Pricing Strategy Evaluation

Brands throw darts at pricing blindfolded when they could use laser precision. This framework eliminates the guesswork (and it’s the exact framework we use for our clients): Step 1: Define Your Objective Get specific before you test anything: • Understanding fair pricing perception? • Measuring brand awareness impact on price sensitivity? • Finding gaps in the current pricing structure? Step 2: Use the Right Methodology • Survey your audience using tools like Pollfish • Split respondents: brand-aware vs brand-unaware • Ask Van Westendorp questions: → What price feels "too expensive"? → What price feels "too inexpensive"? → What price is a "bargain"? Step 3: Analyze Audience Segments These groups live in different worlds: Brand-Aware Customers: • Higher price tolerance • Accept broader price ranges Brand-Unaware Customers: • Prefer entry-level pricing • Need more education and trust-building Step 4: Identify the Optimal Price Range • Plot responses on Van Westendorp Price Sensitivity Meter • Find the Indifference Price Point (IPP)—where price feels "just right." Real example: • Brand-Aware IPP: $65 • Brand-Unaware IPP: $47 • Optimal range: $45–$75 That $18 difference changes everything, which is why you need to stop guessing and start measuring. What's your current pricing based on? If it's a gut feeling instead of data, you're leaving money on the table.

At $10M+ ARR, You are losing money. Not because of bad product, But because of bad pricing. Why pricing? → Competitor pricing weakens positioning → Pricing doesn’t match customer value → Customers stay on the cheapest plan → No upsells, no expansion revenue → Too few users on annual plans → Enterprise deals lack flexibility → Pricing is never tested Lack of pricing strategy directly affects your revenue. Here are 7 steps to fix it. 1. Audit pricing by revenue segment → Where is pricing suppressing upgrades? 2. Reposition pricing against competitors → Own a category, not just a price point. 3. Expand revenue streams → Upsells, add-ons, usage-based models for high-value users. 4. Charge based on value, not just cost → Align pricing with impact and willingness to pay. 5. Move customers to annual → Build ACV and retention with incentive-based annual pricing. 6. Enable enterprise flexibility → Custom contracts, volume discounts, and deal-based pricing. 7. A/B test pricing regularly → At this scale, small price shifts = millions in ARR gains. At $10M+, pricing isn’t just a strategy, it’s a competitive advantage. P.S. How often are you testing your pricing strategy? ♻️ If you find value, let others benefit too. __________________________________________ Ready for more SaaS pricing insights? Follow me, Marcos Rivera🔔

Set and forget is not a pricing strategy ! Price--> Design--> Build We know that's what everyone says, but thats an oversimplification of what the entire process should look like. The assumption your pricing was correct in the pre-design phase and doesn't need change is dangerous, dangerous, dangerous !! I have seen too many physical and software products change drastically between initial design to final delivery. Product owners will typically assume that pricing still holds. You have to change that philosophy. In the real world we need a lot more iteration in price: Step 1: Initial Price: This stage you quantify the value and set an initial target price. This is a combination of internal/external research, some value quantification and pricing knowledge. Step 2: Design: With that price info, the product team designs a product that hits product and profitability targets. This is also where you need to keep track of the product margins. Often product will go design a better product at the expense of higher cost, and margins suffer before launch. Step 3: Reprice: Now that we know the new design constraints that impact the profitability, this stage gives you the opportunity to reprice the product based on the design. If substantial value has been added, price should go up. Do not fall into the 'lets over deliver on value and keep price same' trap. Step 4: Build: Now with that new price info and product roadmap the product goes through the build stage. Step 5: Pre launch reprice : Now significant time may have passed since last price review. The market for the product, the economy etc may have changed. This stage can assist in making last changes before product goes out. Good time to also establish guardrails for price performance, discount strategy, or sales strategy. Step 6: Launch: Goes without saying the product is out in the real world. Great way to capture feedback. Also a stage where performance is measured against the price guardrails. Step 7: Reprice 3: Based on sales feedback, you start charting next steps. Selling too slow, you may need discount or reprice. Selling too fast, it may be overdelivering on price vs value. Pricing metric may need change. Fx may have changed. This is the price adjustment stage, should be annual or semi annual. You can incorporate these steps into new product introduction framework or annual or semi annual pricing strategy process, either ways it will help establish good pricing principles in the org. I know of many products that once designed were never repriced years into its life.. Surely things must have changed all those years... Think of Pricing as a lifecycle !! -------------------------- We are in #Pricingtribe.

