You ask an interesting question.

The ultimate goal with a SaaS is to "land and expand" where you can hook somebody at a cheap point, withhold some valuable features or add hard limits somewhere, and just wait for customers to self-select: the people that use your thing more hit upgrade walls faster and upgrade further and pay you more over time.

Whether or not the ideal inital price is $49 or not, that takes time to determine, but one thing about not offering anything to the lower-end is that you only invite better competition. At $49, you don't give much room for somebody to compete with you on price and still run a profitable business. At $99, attack of the clones. Frankly, after being on HN twice in a week, I am expecting the clone Banner<Noun>s any day now.

> The ultimate goal with a SaaS is to "land and expand" where you can hook somebody at a cheap point, withhold some valuable features or add hard limits somewhere, and just wait for customers to self-select: the people that use your thing more hit upgrade walls faster and upgrade further and pay you more over time.

Are you describing distribution of controlled substances having addictive properties or "Software as a Service"?

Based on your definition of "[t]he ultimate goal", can you delineate the difference?

It's well-known that people are influenced by the number and relative value of options. It may be that very few people purchase the $49 option, but that its mere presence makes people more likely to purchase a higher tier.

And by having the $49 tier present, the company can advertise that their pricing "starts at $49".

Also, there are probably some people whose purchase authority is limited to $1,000/yr.

sales tactics to show that you get a lot of value in that tier per dollar spent.