are adopting volume pricing—a flexible pricing model that ties costs to actual usage, offering fairness and transparency. In this article, we’ll dive into how volume pricing works, why it’s becoming a go-to strategy for SaaS companies, and how you can implement it effectively.
What is volume-based pricing?
Volume-based pricing is a pricing structure where the cost per unit varies based on predefined quantity ranges, with different rates applied to each range—such as $0.10 per unit for the first 50 units and $0.20 per unit for the next 50. This allows prices to decrease or increase depending on the bundle thresholds. In this volume pricing model, customers also typically receive discounts applied to all units once they reach a specific quantity threshold. For example, automation company Zapier uses volume-based pricing discounts where customers’ costs per task decrease as they automate more tasks per month.
Source: Zapier’s volume-based discounts based on the number of tasks automated per month
However, the benefits of volume pricing extend far beyond the immediate cost savings for customers. For businesses, this model also incentivizes customers to purchase large quantities of a product or service, which drives up sales volume. In the context of SaaS, this could mean your customers increase their usage of your service in order to get discounts and make the most of your volume pricing structure.
And compared to more complex pricing strategies like outcome-based pricing, volume pricing offers simplicity and transparency. Customers easily understand the savings tied to purchasing larger amounts, and this can make this model much more appealing and practical for SaaS businesses looking to meet customer needs while maintaining a scalable, straightforward pricing structure.
How volume-based pricing differs from tiered and bulk pricing models
There are two other common models to consider, tiered pricing and bulk pricing. While volume-based pricing is popular, it’s important to understand how it compares to these models, which also offer volume discounts.
Each has unique characteristics that suit different business needs and customer preferences.
Tiered pricing
In a tiered pricing model, customers pay a different price for each tier of consumption or purchase. For example, in SaaS or telecommunications, the cost for the next tier may increase as usage crosses defined thresholds. However, the pricing applies only to the units or services within that specific tier. This makes it easy for businesses to offer quantity discounts at incremental levels while maintaining the integrity of their pricing structure.
Source: A starter and a premium price plan set up within Togai
Bulk pricing
Bulk pricing, on the other hand, provides a flat discount for bulk purchases. Unlike tiered or volume-based pricing, bulk discounts are a one-time incentive for purchasing a large quantity at once. This model is prevalent in retail and wholesale industries, where businesses encourage customers to stock up by offering cost savings for buying in bulk. However, bulk pricing doesn’t scale with increasing volume beyond the set discount level.
| Pricing model | Discount model | Use case | Example |
|---|---|---|---|
| Volume pricing | Applies to all units once the threshold is met | SaaS, Manufacturing | Reduced cost for higher usage levels |
| Tiered pricing | Applies differently to each tier | SaaS, Telecommunications | Prices increase per tier but apply only to that tier |
| Bulk pricing | Applies as a flat discount for a single large purchase | Retail, Wholesale | Discounts for one-time bulk purchases |
How to implement volume-based pricing
Unless you have a dedicated usage-based billing platform like Togai, you can’t just plug-and-play a volume pricing strategy. There are several steps you’ll first need to take if you want to set up this model so that it's beneficial for your customers and your business’s bottom line.
Here’s a step-by-step guide to help you create and manage volume-based pricing in your SaaS business.
1. Understand your costs
The foundation of any pricing strategy lies in understanding your costs. To start, calculate your operating hours to ensure your discounts won’t undermine profitability. For SaaS companies, you should also factor in variables like economies of scale and customer acquisition costs, which can shift as you target larger enterprise customers. Knowing your total cost per unit will also allow you to set a discount rate for higher usage volumes that is still profitable for your business
2. Define your volume thresholds
Defining the right volume thresholds is essential for striking a balance between satisfying your customers and meeting your business goals.
To find the right volume/usage thresholds for your business, you can start by analyzing your historical sales data and metrics to uncover your customers’ purchasing patterns. Or, if you’re already using a usage-based pricing (UBP) model, you could use a tool like Togai’s revenue analytics to understand the business impact of any pricing changes based on your customers’ actual usage data.
You can then pair these insights with market research to understand what usage levels or subscription tiers will entice your customers to scale their usage without overcomplicating your pricing structure. For example, offering discounts for customers who process 10,000, 50,000, or 100,000 API calls per month might align with your audience’s usage patterns while ensuring your SaaS business remains profitable and efficient.
3. Test your pricing models
Before you roll out your volume pricing strategy at scale, you should test different approaches to determine what works best.
For instance, running A/B tests on different volume pricing options would allow you to gauge customer responses and evaluate whether your pricing offers align with their expectations. And with a dedicated billing platform like Togai, you can run pricing simulations based on actual usage data to compare and contrast the impact of different pricing models on your business.
Source: Three different pricing plans being compared within Togai’s Revenue Simulator
By collecting this feedback and analyzing the results, you can refine your price points to ensure they meet your customers’ expectations and drive the most revenue possible for your business.
4. Integrate into your existing systems
Once you’ve landed on the right way to configure your volume based pricing strategy, you’ll want to ensure that the billing tool you’re using integrates well with the rest of your tech stack. By incorporating this pricing model into your billing and CRM platforms, you can automate discount calculations for larger orders and track data throughout the order to cash process.
Source: A visual diagram of the order to cash process
5 volume-based pricing tools to use
It doesn’t matter what types of volume-based pricing you implement in your business unless you have the right tools to back them up. In this list, we’ll give you five of our top volume-based pricing tool recommendations for growing SaaS businesses.
1. Togai
First up, Togai is a usage-based billing platform built specifically for SaaS companies looking to implement flexible pricing models, including volume-based pricing.
