Pricing Strategy — Price to Maximize Revenue — Claude Skill

Pricing Research Methods

Contents

• Van Westendorp Price Sensitivity Meter (The Four Questions, How to Analyze, Survey Tips, Sample Output)
• MaxDiff Analysis (How It Works, Example Survey Question, Analyzing Results, Using MaxDiff for Packaging)
• Willingness to Pay Surveys
• Usage-Value Correlation Analysis

Van Westendorp Price Sensitivity Meter

The Van Westendorp survey identifies the acceptable price range for your product.

The Four Questions

Ask each respondent:

1. "At what price would you consider [product] to be so expensive that you would not consider buying it?" (Too expensive)
2. "At what price would you consider [product] to be priced so low that you would question its quality?" (Too cheap)
3. "At what price would you consider [product] to be starting to get expensive, but you still might consider it?" (Expensive/high side)
4. "At what price would you consider [product] to be a bargain—a great buy for the money?" (Cheap/good value)

How to Analyze

1. Plot cumulative distributions for each question
2. Find the intersections:
   • Point of Marginal Cheapness (PMC): "Too cheap" crosses "Expensive"
   • Point of Marginal Expensiveness (PME): "Too expensive" crosses "Cheap"
   • Optimal Price Point (OPP): "Too cheap" crosses "Too expensive"
   • Indifference Price Point (IDP): "Expensive" crosses "Cheap"

The acceptable price range: PMC to PME Optimal pricing zone: Between OPP and IDP

Survey Tips

• Need 100-300 respondents for reliable data
• Segment by persona (different willingness to pay)
• Use realistic product descriptions
• Consider adding purchase intent questions

Sample Output

Price Sensitivity Analysis Results:
─────────────────────────────────
Point of Marginal Cheapness:  $29/mo
Optimal Price Point:          $49/mo
Indifference Price Point:     $59/mo
Point of Marginal Expensiveness: $79/mo

Recommended range: $49-59/mo
Current price: $39/mo (below optimal)
Opportunity: 25-50% price increase without significant demand impact

MaxDiff Analysis (Best-Worst Scaling)

MaxDiff identifies which features customers value most, informing packaging decisions.

How It Works

1. List 8-15 features you could include
2. Show respondents sets of 4-5 features at a time
3. Ask: "Which is MOST important? Which is LEAST important?"
4. Repeat across multiple sets until all features compared
5. Statistical analysis produces importance scores

Example Survey Question

Which feature is MOST important to you?
Which feature is LEAST important to you?

□ Unlimited projects
□ Custom branding
□ Priority support
□ API access
□ Advanced analytics

Analyzing Results

Features are ranked by utility score:

• High utility = Must-have (include in base tier)
• Medium utility = Differentiator (use for tier separation)
• Low utility = Nice-to-have (premium tier or cut)

Using MaxDiff for Packaging

Willingness to Pay Surveys

Direct method (simple but biased): "How much would you pay for [product]?"

Better: Gabor-Granger method: "Would you buy [product] at [$X]?" (Yes/No) Vary price across respondents to build demand curve.

Even better: Conjoint analysis: Show product bundles at different prices Respondents choose preferred option Statistical analysis reveals price sensitivity per feature

Usage-Value Correlation Analysis

1. Instrument usage data

Track how customers use your product:

• Feature usage frequency
• Volume metrics (users, records, API calls)
• Outcome metrics (revenue generated, time saved)

2. Correlate with customer success

• Which usage patterns predict retention?
• Which usage patterns predict expansion?
• Which customers pay the most, and why?

3. Identify value thresholds

• At what usage level do customers "get it"?
• At what usage level do they expand?
• At what usage level should price increase?

Example Analysis

Usage-Value Correlation Analysis:
─────────────────────────────────
Segment: High-LTV customers (>$10k ARR)
Average monthly active users: 15
Average projects: 8
Average integrations: 4

Segment: Churned customers
Average monthly active users: 3
Average projects: 2
Average integrations: 0

Insight: Value correlates with team adoption (users)
        and depth of use (integrations)

Recommendation: Price per user, gate integrations to higher tiers

Tier Structure and Packaging

Contents

• How Many Tiers?
• Good-Better-Best Framework
• Tier Differentiation Strategies
• Example Tier Structure
• Packaging for Personas (Identifying Pricing Personas, Persona-Based Packaging)
• Freemium vs. Free Trial (When to Use Freemium, When to Use Free Trial, Hybrid Approaches)
• Enterprise Pricing (When to Add Custom Pricing, Enterprise Tier Elements, Enterprise Pricing Strategies)

How Many Tiers?

