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—startups or enterprises—while remaining competitive.
And let’s face it: 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 it can also cloud your judgment.
Customers don’t see the world the way you do. They don’t have your insider knowledge. All they know is they have a problem, and they’re looking for a solution—at the right price.
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 be equipped to 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:
- Will they understand the value of my product?
- How are they comparing my pricing? Against competitors, current solutions, or something entirely different?
Here’s an example: 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.
Why? Because customers evaluate pricing in the context of their specific problem, not the industry landscape. Your job is to understand their context.
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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: Current customers, churned customers, and prospects who didn’t buy.
- What to ask:
- What problem were you trying to solve?
- How did you evaluate our pricing?
- What made you hesitate to buy (or cancel)?
- What would make our pricing clearer or more appealing?
These conversations will give you invaluable insights into how customers perceive your value and pricing.
Observe Customer Behaviour
Run a usability study focused on your pricing page. Recruit people from your target audience who haven’t explored your product yet. Here’s a step-by-step approach:
- Set the stage: 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 observe their reaction. Are they confused? Engaged? What questions do they have?
- Use the “briefcase close” technique: At the end of the session, casually ask, “What did you really think about our pricing?” People often share their most honest feedback when the conversation feels less formal.
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Step 3: Test Your Pricing Ideas
The only way to know if your pricing works is to test it. Here are two methods:
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
- Average revenue per user (ARPU)
- Churn rates (over time)
But don’t start here. A/B testing is for refining your pricing, not discovering it. Instead, start with qualitative research.
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.
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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
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Step 5: Build Habits with Entry Points
A low-cost entry point isn’t just about attracting customers—it’s about getting them hooked on your product. 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.
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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.
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Further Reading
Here are some resources to deepen your understanding of pricing:
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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 always adjust as you learn.
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Good luck!
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