It stands out with features like dynamic pricing adjustments that ensure accurate billing based on real-time customer usage. Unlike other SaaS billing platforms that spread themselves thin across multiple pricing models, Togai was built exclusively with usage-based and volume pricing in mind.
Additionally, its seamless integration with subscription management systems allows companies to track usage, generate invoices, and adapt their pricing in real time—all on a single platform.
Source: Togai’s usage-based billing landing page
Key features:
- Industry-specific and UBP configurations across verticals like SaaS, Fintech, Gen AI, and CPaaS
- A revenue simulator that allows users to understand the business impact of any pricing changes based on actual customer usage data
Why it’s useful: Togai is ideal for SaaS companies that want to rapidly test, implement, and optimize volume-based pricing.
Want to implement volume pricing in your SaaS business? Sign up for free to get started with Togai.
2. Stripe
Stripe is a leading payment platform that supports a range of pricing models, including volume discount pricing, for both SaaS and e-commerce businesses.
Source: Stripe’s usage-based billing landing page (Stripe)
Key features:
- Flexible package pricing that adjusts based on order quantities or usage
- A robust API for customizing product pricing and discount structures
Why it’s useful: Stripe simplifies billing and payment processes and makes it easy to implement scalable pricing strategies without additional infrastructure.
Problems with this solution: Stripe's API is highly flexible, but its complexity can pose challenges for businesses without dedicated developers, leading to longer setup times and higher onboarding costs.
3. Chargebee
Chargebee offers a comprehensive solution for managing subscriptions and recurring billing with support for volume-based pricing customization.
Source: Chargebee’s usage-based billing landing page (Chargebee)
Key features:
- Easy-to-use template configurations for setting volume thresholds
- Tools to manage unit cost calculations and ensure profitability at scale
Why it’s useful: Chargebee empowers businesses and makes it easy for them to offer tailored pricing structures while maintaining control over their revenue streams.
Problems with this solution: Because Chargebee caters to several different verticals and use cases, it may not be the best choice for companies that want a tool built exclusively for SaaS businesses.
4. Maxio
Maxio (formerly SaaSOptics and Chargify) is a financial operations platform tailored for SaaS businesses.
Source: Maxio’s usage-based billing landing page (Maxio)
Key features:
- Advanced analytics for tracking the success of volume discount pricing strategies.
- Tools to create, manage, and refine pricing models that align with customer usage patterns.
Why it’s useful: Maxio provides insights across dozens of different SaaS-specific metrics so business leaders can track the success of their billing and pricing strategies
Problems with this solution: Maxio’s advanced analytics and features come with a higher cost, which may not be suitable for early-stage or budget-conscious SaaS companies.
5. Custom billing solutions
All of the aforementioned tools are great choices for growing and established SaaS businesses. But for truly larger enterprises, integrating volume discount pricing into proprietary ERP or CRM systems provides unmatched flexibility and customization. These systems offer full control over unit cost adjustments and pricing rules, seamlessly integrating with tools used to manage inventory, sales, and customer relationships.
This level of customization allows enterprise businesses to design package pricing models that are highly specific to their operational needs and customer base. However, if you’re operating an earlier-stage business, this setup provides no tangible benefits as the development costs of a custom solution far outweigh the potential cost-savings.
3 examples of successful volume pricing strategies
Need inspiration on how to set up and implement your own volume based pricing strategy? Here are three real-world examples of SaaS companies successfully using volume pricing to grow their customer base and increase their sales volume.
1. Freshdesk
Freshdesk is a customer support platform that uses volume-based pricing to cater to growing teams.
Under their volume-based model, as businesses add more agents to their support systems, the per-agent cost decreases, providing clear savings for larger teams. Freshdesk also offers scalable plans with advanced features tailored to the needs of expanding organizations. This strategy not only helps businesses manage their costs efficiently as they grow but also builds loyalty by offering flexible pricing that adapts to their evolving requirements.
2. ConvertKit
ConvertKit, an email marketing platform for creators and small businesses, uses volume-based pricing to reward customers who increase their number of email subscribers. As their number of subscribers increases, ConvertKit users pay a reduced price for their email service as they scale.
Additionally, ConvertKit also offers tiered plans that provide their users access to more advanced features. By combining these models, ConvertKit’s hybrid pricing approach not only supports creators as they expand their reach but also strengthens customer loyalty.
3. Zapier
As we mentioned earlier, Zapier, is known for its volume-based pricing strategy that charges users based on the number of tasks users automate each month.
The reason this model works so well, however, is because Zapier lowers the cost per task as businesses automate more, offering clear savings for users who automate higher task volumes. Zapier also provides flexible team plans with increased task limits, which makes it easy for growing companies to get the most out of their investment.
FAQs
What is the difference between volume and tier pricing?
Volume pricing applies a discount to all units once a specific threshold is met, reducing the cost per unit for the entire purchase. In contrast, tier pricing applies different rates to each tier of consumption, meaning the discount only applies to the units within the defined tier.
What is volume pricing also known as?
Volume pricing is also referred to as quantity-based pricing or bulk discount pricing, as it incentivizes purchasing in larger quantities by lowering the per-unit cost.
How do volume discounts work?
Volume discounts reduce the cost per unit of a product or service when a customer purchases a larger quantity. These discounts are applied based on predefined thresholds, where customers pay a lower rate for all or part of their purchase once they exceed a specific quantity.
How to determine volume pricing?
To determine volume pricing, analyze your cost structure and customer usage patterns to set quantity thresholds that incentivize higher purchases while maintaining profitability. Then, combine historical data, market research, and tools like revenue analytics to test and refine pricing tiers that align with customer needs and business goals.
