What to charge.
WHY IT BELONGS IN PRODUCT
Price shapes who uses the product and how it is perceived.
WHAT TO BASE IT ON
The value delivered to the customer.
WHAT NOT TO BASE IT ON
Cost to build What competitors charge, alone
WHAT TO ESTABLISH
What the problem costs the customer What alternatives cost them What they currently spend
WHAT PRICING MODELS EXIST
Per user Per usage Flat rate Tiered by capability Combinations
WHAT TO CHOOSE BY
What scales with the value the customer receives.
WHY THAT ALIGNMENT MATTERS
Customers accept paying more as they get more.
WHAT TIERS SHOULD DIFFER BY
Something meaningful to the customer.
WHAT THEY SHOULD NOT DIFFER BY
Arbitrary limits designed to force upgrades.
WHY
Customers recognise it.
HOW MANY TIERS
Few. Two or three.
WHY
More produces indecision.
WHAT TO TEST
Raising prices for new customers.
WHAT USUALLY HAPPENS
Less resistance than expected.
WHAT TO BE CAREFUL WITH
Changing prices for existing customers.
WHAT TO DO IF YOU MUST
Notice, a reason, and time.
WHAT TO MEASURE
Conversion at each price Whether customers upgrade over time
WHAT FLAT UPGRADE RATES INDICATE
Tiers that do not reflect growing value.
