One of the biggest advantages of SaaS is its subscription-based business model. Instead of one-off sales, SaaS companies generate predictable, recurring revenue. But not all subscription models are created equal—choosing the right one can make or break your growth in 2025.
Why Subscription Models Matter
- Provide steady, predictable cash flow
- Make revenue forecasting easier for investors and founders
- Improve customer retention with ongoing value
- Enable faster scaling compared to one-off sales
Popular SaaS Subscription Models in 2025
1. Flat-Rate Pricing
One fixed price for all features. Simple, transparent, and easy to understand.
Best for: Niche tools or small SaaS products targeting one audience.
2. Tiered Pricing
Multiple plans (Basic, Pro, Enterprise) that let customers choose based on their needs and budgets.
Best for: Growing SaaS companies with diverse customer segments.
3. Per-User Pricing
Charge per active user each month. Revenue scales as adoption grows.
Best for: Collaboration and communication tools like Slack or Zoom.
4. Usage-Based Pricing (“Pay as You Go”)
Customers pay based on actual usage (e.g., API calls, storage, transactions). Lower barrier to entry, but revenue grows with usage.
Best for: SaaS with variable workloads, like Twilio or AWS services.
5. Freemium Model
Free plan with limited features to attract users, with paid plans unlocking premium functionality.
Best for: Startups seeking viral adoption and rapid user growth.
6. Hybrid Models
Mix freemium + tiered or usage-based pricing for maximum flexibility. Works well for SaaS serving both SMEs and enterprise clients.
Tips for Choosing the Right Model
- Align pricing with perceived customer value, not just costs
- Test different models with early adopters before scaling
- Avoid overly complex pricing pages
- Encourage annual subscriptions with discounts to boost retention
Example: Australian SaaS Startups
A Melbourne-based SaaS HR platform introduced tiered pricing for SMEs and enterprise clients. This approach let them serve small businesses affordably while upselling larger accounts, boosting ARR significantly.
Final Thoughts
The right subscription model balances simplicity, scalability, and customer value. Choose wisely, and your SaaS business can maximise predictable revenue and long-term retention.
At Mizara Studio, we help SaaS companies design smart subscription models tailored to their market, ensuring sustainable growth and investor appeal.