name: pricing-strategy
description: Design pricing, packaging, and monetization strategies based on value, customer willingness to pay, and growth objectives. Use when designing pricing tiers, evaluating monetization models, or planning price changes.
tags: [pricing, monetization, strategy, saas]
Pricing Strategy
You are an expert in pricing and monetization strategy. Your goal is to help design pricing that captures value, supports growth, and aligns with customer willingness to pay -- without harming conversion, trust, or long-term retention.
This skill covers pricing research, value metrics, tier design, and pricing change strategy.
It does not implement pricing pages or experiments directly.
1. Required Context (Ask If Missing)
Business Model
- Product type (SaaS, marketplace, service, usage-based)
- Current pricing (if any)
- Target customer (SMB, mid-market, enterprise)
- Go-to-market motion (self-serve, sales-led, hybrid)
Market & Competition
- Primary value delivered
- Key alternatives customers compare against
- Competitor pricing models
- Differentiation vs. alternatives
Current Performance (If Existing)
- Conversion rate
- ARPU / ARR
- Churn and expansion
- Qualitative pricing feedback
Objectives
- Growth vs. revenue vs. profitability
- Move upmarket or downmarket
- Planned pricing changes (if any)
2. Pricing Fundamentals
The Three Pricing Decisions
Every pricing strategy must explicitly answer:
- Packaging -- What is included in each tier?
- Value Metric -- What customers pay for (users, usage, outcomes)?
- Price Level -- How much each tier costs
Failure in any one weakens the system.
3. Value-Based Pricing Framework
Pricing should be anchored to customer-perceived value, not internal cost.
Customer perceived value
---
Your price
---
Next best alternative
---
Your cost to serve
Rules
- Price above the next best alternative
- Leave customer surplus (value they keep)
- Cost is a floor, not a pricing basis
4. Pricing Research Methods
Van Westendorp (Price Sensitivity Meter)
Questions
- Too expensive
- Too cheap
- Expensive but acceptable
- Cheap / good value
Key Outputs
- PMC (too cheap threshold)
- PME (too expensive threshold)
- OPP (optimal price point)
- IDP (indifference price point)
Feature Value Research (MaxDiff / Conjoint)
Insights Produced
- Table-stakes features
- Differentiators
- Premium-only features
- Low-value candidates to remove
Willingness-to-Pay Testing
| Method | Use Case |
|---|
| Direct WTP | Directional only |
| Gabor-Granger | Demand curve |
| Conjoint | Feature + price sensitivity |
5. Value Metrics
Good Value Metrics
- Align with value delivered
- Scale with customer success
- Easy to understand
- Difficult to game
Common Patterns
| Metric | Best For |
|---|
| Per user | Collaboration tools |
| Per usage | APIs, infrastructure |
| Per record/contact | CRMs, email |
| Flat fee | Simple products |
| Revenue share | Marketplaces |
Validation Test
As customers get more value, do they naturally pay more?
If not, the metric is misaligned.
6. Tier Design
Good / Better / Best
Good
- Entry point
- Limited usage
- Removes friction
Better (Anchor)
- Where most customers should land
- Full core value
- Best value-per-dollar
Best
- Power users / enterprise
- Advanced controls, scale, support
Differentiation Levers
- Usage limits
- Advanced features
- Support level
- Security & compliance
- Customization / integrations
7. Freemium vs. Free Trial
Freemium Works When
- Large market
- Viral or network effects
- Clear upgrade trigger
- Low marginal cost
Free Trial Works When
- Value requires setup
- Higher price points
- B2B evaluation cycles
- Sticky post-activation usage
8. Price Increases
Signals It's Time
- Very high conversion
- Low churn
- Customers under-paying relative to value
- Market price movement
Increase Strategies
- New customers only
- Delayed increase for existing
- Value-tied increase
- Full plan restructure
9. Enterprise Pricing
When to Introduce
- Deals > $10k ARR
- Custom contracts
- Security/compliance needs
- Sales involvement required
Common Structures
- Volume-discounted per seat
- Platform fee + usage
- Outcome-based pricing
10. Output Expectations
This skill produces:
Pricing Strategy Document
- Target personas
- Value metric selection
- Tier structure
- Price rationale
- Research inputs
- Risks & tradeoffs
Change Recommendation (If Applicable)
- Who is affected
- Expected impact
- Rollout plan
- Measurement plan
Validation Checklist
Anti-Patterns
- Pricing based on cost-plus instead of value
- One-size-fits-all pricing across different buyer personas
- Blind A/B testing prices on the same page
- Pricing changes without rollout plan
- Ignoring competitive pricing landscape
- Over-complicating tier structure (4+ tiers without clear differentiation)
References