You are paying too much for a VDR: Per-page pricing downsides explained

Businesses are expanding software budgets, with SaaS costs growing faster than market inflation. That is why tracking expenses for critical software solutions, including virtual data rooms (VDRs), is becoming increasingly important. 

“A typical business in 2024 is spending significantly more on software than it was a year ago — even without purchasing any new products or licences.” Vertice in its 2024 SaaS Inflation Index Report.

To account for inflation, meet consumer demand, and attract customers, SaaS businesses offer dynamic pricing strategies. However, under certain SaaS pricing models, like per-page pricing, customers often face unexpectedly high bills. This time, we explore why that happens, diving deep into the pitfalls of a per-page pricing process and comparing it with an affordable alternative pricing method.

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Understanding per-page pricing for VDR users

The per-page SaaS pricing model is very different from common pricing strategies. It charges customers for the number of pages uploaded to the data room. The term “pages” generally refers to page count in Word, Excel, PDF, and other documents.

For example, when you upload a 10-page MS Word document, you will be charged for 10 pages at a specific per-page rate ($0.7 per page is common) rather than the actual document size or total storage volume.

Per-page VDR providers typically inform potential customers about per-page rates and page-to-volume conversions during sales presentations. With substantial volume-based discounts, this pricing strategy may attract price-sensitive customers, appearing more favourable than competitor pricing.

That is possible when competitor prices have fixed costs that proportionally increase with data storage. So let’s explore how this pricing model works at first glance.

Sounds like a straightforward cost structure. It may also seem more favourable than most popular pricing models (like tiered pricing or user pricing, particularly when volume-based discounts are introduced). In reality, however, it translates into much higher prices and negatively impacts customers’ profit margins.

The main reason is that per-page VDRs use unique page-to-volume considerations. Moreover, page count is not relative to file size. For instance, a table-heavy DOCX file would translate into more pages than a text-heavy DOCX file of similar size. 

How do VDR providers convert pages?

Per-page VDR providers typically apply unclear file-based page-to-volume conversions, exposing customers to significant overpayment risks. Let’s illustrate it.

In reality, per-page VDR rates don’t reflect page count in documents, confusing customers and translating into unexpected expenses. A customer pays significantly higher bills when managing visuals and non-PDF text-based files.

Six common per-page pricing downsides

The per-page VDR pricing strategy is unnecessarily convoluted, with the following pitfalls:

1. Insufficient pricing transparency
2. Upload-based charges
3. Unforeseen charges for special media
4. Unpredictable overages
5. High data hibernation costs
6. High data extension costs

Insufficient pricing transparency

Today, the per-page pricing strategy lacks the transparency it had several decades ago. It originated in physical data rooms, where physical data room providers faced substantial manufacturing costs associated with secure data management.

Physical VDR providers used a cost-plus pricing strategy where per-page rates were tied to the cost of running physical data rooms. It was a method to cover business costs. At that time, these rates reflected the market price.

In the digital age, however, per-page pricing is barely justifiable, sometimes working solely due to brand loyalty of old data room providers. Some per-page VDR providers highlight pricing flexibility and how they adjust pricing to the market demand and offer substantial discounts for customer loyalty. As a result, the selling price sometimes can be only 20% of the retail price. Although this generally benefits data room customers, it deprives the billing process of clarity that is available in other pricing options.

Some customers might ask themselves: “If my VDR provider gives me an 80% discount after reaching 100,000 pages, does that mean I have been overpaying from the beginning?”

The inability to understand how per-page prices are shaped makes it challenging for VDR customers to control their expenses. In this case, customers can shift to more competitive pricing strategies, like usage-based pricing.

Upload-based charges

With conventional virtual data rooms, even under different pricing models, customers are typically given specific storage limits. Let’s say it’s 50 GB  — a straightforward measure for keeping your storage within the limit. Also, you can manage your storage capacity by removing old documents and replacing raw files with compressed versions. You are not charged for each upload but rather for total gigabytes.

In a per-page VDR, customers are charged each time new files are added to the data room regardless of the total storage used. In some cases, customers are unable to remove uploaded data without technical support. That means when you accidentally upload files, you will be charged for that, without the possibility to reverse that fee.