There isn’t one pricing strategy that drives upgrades. What works depends on how and when customers realise value. A recent PricingSaaS breakdown highlighted five different approaches teams are using. They’re not silver bullets, but each solves a specific mismatch between pricing and usage. 1. Change the billing cadence ↳ Moving from monthly to quarterly or annual billing gives customers more time to see value before a renewal decision. ↳ This works best when time-to-value isn’t instant and early churn is driven by impatience rather than lack of fit. 2. Rethink what you meter ↳ Some teams removed limits like user caps and shifted to usage metrics closer to real value. ↳ The upgrade trigger becomes growth in usage, not hitting an artificial ceiling. 3. Use add-ons as a discovery path ↳ Add-ons let customers try advanced capabilities without committing to a higher tier. ↳ They work well when value is clear only after hands-on use. 4. Price onboarding and support intentionally: ↳ Defaulting to self-serve onboarding and reserving human support for higher tiers aligns cost with commitment. ↳ It also signals where the product expects customers to be more serious. 5. Adjust the entry point: ↳ Raising the floor price or tightening the lowest tier can naturally push customers toward plans where upgrades make more sense economically. Across all five, the pattern is alignment. Pricing works when it follows customer behaviour, not when it tries to correct it. Which part of your pricing feels most disconnected from how customers actually use your product today?

Inflation often forces businesses into a dilemma—raise prices and risk losing customers, or keep prices stable and shrink margins. But what if data could help strike the perfect balance? 🚀 Challenge: Flipkart, one of India’s largest e-commerce platforms, noticed fluctuating customer retention rates and declining repeat purchases, especially during inflationary periods. Traditional deep-discount campaigns led to short-term sales spikes but failed to build long-term customer loyalty. 🔎 Solution: Data-Driven Discounting Strategy Flipkart’s analytics team uncovered a key insight: Small, frequent discounts (e.g., 5-10% on repeat purchases) led to higher engagement. Personalized offers based on purchase history encouraged repeat buys. A/B testing revealed that customers preferred consistency over occasional deep discounts. 💡 Implementation: Using AI-driven dynamic pricing, Flipkart rolled out: ✅ Tiered discounts for loyal customers. ✅ AI-powered coupon recommendations. ✅ Targeted email campaigns promoting small, time-sensitive discounts. 📈 Results: After three months of testing, Flipkart saw: ✔️ 17% increase in repeat purchases ✔️ 12% uplift in customer retention ✔️ Higher profit margins vs. deep discounting 🎯 Key Takeaway: In an inflationary environment, data-driven pricing isn't just about maximizing revenue—it’s about customer psychology. Businesses that personalize their offers and optimize discounts intelligently can boost retention while protecting margins. 𝑾𝒉𝒂𝒕 𝒑𝒓𝒊𝒄𝒊𝒏𝒈 𝒔𝒕𝒓𝒂𝒕𝒆𝒈𝒊𝒆𝒔 𝒉𝒂𝒗𝒆 𝒘𝒐𝒓𝒌𝒆𝒅 𝒇𝒐𝒓 𝒚𝒐𝒖𝒓 𝒃𝒖𝒔𝒊𝒏𝒆𝒔𝒔 𝒊𝒏 𝒄𝒉𝒂𝒍𝒍𝒆𝒏𝒈𝒊𝒏𝒈 𝒕𝒊𝒎𝒆𝒔? #datadrivendecisionmaking #DataAnalytics #DiscountStrategy #BusinessStrategies

We reached $4M ARR, then cut pricing ~40% to prioritize retention over short term revenue. Pricing can separate a nice $5M biz and a breakout. If launching a product, here's the tactical way to set pricing, based on your goals: 1. Recognize that pricing strategy is VERY different depending on if you're VC backed or bootstrapped. VC backed can undercut competitors with subsidized low pricing, grab market share, then increase prices over time (see: Uber, Doordash). Bootstrapped companies have no such luxury: they need to make a profit on every customer from day 1 - you need the cash, yesterday. *this post focuses on finding right pricing in a bootstrapped environment* 2. First, figure out the lowest possible price you can breakeven at. Consider all costs involved from bringing on and servicing a customer - from sales and AM, to variable product costs. This is now your absolute minimum pricing. 3. Take 50 calls, get 10 customers, as fast as you can, at whatever cost you can, (above min. pricing). Your first 10 customers aren't about making money, they are about gathering data. Every call is an opportunity to triangulate what people are willing to pay. Try min. pricing, try 3x min. pricing. Try 2x min. pricing for month to month, but say that you can drop that by 30% for 3 month commit. Keep pushing up price until people tell you that is ridiculous. Triangulate towards a price people will pay. 4. Classify these calls by customer type. One type of business might think pricing is ridiculous, whereas another finds it cheap. Make sure you are not letting all of this data get mixed in together. Half of pricing discovery is figuring out who your core customer is. 5. Sign 3 month deals, not annuals (to start). Eventually, you want annuals. But at first, annuals are dangerous. You're looking for data on retention, and locking someone into an annual prevents you from gathering that data. Signing 3 month deals forces the conversation earlier.... are people getting value for the price? 6. Revise. Assuming you care about retention, take note of who is staying on. Be honest that you're trying to find a price that works for them. People like honesty and this will get you more information then beating around the bush. Ask "what pricing would make this a no brainer to commit for the next year?" 7. Get real about what you are prioritizing - short term revenue, or long term retention? There is no singular right answer to this. So many factors come in to play: your end game, how big your market is, how easy/hard it is to attract new customers, and much more. But understand that price/margin and customer retention are opposing forces. Be intentional about what you are prioritizing for. (note: this can change at different times in company lifecycle). In short: - Take 50 calls, throw out wildly diverse pricing to gather feedback - Sign 3 month deals to rapidly understand value to price/retention - Be intentional about what your pricing will drive (margin v NDR)

