When was the last time you thought about pricing applied in your business?

Most tech founders spend far more time optimising costs than optimising pricing. That is understandable as costs feel controllable and pricing feels risky.

But what we observed across our clients is that even a modest 3% price increase can improve EBITDA by 15% to 20%, depending on the exact business model and the volume of customers. Yet the average tech business spends very little time on a pricing strategy.

For founders building businesses between £500k and £5m turnover, pricing is often the most underused growth lever available.

Here are four areas every scaling tech business should focus on.

1. Why Under-Pricing Quietly Damages Margins and Positioning

Many founders price based on where the product started rather than the value it delivers today.

I often see technically strong businesses solving mission-critical problems while still charging early-stage pricing. Over time, this creates pressure everywhere else in the business:

• Lower margins

• Reduced reinvestment capacity

• Cash flow strain

• Increased support burden

• Difficulty hiring senior talent

Under-pricing also damages positioning. Enterprise customers rarely associate “cheap” with “strategic”.

If your software saves a customer £100,000 annually through automation or operational efficiency, charging £5,000 simply because competitors do something similar is usually a mistake.

The strongest tech businesses price around outcomes:

• Revenue generated

• Time saved

• Risk reduced

• Efficiency improved

Customers do not buy software because of your hosting costs or development effort. They buy commercial impact.

2. The Difference Between Value-Based, Usage-Based and Hybrid Pricing

There is no universal pricing formula to apply. The right pricing structure depends on how customers receive value from your product.

Value-Based Pricing

This is increasingly the gold standard for B2B Saas companies.

Value-based pricing means charging as a proportion of the economic value created for the customer. If your platform helps reduce churn, improve conversion rates, or automate labour-intensive tasks, your pricing should reflect that outcome.

Founders using value-based pricing often achieve materially stronger margins because pricing scales with customer value rather than product cost.

Usage-Based Pricing

Usage-based pricing has become particularly common across AI, API and infrastructure businesses.

Customers pay according to consumption:

• API calls

• AI tokens

• Transactions

• Data usage

• Active users

This creates alignment between the value received and the price paid. It also allows revenue to grow naturally alongside customer adoption.

The challenge is predictability. Customers can become nervous about variable costs if pricing lacks transparency.

Hybrid Pricing

Increasingly, the market is moving towards hybrid pricing models.

Research shows companies using hybrid pricing models report median growth rates of 21%, outperforming businesses using purely subscription or purely usage-based pricing.

Typical hybrid structures include:

• Subscription fee + usage charges

• Platform fee + transaction costs

• Per-seat pricing + AI consumption

For scaling SaaS businesses, hybrid pricing often provides the best balance between predictable recurring revenue and expansion potential.

3. How AI Is Reshaping Pricing Models Across SaaS Businesses

AI is fundamentally changing how software companies think about pricing.

Traditional seat-based pricing becomes less effective when automation replaces user activity. Customers increasingly care about outcomes rather than user access.

As a result, AI-native businesses are moving towards:

• Consumption pricing

• Outcome-based pricing

• Credit systems

• Hybrid AI usage models

At the same time, founders must carefully manage infrastructure costs. AI businesses relying heavily on third-party LLMs can see gross margins compressed quickly as usage scales.

The businesses winning in AI are not simply adding AI features. They are building pricing models that align commercial value with operational scalability.

4. Where Founders Unintentionally Lose Margin Through Over-Customisation and Support

One of the biggest hidden margin killers in growing tech businesses is over-customisation.

In pursuit of growth, founders often agree to:

• Bespoke integrations

• Custom reporting

• Tailored onboarding

• Special pricing arrangements

• Unlimited support expectations

Initially, revenue growth hides the problem. But eventually operational complexity catches up: support costs rise, product focus weakens, and delivery becomes inefficient.

Enterprise customers create another common challenge. Many SaaS businesses underestimate the commercial cost of procurement reviews, SLAs, security assessments, stakeholder management and account support. If enterprise-level service is included in standard pricing, margins quietly disappear. Sometimes, the most profitable customer is not the largest customer.

Final thoughts

Most businesses end up using a combination of the above pricing models. But the most important thing is that pricing should never be treated as a one-off decision. It should evolve alongside the value your product delivers. What worked at £500k ARR rarely works at £5m ARR.

Founders often fear customer backlash from pricing changes, but the most successful technology businesses rarely compete solely on price. They compete on value, positioning, and commercial clarity.

If you'd like support refining your pricing strategy or gaining financial clarity, we'd be happy to arrange a call.