Pricing Strategy

Production-grade SaaS pricing framework covering the three pricing axes (value metric, packaging, price point), value-based pricing methodology, tier architecture, pricing research methods, pricing page design, price increase execution, and competitive pricing positioning. Pricing is positioning -- the right price communicates as much about your product as your marketing does.

Use when

• The user asks to "design pricing", "set prices", or "choose a value metric"
• Pricing tiers need to be restructured (Good-Better-Best, add/remove tiers, repackage features)
• A price increase is planned and needs execution design (strategy, timing, communication, grandfathering)
• Conversion on the pricing page is flat or declining
• Freemium vs free trial decision needs to be made, or the freemium tier is cannibalizing paid
• Competitor pricing shifts require a positioning response
• The user says "our pricing feels off" or asks for a pricing audit

Table of Contents

• Operating Modes
• The Three Pricing Axes
• Value Metric Selection
• Tier Architecture
• Value-Based Pricing
• Pricing Research Methods
• Pricing Page Design
• Price Increase Playbook
• Freemium vs Free Trial Decision
• Competitive Pricing Analysis
• Pricing Signals and Diagnostics
• Output Artifacts
• Related Skills

Operating Modes

Mode 1: Design From Scratch

No pricing exists or full rebuild needed. Work through value metric, tier structure, price points, and page design.

• Validate: value metric chosen before tier design; tier design locked before price points; price points tested against the corridor before page design.

Mode 2: Optimize Existing Pricing

Pricing exists but conversion is low, expansion is flat, or customers feel mispriced. Audit, benchmark, and identify specific improvements.

• Validate: the diagnosis names a specific failure mode (e.g., "middle tier too narrow", "value metric doesn't scale") before any change is proposed.

Mode 3: Price Increase

Prices need to go up. Design a strategy that increases revenue without burning customer relationships.

• Validate: grandfather policy defined, communication window set (90+ days for annual customers), and expected churn modeled before sending the first notice.

The Three Pricing Axes

Every pricing decision lives across three axes. Most teams skip to price point. That is backwards.

     ┌──────────────────┐
     │   VALUE METRIC    │  What do you charge for?
     │  (how it scales)  │  (per seat, per usage, per feature)
     └────────┬─────────┘
              │
     ┌────────┴─────────┐
     │   PACKAGING       │  What is in each tier?
     │  (what you get)   │  (feature bundles, limits, support levels)
     └────────┬─────────┘
              │
     ┌────────┴─────────┐
     │   PRICE POINT     │  How much?
     │  (the number)     │  (actual dollar amount)
     └──────────────────┘

Lock in the value metric first, then packaging, then test the price point.

Value Metric Selection

Common Value Metrics

Selection Criteria

Answer these 4 questions:

Value Metric Red Flags

Tier Architecture

Good-Better-Best (3 Tiers)

Three tiers is the standard because it anchors perception.

Feature Allocation Framework

Tier Naming

Naming rules:

• Names should be instantly understandable
• Avoid jargon or made-up words
• The default/recommended plan should be visually highlighted

Value-Based Pricing

The Pricing Corridor

[Cost floor] ... [Next-best alternative] ... [YOUR PRICE] ... [Perceived value]

Step-by-Step

Step 1: Define the next-best alternative

• What would the customer do without your product?
• What does that cost them? (competitor, manual process, hiring)

Step 2: Estimate value delivered

• Time saved x hourly rate of the person using it
• Revenue generated or protected
• Cost of errors/risk avoided
• Ask customers: "What would you lose if you stopped using us?"

Step 3: Price in the corridor

• Price at 10-20% of documented value delivered
• Above the next-best alternative (signals confidence)
• Below the perceived value ceiling (customer feels good ROI)

Conversion Rate as a Pricing Signal

Pricing Research Methods

Van Westendorp Price Sensitivity Meter

Four questions asked to 30+ current customers or qualified prospects:

1. At what price would