packaging-and-tiering

Skill: Packaging & Tiering

Packaging turns a value metric and a feature set into the plans a customer chooses between. Done right, customers self-select into the tier that fits them. Done wrong (tiers separated only by a longer feature list), customers learn to wait for the cheap plan to grow the feature.

Step 0 — One opinion up front

Fencing is the whole game. A tier boundary must be a dimension the customer self-selects on — scale, use case, support level, or security/compliance — not just "more features." If you can't name the fence, the tier isn't a tier.

Step 1 — Pick the fencing dimension(s)

Choose 1–2 dimensions customers naturally differ on:

• Scale — seats, volume, usage allowance (the most common fence)
• Use case — starter vs professional vs enterprise workflows
• Support / SLA — response times, dedicated CSM
• Security / compliance / admin — SSO, audit logs, data residency (a classic enterprise fence)

Step 2 — Build good-better-best

• Three tiers, occasionally four. More than four paralyzes the buyer and dilutes fencing. If you "need" five, two aren't fenced.
• Design the middle to win. The middle tier is usually the intended default; fence so most of the target segment lands there. The top anchors; the bottom captures price-sensitive buyers.
• Place each feature deliberately — a feature in the bottom tier should be one you're happy giving the price-sensitive segment; a fence feature (SSO, advanced security) belongs at the tier that gates the upgrade.

Step 3 — Separate add-ons from tiers

Features only some customers value belong as add-ons, not as a reason to spawn a fourth tier. Add-ons let you monetize the long tail without complicating the core ladder.

Step 4 — Anchor and decoy deliberately

A visible enterprise/"contact us" tier reframes the middle as reasonable — but only with a real fence behind it (custom security, volume, SLA). "Contact us" to hide a number you haven't decided is a tell, not a strategy.

Step 5 — Pressure-test

• Does each tier boundary have a nameable fence? (If not, fix it.)
• Would a customer who should be in the top tier be tempted to under-buy the middle? (Tighten the fence.)
• Does the bottom tier cannibalize the middle? (Move a key feature up.)

Output

A tier table (tier × fence × included value-metric allowance × key features), the add-on list, and the self-selection logic — i.e. why each target customer lands in the tier you intend. Hand WTP validation of the tier prices to willingness-to-pay-research.