2 tiers: Simple, clear choice

• Works for: Clear SMB vs. Enterprise split
• Risk: May leave money on table

3 tiers: Industry standard

• Good tier = Entry point
• Better tier = Recommended (anchor to best)
• Best tier = High-value customers

4+ tiers: More granularity

• Works for: Wide range of customer sizes
• Risk: Decision paralysis, complexity

Good-Better-Best Framework

Good tier (Entry):

• Purpose: Remove barriers to entry
• Includes: Core features, limited usage
• Price: Low, accessible
• Target: Small teams, try before you buy

Better tier (Recommended):

• Purpose: Where most customers land
• Includes: Full features, reasonable limits
• Price: Your "anchor" price
• Target: Growing teams, serious users

Best tier (Premium):

• Purpose: Capture high-value customers
• Includes: Everything, advanced features, higher limits
• Price: Premium (often 2-3x "Better")
• Target: Larger teams, power users, enterprises

Tier Differentiation Strategies

Feature gating:

• Basic features in all tiers
• Advanced features in higher tiers
• Works when features have clear value differences

Usage limits:

• Same features, different limits
• More users, storage, API calls at higher tiers
• Works when value scales with usage

Support level:

• Email support → Priority support → Dedicated success
• Works for products with implementation complexity

Access and customization:

• API access, SSO, custom branding
• Works for enterprise differentiation

Example Tier Structure

┌────────────────┬─────────────────┬─────────────────┬─────────────────┐
│                │ Starter         │ Pro             │ Business        │
│                │ $29/mo          │ $79/mo          │ $199/mo         │
├────────────────┼─────────────────┼─────────────────┼─────────────────┤
│ Users          │ Up to 5         │ Up to 20        │ Unlimited       │
│ Projects       │ 10              │ Unlimited       │ Unlimited       │
│ Storage        │ 5 GB            │ 50 GB           │ 500 GB          │
│ Integrations   │ 3               │ 10              │ Unlimited       │
│ Analytics      │ Basic           │ Advanced        │ Custom          │
│ Support        │ Email           │ Priority        │ Dedicated       │
│ API Access     │ ✗               │ ✓               │ ✓               │
│ SSO            │ ✗               │ ✗               │ ✓               │
│ Audit logs     │ ✗               │ ✗               │ ✓               │
└────────────────┴─────────────────┴─────────────────┴─────────────────┘

Packaging for Personas

Identifying Pricing Personas

Different customers have different:

• Willingness to pay
• Feature needs
• Buying processes
• Value perception

Segment by:

• Company size (solopreneur → SMB → enterprise)
• Use case (marketing vs. sales vs. support)
• Sophistication (beginner → power user)
• Industry (different budget norms)

Persona-Based Packaging

Step 1: Define personas

Step 2: Map features to personas

Step 3: Price to value for each persona

• Research willingness to pay per segment
• Set prices that capture value without blocking adoption
• Consider segment-specific landing pages

Freemium vs. Free Trial

When to Use Freemium

Freemium works when:

• Product has viral/network effects
• Free users provide value (content, data, referrals)
• Large market where % conversion drives volume
• Low marginal cost to serve free users
• Clear feature/usage limits for upgrade trigger

Freemium risks:

• Free users may never convert
• Devalues product perception
• Support costs for non-paying users
• Harder to raise prices later

When to Use Free Trial

Free trial works when:

• Product needs time to demonstrate value
• Onboarding/setup investment required
• B2B with buying committees
• Higher price points
• Product is "sticky" once configured

Trial best practices:

• 7-14 days for simple products
• 14-30 days for complex products
• Full access (not feature-limited)
• Clear countdown and reminders
• Credit card optional vs. required trade-off

Credit card upfront:

• Higher trial-to-paid conversion (40-50% vs. 15-25%)
• Lower trial volume
• Better qualified leads

Hybrid Approaches

Freemium + Trial:

• Free tier with limited features
• Trial of premium features
• Example: Zoom (free 40-min, trial of Pro)

Reverse trial:

• Start with full access
• After trial, downgrade to free tier
• Example: See premium value, live with limitations until ready

Enterprise Pricing

When to Add Custom Pricing

Add "Contact Sales" when:

• Deal sizes exceed $10k+ ARR
• Customers need custom contracts
• Implementation/onboarding required
• Security/compliance requirements
• Procurement processes involved

Enterprise Tier Elements

Table stakes:

• SSO/SAML
• Audit logs
• Admin controls
• Uptime SLA
• Security certifications

Value-adds:

• Dedicated support/success
• Custom onboarding
• Training sessions
• Custom integrations
• Priority roadmap input

Enterprise Pricing Strategies

Per-seat at scale:

• Volume discounts for large teams
• Example: $15/user (standard) → $10/user (100+)

Platform fee + usage:

• Base fee for access
• Usage-based above thresholds
• Example: $500/mo base + $0.01 per API call

Value-based contracts:

• Price tied to customer's revenue/outcomes
• Example: % of transactions, revenue share