Pricing in SaaS is rarely as simple as adjusting a number and watching demand respond. Real-world willingness to pay is shaped by behaviour, context, and customer differences.
Signal
SaaS companies misprice products by treating elasticity as a single number.
Stakeholders
CEO, CRO, Head of Pricing, Product Lead, Revenue Operations, Growth Lead
Strategy
Use behavioural data and segmented analysis to understand willingness to pay and align pricing with strategy.
Elasticity Is Not A Single Number
Price sensitivity varies widely across different types of customers. Treating it as a single number leads to missed opportunities and poor pricing decisions. Some customers are highly price-sensitive, comparing options, waiting for discounts, and switching easily. Others are convenience-driven or brand-loyal, willing to pay more for speed, trust, or experience. These differences often matter more than income alone.
There are also important thresholds. A £5 increase on a low-cost item can feel significant, while the same increase on a premium product may go unnoticed. Customers do not think in percentages, they react to perceived jumps.Usage intensity plays a role too. Frequent users tend to justify higher spend because the value feels tangible. Occasional users question even small costs because the benefit is less clear.
Averaging these behaviours hides what is really happening. You might increase prices and see stable revenue, while quietly losing your most price-sensitive segment or undercharging your most loyal one.
The smarter approach is to understand your different customer groups and decide which ones you want to optimise for, then shape pricing accordingly.
Measuring Elasticity Using Behavioural Data
What people do matters far more than what they say. Behavioural data provides the clearest view of willingness to pay.
Purchase timing is a strong signal. Customers who buy immediately are less price-sensitive than those who wait, revisit, or abandon and return later. Repeat visits to product or pricing pages often indicate hesitation or comparison.
Discount behaviour is especially revealing. Some customers only buy during promotions, clearly signalling price sensitivity. Others purchase regardless of discounts, showing that price is not their primary concern.
Basket abandonment is another key signal. If customers consistently drop off at the same stage, it may reflect price shock, lack of trust, or uncertainty about value. Patterns across many users help identify the real cause.
Post-purchase behaviour also matters. Customers who return, upgrade, or increase spend are demonstrating strong perceived value. Those who churn quickly or only engage during sales reveal weaker willingness to pay.
The real insight comes from connecting these behaviours. A customer who browses repeatedly, waits for a discount, and then buys once is very different from one who buys instantly and returns regularly.
Analytical Techniques
Structured approaches can sharpen your understanding, but they must reflect real consumer behaviour.
Van Westendorp helps identify perceived price ranges by asking customers what feels too cheap or too expensive. It is useful for understanding perception, but consumers often underestimate what they would actually pay.
Conjoint analysis goes further by forcing trade-offs between features and price. In B2C, this is valuable for understanding what drives decisions, whether it is convenience, quality, or brand. However, it must feel realistic or the results lose meaning.
Behavioural data remains the most reliable source. Real purchases, real drop-offs, and real responses to price changes capture the emotional and contextual factors that surveys miss.
The strongest approach blends methods. Use behavioural data as your foundation, layer in research to explore new ideas, and validate with controlled tests before scaling changes.
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Elasticity In The Real World
Consumer behaviour often defies simple pricing logic.
Lower prices do not always increase demand. Many customers are held back by uncertainty, habit, or lack of urgency rather than price. A discount does not solve those problems. In some cases, lower prices can even reduce demand by signalling lower quality. Consumers often use price as a shortcut for trust, especially when comparing unfamiliar options.
Premium pricing can have the opposite effect. Higher prices can increase appeal by suggesting better quality, exclusivity, or status. This is especially true in categories driven by brand and perception.
Thresholds are also critical. Prices just below round numbers often perform better because they feel more acceptable. Crossing a boundary, even by a small amount, can trigger a disproportionate drop in conversion.
Context matters as well. The same product may feel affordable or expensive depending on where and how it is presented, what alternatives are visible, and what the customer is trying to achieve.
When Elasticity Conflicts With Strategy
Not all demand is worth capturing. In B2C, chasing every price-sensitive customer can weaken your brand and reduce long-term value.
Heavy discounting may increase short-term sales but train customers to wait for offers. This erodes margins and makes full-price sales harder over time.
On the other hand, premium positioning may reduce conversion but attract more valuable, loyal customers. These customers often have higher lifetime value and lower support needs.
Free or low-paying users present another challenge. While they can drive traffic or awareness, they may not contribute meaningful revenue. Their value depends on your growth model and whether they support paid customers.
Good pricing decisions require choosing who you are for. Elasticity shows you what is possible, but strategy defines what is desirable.
Conclusion
In B2C, willingness to pay is shaped by perception, behaviour, and context rather than pure calculation. Customers respond differently depending on who they are, what they need, and how they feel in the moment.
Understanding elasticity means moving beyond averages and into patterns. Behavioural data, combined with thoughtful analysis, reveals how different customers respond to price.
But pricing is not just about optimisation. It is about alignment, choosing the right customers, reinforcing your positioning, and building a model that grows sustainably over time.
The businesses that succeed are not the ones with the perfect price. They are the ones that continuously learn how their customers perceive value and adapt accordingly.
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