Use this when: You're launching a paid product, adding a tier, or restructuring pricing. You need to decide model, tiers, and price points with data instead of guessing.
You're done when: You have a pricing page you can defend with research, a value metric that aligns price with customer success, and validation from real prospect conversations.
Three Pricing Decisions
Every SaaS pricing structure comes down to three independent decisions. Getting them right means answering each one separately, not mashing them together.
1. What's your primary pricing lever?
This is the unit that most directly drives your price up as the customer gets more value:
- Per seat — price scales with people. Best when each user gets distinct value from having their own account (Slack, Figma, GitHub)
- Per usage — price scales with consumption of a measurable unit. Best when your cost-to-serve scales with their usage (Twilio, OpenAI, Vercel)
- Per outcome — price scales with results delivered. Instead of charging for seats or API calls, you charge for completed tasks, resolved tickets, or qualified leads. Emerging with AI agents, where the product does the work, not the user (Sierra, Intercom Fin)
- Flat rate — same price for everyone regardless of usage or team size. Best when value is consistent and predictable (Basecamp, Hey)
Most products combine these. Slack charges per seat but also has feature tiers. Vercel charges per usage but has plan tiers. That's fine — the question is which lever is primary, the one that most directly connects price to value.
2. How do you package it?
This is your tier structure:
- Single plan — one price, take it or leave it. Simple, but limits your market to one willingness-to-pay band
- Good/Better/Best — 2-3 tiers with increasing capabilities. The most common SaaS packaging. Each tier should unlock meaningful value, not just more of the same
- Custom enterprise — negotiated per customer. Necessary when deal sizes are large and needs vary significantly
3. How do users start?
This is your conversion model, and it's independent of how you charge:
- Freemium — free forever with limits. Works when free users become your acquisition channel: they invite teammates, create public content, or generate word-of-mouth. The free tier is a growth engine, not charity
- Free trial — full access for 7-14 days. Works when the product needs time to prove value but doesn't spread virally. Users need to experience the workflow before committing
- Straight to paid — no free option. Works when the product needs setup, configuration, or a demo to show value. Trying it for free would underwhelm because the product only shines after onboarding
The Sequence
Template
Example
A developer tools startup defaulted to $49/month flat because "that's what dev tools cost." They ran Van Westendorp with 30 prospects and discovered willingness to pay clustered around $120-250/seat/month for teams. They walked through the three decisions:
- Primary lever — per seat, because each developer on the team gets their own workspace and value scales with team size
- Packaging — Good/Better/Best tiers. Pro at $149/seat, Business at $349/seat with SSO and audit logs (makes $149 look like a bargain), custom pricing for large teams
- Conversion model — freemium, because the product spreads when developers share configs with teammates. Free tier limited to 1 user and 3 projects — enough to prove value, restrictive enough to force upgrade
They tested with 10 real prospects before launching the pricing page. Most paused, asked a clarifying question, then said they'd sign up — the slight hesitation meant the price was high enough to signal value without killing the deal.
Written with ❤️ by a human (still)