Benefits Of Limiting Users.

Setting limits on services and features can improve the revenue, cost and user experience aspects of SaaS applications. Limits may sound not right, but allow to guide user to better experience.

Benefits Of Limiting Users.
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Table of Contents

Introduction

Setting limits on services and features can improve the revenue, cost and user experience aspects of SaaS applications. Limits may sound not right, but allow to guide user to better experience.

Keep Costs In Check.

Vercel. Almost every app runs on the cloud. One way or the other and cloud prices get out of hand real quick.
Most recent example I am aware is how Vercel charged $96,280 for hosting services. This could've been avoided if there were proper service limits in place.

OpenAI. When the ChatGPT hype broke out, many developers started creating AI chatbots. One developer released their application and asked feedback on Reddit. Sadly, a random Reddit user used prompt hacking magic and ended up depleting the developer's OpenAI credits. Luckily, since OpenAI operates on a pay-as-you-go model, the developer didn't lose more than he could afford.

And the list goes on.

A shared resource is any hardware or software component that can be used concurrently by multiple users or applications. 

Limiting On Shared Resources.

Those can be a Database, Cache, Storage or even 3rd party service your application is using to provide services to the end customer. In context of CRMs managing and storing large numbers of contacts and email campaigns could require significant server resources.

Limiting these usage in various tiered plans ensures that the service remains performant and reliable for all users.

Also compute resources are also important from infrastructure perspective - modern SaaS applications offer reporting in some shape or form that can be(come) resource-intensive and can get out of hand quickly and become problem for the whole platform.

Revenue Optimization

By offering more powerful features and higher usage limits in premium plans, SaaS companies incentivize customers to upgrade as their needs grow. This strategy can effectively increase monthly recurring revenue (MRR) by encouraging customers to move to more expensive plans. For example, limiting users by the number of contacts they can add, rather than by the features available to them, can drive upgrades.

Different customers have different needs: a small startup might only require basic contact management and email capabilities, while a large enterprise may need extensive integrations and advanced automation. By segmenting features across various plans, a CRM can better serve to this diverse range of users.

Conclusion

Implementing limits on services and features is crucial for balancing cost management, revenue and UX in SaaS applications. It may seem counterintuitive, these limits help guide users toward better experiences and ensure the stability and performance of the platform.

By keeping costs in check, especially in cloud-based services, and managing shared resources SaaS providers can prevent abuse and maintain reliability which is considered a competitive advantage as well.

Additionally feature segmentation and tiered plans enable companies to cater to different customer needs and encourage upgrades.