pricing

Choose a value metric by asking whether customers get more value as they use more of that metric. Common options include per user for collaboration tools, per usage for variable consumption, and per transaction for payments. The metric should align price with value, be easy to understand, and scale as the customer grows.

Use the Van Westendorp price sensitivity meter, which asks four questions about too expensive, too cheap, expensive, and bargain price points to find an acceptable range. Complement it with MaxDiff analysis to rank feature importance and competitive benchmarking against alternatives.

Freemium works when the product has network effects, low marginal cost to serve free users, and clear upgrade triggers. Free trials fit products needing time to demonstrate value, higher price points, or B2B buying committees. Hybrid approaches like reverse trials combine both.

Raise prices when conversion rates exceed 40%, churn is below 3% monthly, prospects don't flinch at pricing, or significant value has been added since the last change. Use strategies like grandfathering existing customers, announcing increases 3-6 months ahead, or tying the increase to new features.

Three tiers is the industry standard: an entry tier to remove barriers, a recommended middle tier where most customers land, and a premium tier at 2-3x the middle price. Four or more tiers add granularity for wide customer ranges but risk decision paralysis.

Pricing strategy covers what to charge, how to package tiers, and which value metric to use. Pricing page conversion optimization, such as improving a low-converting page layout or CTAs, belongs to conversion rate optimization work rather than pricing decisions.