These billing practices may not be apparent to new customers, translating into unexpected bills, additional financial strain, and generally poor customer experience.

Unforeseen charges for special media

Per-page VDR customers may face unforeseen fees for uploading special media, like high-resolution videos and images. Upload charges for these media types can significantly surpass fees for lightweight document formats like MS Office and PDF. 

Consider a scenario where a customer uploads two uncompressed video files equivalent to 50,000 pages or $35,000. This example illustrates how quickly per-page VDR expenses can escalate when customers deal with media files that take significantly more “pages” than standard documents.

Unpredictable overages

Overages refer to additional charges incurred when customers exceed storage limits. Overages are usually prorated, meaning customers pay only for what they additionally use.

• Example: 10 GB storage at $100 with $10 for every additional gigabyte.

Per-page VDRs handle overages differently from other VDR providers. Instead of prorated overage charges, customers may be charged full-package fees when exceeding page limits.

• Example: $7,000 for 1–10,000 pages and $7,000 for 10,001–20,000 pages.

High data hibernation costs

Data hibernation benefits customers who want to reduce costs when storing inactive but necessary data, like past financial records. With per-page VDRs, storing inactive or seldomly accessed data can incur additional expenses, sometimes as high as 30% over standard renewal fees. That may not be apparent to new customers, making data hibernation rather costly and disadvantageous.

High data extension costs

Sometimes completed or frozen projects need to be extended. Completed projects can be usually stored indefinitely as long as customers pay for allocated storage. In per-page VDRs, however, there may be time limitations for closed and frozen projects. Upon expiry, projects are purged or extended at a high rate, sometimes 30% over the standard fee.

Financial risks tied to per-page pricing

In addition to being overly expensive in itself, per-page VDR pricing can incur additional overpayment risks. So let’s break down financial risks associated with common per-page pricing pitfalls, assuming the base rate is $7,000 per 10,000 pages ($0.7 per page).

What should the right pricing strategy look like?

Usage-based pricing can be a more transparent and predictable alternative to per-page pricing. It’s a subscription-based pricing model where customers pay monthly fees for allocated data storage at certain price points.

Most SaaS companies (61%) prefer usage-based pricing to cater to various customer segments in the target market. Let’s explore its benefits over per-page rates in today’s competitive market:

1. Consistent pricing from start to finish
2. Predictable costs
3. Volume-based charges
4. Prorated overages

Consistent pricing from start to finish

Usage-based VDRs charge for the actual gigabytes, making their price offerings transparent and predictable. When potential VDR customers receive GB-based quotes during a sales presentation that match actual monthly bills.

This is possible due to the usage-based pricing being tied to data volume rather than inconsistent page-to-volume conversions. It’s value-based pricing, where customers pay for perceived value — data storage provided.

Predictable costs

Usage-based pricing ensures transparent and predictable VDR expenses. Most importantly, usage-based costs ignore file formats. Whether a VDR customer uploads 30,000 MS Word files or 100 HD images, the fees are based solely on storage.

Volume-based charges

Usage-based VDRs charge customers for actual data usage rather than uploads. Most importantly, when a customer attempts to upload files that exceed the storage limit, the upload is automatically blocked or only files that fit the storage limit will be uploaded successfully. This is how usage-based VDRs prevent customers from exceeding storage limits, enhancing cost control and predictability.

Furthermore, customers can perform unlimited downloads and uploads while operating under the storage limit. This ensures collaborative flexibility when VDR users can upload compressed files, delete old files, download archives, maintain file versions, and generally do whatever is necessary to optimise data storage.

Prorated overages

With usage-based VDRs, customers pay proportional overage fees that reflect actual data usage rather than excessive flat fees. This is called prorated overages. Let’s explore how this pricing strategy works.

Bottom line

• Per-page data rooms charge for the number of documents uploaded to data rooms using non-apparent page-to-volume conversion rates. This creates ambiguity among VDR customers, translating into unexpectedly high bills.
• Flat-fee overages, inconsistent page-to-volume conversions, upload-based billing, and high data extension costs make the per-page pricing model outdated and non-competitive.
• Usage-based pricing is the best pricing strategy for data rooms. It’s a transparent, predictable, and affordable data room pricing model that accounts for total data usage. It offers straightforward volume-based quotes and prorated overages.