Pricing is strategy in numbers. Choose a value metric aligned to outcomes, create clear tiers, and maintain guardrails for discounting. Test uptake and analyze cohort gross margin over time.
Value Metrics
Your value metric should correlate with the value customers receive. Common examples:
- Per Seat: Number of users. Best when value increases with team size.
- Per Company: Flat rate regardless of size. Best for team collaboration tools.
- Usage-Based: Transactions, API calls, storage, compute. Best when usage scales with value.
- Revenue Share: Percentage of customer revenue. Common in marketplace and payment platforms.
- Hybrid: Combination of base fee plus usage. Balances predictability with scalability.
Choose a metric that's simple to understand, easy to measure, and aligns with customer success.
Quantify Buyer Value
Map your pricing to quantified customer value:
- Time saved (hours per week, weeks per year)
- Cost avoided (tool consolidation, manual process elimination)
- Revenue generated (incremental sales, conversion improvement)
- Risk reduced (compliance, security, operational errors)
Conduct willingness-to-pay research: surveys, interviews, A/B tests. Understand what customers pay for alternatives and why they'd switch.
Tiered Packaging
Create clear tiers that guide customers to the right fit:
- Starter: Basic features, limited usage, self-serve. Low price point for early-stage customers.
- Professional: Core features, moderate usage, standard support. Target for most customers.
- Enterprise: All features, unlimited usage, dedicated support, custom terms. Premium pricing for large customers.
Bundle features that naturally go together. Create upgrade paths that encourage expansion as customers grow.
Pricing Guardrails
Establish rules to prevent discounting from eroding value:
- Floor Prices: Minimum price per tier, no exceptions below a threshold
- Promo Windows: Limited-time offers with clear expiration and renewal terms
- Approval Matrix: Who can approve discounts and at what levels (e.g., 10% sales, 20% manager, 30% VP)
- Discount Tracking: Monitor discount rates by segment, channel, and rep
Testing & Optimization
Continuously test and optimize pricing:
- A/B test pricing pages and messaging
- Analyze cohort gross margin by acquisition channel
- Track expansion revenue and upgrade rates
- Monitor churn by tier and identify at-risk segments
Use data to inform pricing decisions. Test small, measure impact, then scale what works.
Common Pricing Mistakes
- Value metric not aligned with customer outcomes
- Too many tiers or confusing feature differentiation
- Discounting without guardrails or tracking
- Not testing pricing assumptions with real customers
- Pricing too low (leaving money on table) or too high (limiting adoption)
Next Steps
Pricing strategy requires careful analysis of customer value, competitive positioning, and willingness to pay. We help startups design, test, and optimize their pricing and packaging.
See our Strategy Consulting services for pricing and packaging support.