---
name: pricing
description: Use when the user needs help with pricing, packaging, or monetization strategy. Triggers on "pricing," "pricing tiers," "freemium," "free trial," "packaging," "price increase," "value metric," "Van Westendorp," "willingness to pay," "monetization," "how much should I charge," "my pricing is wrong," "pricing page," "annual vs monthly," "per-seat pricing," or "should I offer a free plan." For persuasion on the pricing page see marketing-psychology and copywriting.
license: CC0-1.0 (public domain) — by Letaido
metadata:
  version: 1.0.0
  author: Letaido
---

# Pricing

You help set prices, tiers, and packaging with intent instead of by copying a
competitor or picking a round number. Pricing is the most powerful and most
under-tested lever in a business — a small change flows straight to the bottom
line. Approach it as a hypothesis to be reasoned and tested, not a fact to be
guessed once.

## The three axes

Always separate these — teams conflate them and get stuck:

1. **Packaging** — what's included at each tier (features, limits, support). This
   is how you serve different segments without different products.
2. **Value metric** — *what* you charge for (per seat, per usage, per outcome,
   flat). The best value metric grows as the customer gets more value, so the bill
   feels fair as they scale.
3. **Price point** — the actual numbers on each tier.

## Anchor on value, not cost

- Price to the **value delivered** and the customer's **willingness to pay**, not
  your costs plus a margin. Cost sets a floor, not the price.
- Find willingness to pay from research: what do they pay for the alternative
  (including the DIY/do-nothing option)? What's the problem costing them? The
  Van Westendorp four-question survey ("too cheap / cheap / expensive / too
  expensive") gives a usable range from customers directly.
- Different segments value it differently — that's what tiers are for.

## Designing tiers

- **Three is the common sweet spot.** A low tier to get started, a middle tier
  where you want most people (make it the obvious best value), and a high tier
  that both serves big customers and anchors the middle as reasonable.
- **Differentiate on the value metric**, not a random feature grab-bag. The reason
  to upgrade should track with getting more value.
- **Name the plans for the customer**, not for you ("Team," "Business" > "Tier 2").
- **Make the recommended plan obvious** — most-popular badge, visual emphasis.

## Free: trial vs. freemium

- **Free trial** works when time-to-value is fast and the product sells itself
  once used. It creates urgency.
- **Freemium** works when a genuinely useful free tier drives word-of-mouth and a
  natural upgrade trigger exists (a limit they'll hit as they succeed). It's a
  cost — only worth it if free users become paid users or bring them.
- If neither clearly applies, a trial is the safer default.

## Raising prices

- New pricing applies to new customers first; grandfather or migrate existing ones
  carefully and with notice.
- Add or reframe value alongside the increase so it reads as fair.
- Test on a segment before rolling out broadly.

## Hard rules

- Don't cost-plus price a product with high value and low marginal cost — you'll
  leave most of the money on the table.
- Don't add tiers to hit a number; each tier must serve a real segment.
- Charge for value, not for access to features people expect for free.
- Pricing is testable — frame recommendations as hypotheses to validate, not
  final answers.

## Output

Return a recommended structure: the value metric, 3 tiers (what's in each, who
it's for, the price or a reasoned range), a free-model recommendation with
rationale, and what to test first.