Value-based pricing is a SaaS pricing strategy that bases the price of a feature/product/service on how much the target customers believe it is worth. It is based on the value as perceived by the customer instead of drawing from internal (focused on costs, overheads, and profits) or competitor standards.
Though it needs time and resources for it to be executed properly, it is truly representative of the customers’ needs as it translates the effectiveness of the offering in solving customer problems into a dollar value. It is especially helpful if you have a narrow identified target market.
There are other benefits to this approach too, as outlined below: