pricing

• What type of product? (SaaS, marketplace, e-commerce, service)
• What's your current pricing (if any)?
• What's your target market? (SMB, mid-market, enterprise)
• What's your go-to-market motion? (self-serve, sales-led, hybrid)

• What's the primary value you deliver?
• What alternatives do customers consider?
• How do competitors price?

• What's your current conversion rate?
• What's your ARPU and churn rate?
• Any feedback on pricing from customers/prospects?

• Optimizing for growth, revenue, or profitability?
• Moving upmarket or expanding downmarket?

1. Packaging — What's included at each tier?

• Features, limits, support level
• How tiers differ from each other

2. Pricing Metric — What do you charge for?

• Per user, per usage, flat fee
• How price scales with value

3. Price Point — How much do you charge?

• The actual dollar amounts
• Perceived value vs. cost

Price should be based on value delivered, not cost to serve:

• Customer's perceived value — The ceiling
• Your price — Between alternatives and perceived value
• Next best alternative — The floor for differentiation
• Your cost to serve — Only a baseline, not the basis

Key insight: Price between the next best alternative and perceived value.

Don't anchor on the wrong things:

• Not competitor-based — matching a competitor's price copies their strategy, not their economics. It's a data point, not a target.
• Not cost-based — cost is a floor, never the basis. Value + differentiation set the price.

When you have nothing to go on, start with the order of magnitude that matches who you serve:

• ~$10/mo — prosumer / individual, high volume, low touch
• ~$100/mo — SMB / team tool, the SaaS default
• ~$1,000/mo — mid-market / business-critical / sales-assisted

Pick the bucket by who the customer is and how much value you deliver, then start near the round number. You can move within the bucket fast once you have signal.

Resist the urge to price ultra-low (e.g. $9/mo) to reduce friction. Ultra-low pricing:

• Creates false traction — signups that look like validation but come from people who'd never pay a real price
• Traps you — it's far harder to raise a price 5–10x later than to have started higher, and your cheapest customers churn most and complain loudest (see references/pricing-models.md on low-price retention)

Round-and-slightly-higher beats clever-and-cheap.

When early Intercom agonized over pricing, Jason Fried's advice was essentially: just charge $50 and see what happens. Stop modeling; get a real signal. If people pay without flinching, raise it. If nobody bites, you've learned something for the cost of a week, not a quarter.

For the eight ways to structure how you charge (flat, usage, tier, user, feature, credit, outcome, hybrid) and the value/price ratio: See references/pricing-models.md.

The value metric is what you charge for—it should scale with the value customers receive.

Good value metrics:

• Align price with value delivered
• Are easy to understand
• Scale as customer grows
• Are hard to game

Ask: "As a customer uses more of [metric], do they get more value?"

• If yes → good value metric
• If no → price doesn't align with value

The value metric picks the pricing model. Once you know what scales with value, choose how to charge on it — flat, usage, tier, user, feature, credit, outcome, or a hybrid. See references/pricing-models.md.

Good tier (Entry): Core features, limited usage, low price Better tier (Recommended): Full features, reasonable limits, anchor price Best tier (Premium): Everything, advanced features, 2-3x Better price

• Feature gating — Basic vs. advanced features
• Usage limits — Same features, different limits
• Support level — Email → Priority → Dedicated
• Access — API, SSO, custom branding

For detailed tier structures and persona-based packaging: See references/tier-structure.md

Four questions that identify acceptable price range:

1. Too expensive (wouldn't consider)
2. Too cheap (question quality)
3. Expensive but might consider
4. A bargain

Analyze intersections to find optimal pricing zone.

Identifies which features customers value most:

• Show sets of features
• Ask: Most important? Least important?
• Results inform tier packaging

For detailed research methods: See references/research-methods.md

Market signals:

• Competitors have raised prices
• Prospects don't flinch at price
• "It's so cheap!" feedback

Business signals:

• Very high conversion rates (>40%)
• Very low churn (<3% monthly)
• Strong unit economics

Product signals:

• Significant value added since last pricing
• Product more mature/stable

1. Grandfather existing — New price for new customers only
2. Delayed increase — Announce 3-6 months out
3. Tied to value — Raise price but add features
4. Plan restructure — Change plans entirely

A price change is a rollout, not a switch you flip. Sequence it to de-risk:

1. Test on new customers first. Raise the price only for new signups and watch conversion. New customers have no anchor and no relationship at stake, so they give you a clean read on whether the market accepts the number — before you touch a single existing account.
2. Don't reflexively grandfather forever. Grandfathering feels kind, but it can leave enormous money on the table. Run the math: a customer paying $50/mo who should be at $250/mo is a $2,400/yr gap — and $200/mo you're subsidizing indefinitely across your whole base. Grandfather as a transition (a grace period), not a permanent exemption.
3. Roll out small, then gradually. Move 5–10% of existing customers to the new price first. Watch churn and support volume for a cycle, then expand in staggered waves. A staggered rollout contains the blast radius and gives you an off-ramp if churn spikes.
4. Communicate the why, months ahead, with a generous offer. Tell customers why the price is changing (usually: more value shipped) well in advance. Soften it: lock-in-the-old-price-if-you-upgrade-to-annual-now, an extended grace window, or a one-time credit. Advance notice + a generous option converts a resentment moment into a loyalty one.

Expect — and accept — some churn. The customers most likely to leave over a justified increase are usually your least-profitable, highest-support, most price-sensitive accounts.

• Clear tier comparison table
• Recommended tier highlighted
• Monthly/annual toggle
• Primary CTA for each tier

• Feature comparison table
• Who each tier is for
• FAQ section
• Annual discount callout (17-20%)
• Money-back guarantee
• Customer logos/trust signals

• Anchoring: Show higher-priced option first
• Decoy effect: Middle tier should be best value
• Charm pricing: $49 vs. $50 (for value-focused)
• Round pricing: $50 vs. $49 (for premium)

• Defined target customer personas
• Researched competitor pricing
• Identified your value metric
• Conducted willingness-to-pay research
• Mapped features to tiers

• Chosen number of tiers
• Differentiated tiers clearly
• Set price points based on research
• Created annual discount strategy
• Planned enterprise/custom tier