📦 Jobs-Led Pricing: A 10-step framework for transforming feature-led products into monetization-ready, jobs-based pricing models. Built on 4 stages: 1. Product (Discovery Layer) 2. Value (Logic Layer) 3. Customer (Preference Layer) 4. Pricing (Monetization Layer) 🔹 STAGE 1: PRODUCT [Discovery Layer] 🔹 Step 1: Feature Inventory What it is: ▪️ List every feature, tool, and function in the product
▪️ Include hidden, premium, or internal-use features Why it matters: ▪️ Creates a complete picture of what’s being delivered
▪️ Prevents missing monetizable elements 🔹 Step 2: Feature to Plan Mapping What it is: ▪️ Show how features are bundled into pricing plans today
▪️ Expose arbitrary or legacy packaging logic Why it matters: ▪️ Reveals pricing misalignment with value
▪️ Highlights over- or under-incentivized plans 🔹 Step 3: Feature Usage Mapping What it is: ▪️ Track actual customer usage of each feature
▪️ Look for engagement patterns by segment Why it matters: ▪️ Identifies “dead weight” vs “core value” features
▪️ Helps assess ROI per feature 🧠 STAGE 2: VALUE [Logic Layer] 🔹 Step 4: Feature Valuation What it is: ▪️ Qualitatively or quantitatively assign value to each feature
▪️ Use proxies: time saved, revenue unlocked, cost reduced Why it matters: ▪️ Establishes which features are worth monetizing
▪️ Anchors the price-to-value logic 🔹 Step 5: Jobs Identification What it is: ▪️ Identify core Jobs-To-Be-Done (JTBD) your product enables
▪️ Use user interviews, surveys, task analysis Why it matters: ▪️ Shifts the model from features to outcomes
▪️ Connects monetization to customer success 🔹 Step 6: Feature–Jobs Mapping What it is: ▪️ Map each feature to one or more customer Jobs
▪️ Create a logic layer: feature → outcome → value Why it matters: ▪️ Bridges product design with pricing strategy
▪️ Enables bundling and upsell opportunities around outcomes 🎯 STAGE 3: CUSTOMER [Preference Layer] 🔹 Step 7: Rank Jobs What it is: ▪️ Prioritize Jobs by importance and frequency
▪️ Use customer feedback and behavior data Why it matters: ▪️ Surfaces which outcomes matter most
▪️ Enables tiering or segmentation logic 🔹 Step 8: Value Jobs What it is: ▪️ Quantify perceived value of each Job
▪️ Use surveys, conjoint analysis, BWS, or proxies Why it matters: ▪️ Links value perception to potential willingness to pay
▪️ Avoids feature-based pricing traps 💰 STAGE 4: PRICING [Monetization Layer] 🔹 Step 9: Value Capture [%] Analysis What it is: ▪️ Decide what % of value created you can capture
▪️ Compare to industry benchmarks or strategic posture Why it matters: ▪️ Sets pricing defensibility
▪️ Avoids overcharging or leaving money on the table 🔹 Step 10: Pricing Metric / Model What it is: ▪️ Choose pricing metric: per seat, usage, credits, % of revenue, hybrid
▪️ Align it to how value is delivered + Jobs solved Why it matters: ▪️ Ensures pricing scales with value
▪️ Sets the business up for sustainable revenue growth #Pricing #JLP

