pricing-packaging

Choose a pricing model by identifying how customer value scales: per-seat for team collaboration, usage-based for consumption, flat fee for simplicity, tiered for distinct needs, or hybrid for multiple value dimensions. Validate the choice against your sales motion and business economics.

A value metric is the unit connecting what customers pay to the value they receive, such as active users, contacts managed, or transactions processed. Good value metrics are easy to understand, correlate with customer success, resist gaming, and support revenue expansion.

Research willingness to pay using the Van Westendorp Price Sensitivity Meter, conjoint analysis, customer interviews, A/B testing, and competitive benchmarking. Combine qualitative and quantitative methods, and treat stated willingness to pay as a hypothesis rather than confirmed buying behavior.

Three tiers are a common starting hypothesis, not a requirement. Choose single plans, two tiers, add-ons, usage-based, or custom pricing based on whether customer needs genuinely cluster into distinct packages with meaningful value differences.

Avoid freemium when free usage creates unsustainable support or infrastructure costs, when conversion economics are unproven, or when free limits either block adoption or cannibalize paid value. Freemium works only when product-led acquisition and activation are viable.

Communicate price increases by explaining the verified reason, honoring contractual notice requirements, and deciding whether grandfathering or transition periods are justified. Never invent notice periods or discount levels without checking contracts and business policy.