Pricing is hard.
As a B2B SaaS leader, you’ve probably wrestled with questions like: What’s the right price for my product? How should I structure my pricing tiers? Am I undercharging or overcharging?
You’re not alone. Pricing is tricky for any business, especially for SaaS products offering something unique. The complexity lies in crafting a tiered pricing model that appeals to different audiences with different needs and budgets, i.e. startups or enterprise level while remaining competitive.
When you know your product inside out, you tend to overthink. You know your value proposition, your differentiators, and your market dynamics. That knowledge is valuable but can also cloud your judgment and make it difficult to think clearly.
Customers don’t see the world the way you do. They don’t have your insider knowledge, and let’s be honest, they don’t care as much as you do. All they know is they have a problem, and they’re looking for a solution that fits their needs and budget.
So, how do you craft a pricing strategy that works?
In this guide, I’ll walk you through a human-centred approach to pricing. By stepping into your customers’ shoes and testing your assumptions, you’ll create a pricing model that resonates with your audience and drives growth.
Step 1: Shift Your Perspective
First things first: Get out of your head. Stop thinking like a founder and start thinking like a customer.
Ask yourself:
- What problem are they trying to solve?
- Where will they be looking for solutions?
- Is the value of my product clear compared to the other options?
- How are they comparing my pricing? Against competitors, current solutions, or something entirely different?
In one of my research projects, I spoke to a potential customer who compared a SaaS product’s price to the cost of hiring a full-time internal team. Another compared it to paying an external consultant. Neither were comparing the SaaS product to direct competitors.
Customers evaluate pricing in the context of their specific problem, not the industry landscape. Your job is to understand their context and make your product and price make sense against the other options available to them.
Step 2: Research, Observe, and Listen
To create a pricing model that works, you need to deeply understand your customers, their needs, motivations, and pain points. Here’s how:
Conduct Customer Interviews
- Who to interview: New customers, established customers, churned customers, and prospects who didn’t buy.
- What to ask:
- When you first found us, what problem were you trying to solve?
- Where else did you look for a solution?
- What made you consider us?
- What was your decision making process?
- At what point did pricing become most important?
- What made you buy/not buy (or cancel)?
- Who was involved in the decision making and what was most important to them?
You could ask more questions, of course, but this is a great starting point. These conversations will give you invaluable insights into how customers perceive your value and pricing.
Observe Customer Behaviour
Recruit people from your target audience who haven’t explored your product yet and watch them while they size up your offer against your competitors. Pro tip - don’t let them know who you work for, as it will likely influence their decision and how honest they are with you.
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Here’s a step-by-step approach:
- Set the stage:Â Start with a short interview about their needs, decision-making process, and criteria for choosing a solution.
‍ - Observe their research process: Ask them to “Google” the solution to their problem. Watch how they search, where they go, and what they consider.
‍ - Test your pricing page: Direct them to your website and your competitors and observe their reaction. Are they confused? Engaged? What questions do they have? When do they decide to leave (or stay) and why?
‍ - Use the “briefcase close” technique: At the end of the session, when they are comfortable, you’ve asked all your questions and the session is over. Among your small talk, casually ask what they really thought. Sometimes, at this point, I’m completely honest with them about my research goals and ask what they think. People often share their most honest feedback when the conversation feels less formal.
Step 3: Test Your Pricing Ideas
The only way to know if your pricing works is to test it. Here are three methods:
Prototype Testing
Create a basic version of your pricing page (or pages) and get your target audience to take a look and give you feedback. You can make the prototype as basic or polished as you like. The more polished and like the real thing you make it, the more you can test it similarly to Step 2 above.
Either way, you want to get their reaction to the pricing and get them as honest as possible about how they evaluate the content they are seeing.
During this phase, you can test as many variations as possible and refine the presentation after receiving feedback until you feel more confident in your approach.
Soft Launch
Test it with a small group before rolling out new pricing to all customers. You can:
- Offer it to a subset of your email list.
- Use it in sales conversations with new prospects.
- Launch it on a separate landing page for a specific campaign.
Monitor their reactions and adjust accordingly.
A/B Testing
Create two versions of your pricing page with different price points or tier structures. Split your website traffic between the two versions and measure:
- Conversion rates
- Churn rates (over time)
It's best not to start here. A/B testing is for refining your pricing, not discovering it. Instead, start with qualitative research with Prototypes or Soft Launch first.
Step 4: Structure Your Pricing with the Goldilocks Approach
The “Goldilocks” model presents three pricing tiers: low, medium, and high. The goal is to make the middle tier—your ideal choice—feel “just right.”
Here’s how to craft effective tiers:
- Low tier: A basic option with enough value to get started but limited access to premium features.
- Middle tier: Your most balanced offering. Highlight its value compared to the other two tiers.
- High tier: A premium option for larger companies or power users who want it all.
Pro tip: Use tier names and descriptions that resonate with your audience. For example:
- Starter: For small teams starting out
- Growth: For scaling businesses
- Enterprise: For large organizations with complex needs
Step 5: Build Habits with Entry Points
You want to make sure your lowest tier, or free trial, offers enough of the product to allow people to build habits and understand the value of paying for your upper tiers. The more they use it in the early days and get value, the more likely they are willing to pay ongoing.
The key is to:
- Demonstrate value early: Offer enough features for customers to see real results.
- Encourage regular use: Customers are unlikely to upgrade if they don’t build habits around your product.
- Set clear upgrade triggers: Show them what they’re missing in higher tiers, but don’t overwhelm them.
Step 6: Iterate and Optimise
Pricing isn’t a one-and-done decision. It’s an ongoing process. Even after launching your pricing model, keep gathering feedback and monitoring metrics:
- Customer feedback: Are customers satisfied with the value they’re getting?
- Conversion rates: Are prospects converting at expected rates?
- Churn rates: Are customers leaving because of pricing?
Every few months, revisit your pricing to see if it aligns with your product’s value and market conditions.
Further Reading
Here are some resources to deepen your understanding of pricing:
Final Thoughts
Pricing is both an art and a science. It involves understanding your customers, testing your assumptions, and continuously refining your approach. By taking a human-centred perspective and embracing an iterative process, you’ll find the right pricing and build stronger customer relationships and a more sustainable business.
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So, what’s your next step? Start small. Talk to your customers. Test your ideas. And remember—pricing isn’t set in stone. You can constantly adjust as you learn.
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Good luck!
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