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Is the Per User Pricing Model Broken for SaaS Products?

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Is the Per-User SaaS Pricing Model Broken?

For decades, traffic engineers designed cities around the concept of increasing car speed and flow, often prioritizing wide roads and sprawling intersections over pedestrian and cyclist safety. Efforts to reduce traffic deaths through "Vision Zero" programs faced significant resistance, as many believed reducing road capacity or lowering speed limits would cause gridlock and frustrate drivers. However, cities like Stockholm proved otherwise. By redesigning intersections, adding protected bike lanes, and implementing stricter speed limits, Stockholm drastically reduced fatalities without compromising mobility. Initially met with skepticism, these changes inspired cities worldwide to adopt similar models, prioritizing safety and accessibility over speed.

The traditional "per-user" SaaS pricing model faces criticism as outdated and misaligned with modern business needs, particularly for multi-location enterprises. Here’s why it’s problematic and how alternative models, like Pacer's "unlimited user" approach, can offer significant advantages:

Why the Per-User Model is Broken

  • Discourages Engagement: Per-user pricing often limits access to the software within an organization. Businesses attempt to control costs by restricting user accounts, which can result in fewer active users and less collaboration. This reduces the overall effectiveness and impact of the tool​.

    Crunchbase News, ScaleCrush

  • False Accountability: Assigning value solely based on the number of users assumes equal engagement and contribution from all users, which rarely reflects reality. True value often comes from task outcomes, not headcount​.

    OpenView

  • Administrative Complexity: Managing user accounts to optimize costs becomes a tedious task. Organizations may deactivate users and restrict access to inactive locations or projects, wasting time and resources​ managing the tool instead of completing tasks.

    CFO Dive

  • Low Perceived Value: By limiting the number of users, per-user pricing reduces the "stickiness" of the product within an organization, decreasing your teams’ perceived value of the tool itself.

Pacer's Unlimited User Model: A Better Fit

Pacer addresses these limitations by shifting to a task-based pricing model:

  • Flat Monthly Pricing: Charges are based on the number of in-flight (active) tasks across unlimited users, locations, and projects. This encourages broader adoption and collaboration without penalizing companies for scaling up their teams.
  • Simplified Administration: There’s no need to deactivate users or manage licenses for inactive locations, saving administrative effort and ensuring consistent access for everyone involved in a project.
  • Enhanced Value Alignment: Businesses pay for what matters—task management and outcomes—not the number of users logging into the system. This better aligns costs with the actual benefits derived from the software.

Other Innovative Pricing Models

  • Usage-Based Pricing: Companies are increasingly adopting this model, where charges depend on actual usage, such as completed tasks, storage used, or transactions processed. This makes pricing more scalable and adaptable to fluctuating needs.​

    Crunchbase News, CFO Dive

  • Outcome-Based Pricing: Some SaaS providers are moving to value-based models, where fees are tied to results, such as transactions completed or leads generated. This approach ensures businesses only pay for tangible outcomes​.

    Crunchbase News

Why It Matters for Multi-Location Enterprises

For businesses operating across multiple sites, the flexibility of Pacer’s unlimited user model can significantly reduce costs while fostering collaboration. With no restrictions on user access, team members at every location can actively contribute to ongoing tasks and projects, improving project accountability and success rates. This pricing model also eliminates common inefficiencies associated with the per-user approach, such as password sharing and limited engagement.

The shift from per-user pricing to more flexible models like Pacer’s represents a broader evolution in SaaS, emphasizing fairness, scalability, and actual value delivered to businesses.

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