SaaS Pricing Formula
This SaaS pricing tool sets a monthly price floor by taking the higher of two requirements: the margin your COGS demands, and the price needed to pay back CAC within your target window.
Bottom Line
This SaaS pricing tool sets a monthly price floor by taking the higher of two requirements: the margin your COGS demands, and the price needed to pay back CAC within your target window.
SaaS Pricing Strategy Calculator
Set monthly price floors from gross-margin and CAC payback constraints.
On This Page
Formula
Copy the exact expression or work through it step by step below.
Recommended Price = max( Margin Floor, Payback Floor ), where Margin Floor = COGS per User / (1 - Target Gross Margin) and Payback Floor = COGS per User + CAC / Target Payback Months Variables
RP
Recommended Price
The higher of the margin floor and the payback floor, in currency per user per month. A floor to compare against value-based and competitor pricing.
CPU
COGS per User
Monthly cost to serve one user, in currency units. The base both floors build on.
TGM
Target Gross Margin
The gross margin you want to hold, as a percent. It sets the margin floor: COGS divided by one minus the margin.
TPM
Target Payback Months
Months allowed to recover CAC through price above COGS. Fewer months raises the payback floor.
CAC
Customer Acquisition Cost
The cost to acquire one customer, in currency units. Spread across the payback window, it lifts the payback floor.
Step By Step
- 1
Set the baseline case with the real calculator inputs.
Cogs Per User = 28, Target Gross Margin Percent = 80.0%, Target Payback Months = 8, CAC = $450
- 2
Compute the margin floor first: divide COGS per user by one minus the target gross margin, so price covers cost at the margin you need.
COGS of $28 at an 80% target margin gives a $140 margin floor (28 / 0.20).
- 3
Apply the formula and read the first calculator outputs, not just the headline assumption.
The calculator lands with recommended monthly price at $140 and margin floor at $140.
- 4
Re-run with a tighter payback target or higher CAC to see whether the payback floor overtakes the margin floor.
Cutting target payback from 8 to 3 months lifts the payback floor to $178 (28 + 450/3), which then sets the price.
Worked Example
SaaS Pricing sample case
Cogs Per User
28
Target Gross Margin Percent
80.0%
Target Payback Months
8
CAC
$450
Margin floor = $28 / (1 - 0.80) = $140. Payback floor = $28 + $450 / 8 = $84.25. Recommended price = max($140, $84.25) = $140.
The calculator lands with recommended monthly price at $140 and margin floor at $140.
Common Variations
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Open →Sources & References
- SaaS Pricing: The Ultimate Guide — Chargebee
- How To Price Your SaaS Product: A Complete Guide — Baremetrics
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