What a pricing page should be

A good pricing page should be…

• Transparent on the list price –
  • If you’re embarrassed about your list price either your pricing team is lazy, sales people are lazy, or your product team is building anything that sticks without a clear vision
• Clear on what is included in each package and why each feature is valuable
  • Clear on who each package is for (the buyer and use case)
  • Clear on any entitlements that customers may be likely to overrun easily
• Clear on the metric and its definition
• Clear that there is discounting (for B2B sales) with additional volume commitments
  • Quick aside on this subject below

This lineup page example assumes a good-better-best packaging strategy. It’s almost painfully too common in enterprise software. But classics exist for good reason.

Customers receive the following discounts:

0-10 users = 5%, 11-100 users = 10%, 101-500 users = 15%, 501-1000 users = 20%

This page has the key elements: transparent list price, simple description of what’s included, user metric that’s easy for prospects to scope, and basic volume discounting.

Quick Aside on Discounting

The system above is common but flawed in enterprise software. Most refer to it as a volume-discount matrix. I’ll do a deeper dive in another post, but it boils down to this: while easy to explain it can lead to weird behaviors and poor pricing discipline.

Example: a customer buys 100 users of the Better package. At $50/user the qualified discount is 10%. So $50/user * 100 users * (1 – 10% discount) = $4,500 total cost.

But what if they want 101 users? The product is now cheaper(?!) because the customer qualifies for the 15% discount if you treat all users at the new block price. The math is $50/user * 101 users * (1 – 15%) = $4,292.50 total cost.

If you’re a customer, just buy 101 users, not 100 and save $208.

Wait, wouldn’t I just charge the 101st user a 15% discount and the previous 100 get a 10% discount? You could sure do that! But for bigger companies this becomes a systems nightmare. Customers hate it too when they start having to add up the math on each tranche to figure out their true price. If you’re getting a queasy feeling that this feels like the same complexity you use to build your taxes then you’d be right!

Clearly there are some downstream challenges to consider when thinking through discount mechanics. Luckily, there are more sophisticated ways to handle the problem. But for small and lower mid-size companies, this method is mostly fine. When you start seeing $50M+ in revenue it does become a huge opportunity to drive growth, however.

Build a better pricing page by making it clear, transparent, and easy for customers to calculate their needs on the fly. You’ll save yourself lots of time and earn the most valuable business resource that matters: trust.