pricing-strategy

Choose a value metric by asking whether customers get more value as they consume more of that metric. Good options include per seat for collaboration tools, per usage for variable consumption, and per transaction for payments. The metric should be easy to understand and hard to game.

Use a Good-Better-Best framework: an entry tier with core features, a recommended middle tier with full features at an anchor price, and a premium tier at 2-3x the middle price. Differentiate tiers through feature gating, usage limits, support levels, and access like API or SSO.

Raise prices when prospects don't flinch at your price, conversion exceeds 40%, monthly churn is under 3%, or you've added significant value since last pricing. Use grandfathering, delayed announcements, or plan restructuring to roll out the increase.

Van Westendorp asks four questions about price perception: too expensive, too cheap, expensive but acceptable, and a bargain. Plotting the response intersections reveals an acceptable price range and optimal price point for your product.

Offer both with an annual discount of 17-20% to incentivize longer commitments and improve cash flow. Display a monthly/annual toggle on your pricing page with the annual savings clearly called out.