Last month, I had coffee with the founder of a SaaS company that recently sold for over $50 million I asked him the one thing that had the biggest impact on their growth His answer surprised me: "Our pricing strategy" Not product Not marketing Not sales He shared 3 counterintuitive pricing insights that doubled their growth rate: 1. They raised prices 3x over 18 months while competitors were engaged in price wars. Result: Their perceived value increased, and enterprise deals accelerated 2. They eliminated their lowest tier completely, losing 20% of customers. Result: Support costs dropped 64% while ARPU increased 47% 3. They added a "premium services" tier that was 10x their average price. Result: Only 2% of customers bought it, but it made their standard tier look more affordable by comparison, increasing conversion by 30% The founder told me: "Most companies price for customer acquisition. We priced for customer quality" After implementing these strategies with 4 clients, I've seen good results each time The most impactful business decision you'll make this year might not be your marketing strategy or sales process It might be having the courage to charge what your solution is truly worth P.S. If you need help with your sales, send me a message

Price isn't just about a number—it's about the mental model that supports it. 🧠 When OpenStore approached us about OpenDesk—their AI customer support tool for eCommerce brands—they faced a classic behavioral challenge: pricing doesn’t exist in a vacuum. The behavioral POV on value is that it’s subjective and created in the moment. That was true here, too. It wasn't actually the price point that was holding them back. It was the invisible mental accounting happening in customers' heads. 😬 Merchants mentally categorized support tools as expenses, not investments. This mental accounting created a pricing perception problem. When something falls into your "expense" bucket, your goal is to minimize it. When it's in your "investment" bucket, you evaluate ROI instead. 💡 When we reframe the value proposition, willingness to pay changes. Instead of "better customer support," we positioned OpenDesk as a "customer retention driver" – shifting its category from cost center to revenue generator. With this new mental model established, we designed pricing strategies that reinforced this investment framing: 💲 A hybrid model combining subscription + per-ticket charges that balanced predictability with value 🔢 A usage-based option with an interactive calculator that made total costs transparent—similar to how merchants evaluate ROI on other investments 👥 A per-seat model that simplified budgeting while aligning costs with team structure Curious to see where they landed, or to get ideas on optimizing product positioning or pricing strategy? 👇 Check out the case study in the comments. #BehavioralDesign #AIStrategy #ProductPricing

 Learning from McDonald's: Strategic Insights for Pricing Professionals 🍔📉 In a surprising turn, McDonald’s has reported its first global sales slump since 2020 (details in the comment 🔗). This decline, driven by inflation-weary consumers and increased competition, offers critical lessons for pricing professionals and C-level managers. Here’s what we can learn: 1. Understand Your Value Proposition 💡 McDonald’s has struggled to maintain its value perception, as rising costs forced price hikes. When your value leadership shrinks, as McDonald's CEO Chris Kempczinski noted, customers look elsewhere. Ensure your pricing strategy continuously reflects your value proposition, adjusting to both market conditions and consumer perceptions. 2. Coordinated Marketing and Promotions 🎯 While competitors like Burger King and The Wendy's Company swiftly rolled out attractive value deals, McDonald’s lagged, playing catch-up. Coordination across franchises and a unified marketing approach are vital. Implement promotions that are timely, well-communicated, and consistent across all locations to reinforce value. 3. Monitor Competitor and Consumer Behavior 🔍 McDonald’s found itself defending against not just other fast-food chains but also grocery stores offering better value. Regularly analyze where your customers are spending and why. This insight can guide proactive adjustments to pricing and product offerings to stay competitive. 4. Flexibility and Responsiveness 🚀 Economic conditions and consumer preferences are fluid. McDonald’s current $5 meal deal is a step in the right direction but came late. Develop a dynamic pricing strategy that allows for rapid response to market changes, ensuring you can implement necessary adjustments swiftly. Over the past few years, McDonald’s has been hailed as a pricing mastermind, consistently raising prices while seeing sales soar. This time, the challenge is different. However, having seen firsthand how McDonald's navigates complex market conditions and pricing challenges, I’m confident they will be the first to take the most appropriate action to turn the situation around💪💪💪 Actionable Takeaways: ℹ️ Reassess and Align Value Perceptions: Ensure your pricing reflects the value your customers perceive, and adjust marketing messages accordingly. ℹ️ Streamline Promotions: Implement cohesive and timely promotions that reinforce value across all customer touchpoints. ℹ️ Stay Informed: Regularly monitor competitor actions and consumer spending trends to stay ahead of shifts in the market. ℹ️ Be Agile: Maintain flexibility in your pricing strategy to quickly adapt to economic changes and consumer behavior. Remember, every challenge is an opportunity to learn and grow. How do you think businesses can better align their pricing strategies with consumer expectations? Share your thoughts and experiences in the comments below! 💬👇