Modern Pricing Strategies for Product Managers

Your pricing committee meets once a quarter to debate a price increase. Meanwhile, your competitors are making 50 changes in the same period. You're not slower because you don’t have ideas. You're slower because you're treating every pricing change like a five-alarm fire. That’s why I loved the concept of Fynn Glover (co-founder, Schematic): a 2-speed pricing system. Teams should separate pricing work that requires company-wide consensus from work that should happen every single day. 𝐆𝐥𝐨𝐛𝐚𝐥 𝐩𝐫𝐢𝐜𝐞 𝐜𝐡𝐚𝐧𝐠𝐞𝐬 (rare, high-impact): These are the big structural moves. → Superhuman going from $30 to $40/month. → Vercel introducing a new pricing model for AI workloads. → Atlassian lifting prices by ~5% across the board. They affect your entire customer base. They require broad communication. They touch GTM at every level. You revise these quarterly or twice a year. Not more. 𝐋𝐨𝐜𝐚𝐥 𝐩𝐚𝐜𝐤𝐚𝐠𝐢𝐧𝐠 𝐜𝐡𝐚𝐧𝐠𝐞𝐬 (the daily muscle): This is where your pricing & packaging agility actually lives. Tactical. Experimental. Often invisible outside your team. → Sales flexibility: grant a one-time discount for an enterprise deal → Limits & usage: adjust free-tier caps to test conversion → Feature trials: offer time-boxed access to premium features → Add-on gaps: introduce small, high-value add-ons when you spot concentrated demand → Promotions: run limited-time offers to gather elasticity data → Expansion plays: use product signals to trigger upgrade outreach or paywalls These don't need executive approval. They don't need a 6-week rollout plan. They need a system that lets your growth and product teams turn the dials. Here's what happens when you don't separate pricing into two speeds: ❌ Every small change gets stuck in the global process. ❌ Your pricing committee becomes a bottleneck. ❌ Teams stop proposing experiments because they know the friction isn't worth it. You end up with one pricing change every 18 months, while your market moves weekly. While you are still scheduling the meeting to discuss a usage limit, the market leaders have already run the test, gathered the data, and shipped the winner. Your competitors aren't smarter. They’re just faster. Pricing agility doesn't mean changing everything all the time. It means knowing which changes are global events and which ones are local experiments. #SchematicPartner

POV: You’re a product marketer. Pricing and packaging just landed in your lap. ❌ No pricing manager. ❌ No budget for a consultant. Just you, Google Sheets, and a vague sense that “we should probably revisit our pricing.” Common scenario at Series A/B: ✅ You’ve found product-market fit. ✅ You’ve grown fast. Now you need to unlock the next level of growth. So where do you start? First and foremost: Don’t try to fix everything. Pricing touches everything. Before you jump in, understand what you can impact. HubSpot’s Sam Lee breaks pricing into 3 key areas: 1️⃣ Product Monetization: pricing metrics, plan design, packaging. 2️⃣ Commercial Strategy: discounting, sales enablement, channel pricing. 3️⃣ Back Office: Governance, analytics, decision-making flow. I’ll add one more: 4️⃣ Pricing plumbing: tech stack from CPQ through billing. Odds are, you can safely ignore 2️⃣ through 4️⃣ (for now). You probably can’t overhaul your quote-to-cash flow, redesign your deal desk, or implement new billing software. But Product Monetization? That’s where you can move the needle. Here’s how I’d tackle it (in order): Start with packaging. Look at your current plans. For each one, ask: • Does this plan solve a distinct job? • If you were the ICP, would your tiers make sense? This alone can uncover big wins. Often, just simplifying plans can improve conversion or help your sales team tell a better story. Next, take a closer look at features. An easy approach is the value matrix. It maps each feature by: • Relative preference (how much people want it) • Willingness to pay (how much they’d pay for it) You’ll end up with: → Core features: everyone expects them, no one’s paying extra. → Value drivers: people want them and will pay for them. → Add-ons: not for everyone, but high value for a niche. The last one is where most SaaS companies leave money on the table. From there, review usage thresholds. Even if you can’t change your pricing metric (heavy lift), you can still adjust thresholds. Look at usage caps across plans: • Are they aligned with actual customer usage? Competitor research helps here. Find arbitrage opportunities where you can offer more value for the same price or better align value with consumption. Lastly, look at price points. Yes, actual prices come last. Once your packaging, features, and thresholds are dialed, you can ask: • How do we want to be positioned in the market? • Which plan should be the hero (and are we making that clear)? A 10% price bump won’t fix a confusing plan structure. But a well-designed plan can make a higher price feel like a steal. In summary: ✅ Control the controllables. ✅ Think like your customer. ✅ Reassess feature bundling. ✅ Pressure-test your thresholds. ✅ Only then play with price points. You don’t need to be a pricing expert. You just need to use your product and marketing instincts. (And maybe pretend to be your ICP for a day.)

I've seen countless companies relying on outdated models or gut instincts for price changes. That often leads to tactical, knee-jerk pricing, missed profits, or constant battles to justify pricing & promotional plans to supply chain partners. I just recorded a quick video explaining exactly how we combine four different approaches to model elasticity accurately: 1. Double Machine Learning (DML) - Delivers a robust causal estimate by predicting sales and price from confounders, then regressing the residuals. - We typically build one DML model per SKU. In our experience, this often reflects real-world behavior best. 2. Log-Log regression models - It is simple and interpretable - perfect if you have lots of historical data, a high volume of transactions, or price variation. - The log price coefficient directly translates to elasticity. It is quick to implement, though it often oversimplifies and is not a good method for B2B. 3. ElasticNet - A regularized linear model balancing Lasso and Ridge methods. - If you have many variables, such as our promos, competitor promos, distribution, comp distribution, etc., it helps prevent overfitting. 4. Random Forest - Handles non-linearities pretty well without having to do complex data engineering. - We use price perturbation, simulating different price points to see how predicted demand changes, thus estimating implied elasticities. In the video, I also share how we compare the four methods, track metrics like RMSE or MAPE, and deliver scenario-based recommendations about price, promotions, and competitive moves, helping you go from reactive to proactive pricing. The real payoff is that you can: 1. Proactively manage pricing: estimate the impact of competitor actions and optimize your strategy. 2. Maximize promotional ROI: estimate what truly drives incremental volume vs. what's wasted spend. 3. Earn insights-backed credibility: support your pricing with robust elasticity metrics that show retailers how you got to your recommendations. I'd love to hear your thoughts. If you're ready to take a deeper look at these elasticity models (complete with a whitepaper, sample code, and practical examples), check out the comment section for links and more details!

The question I hear most from founders during Sequoia Capital's Arc program is about #pricing. Pricing is one of the most underutilized levers for startups. Why does it matter so much? It has the most direct impact on revenue, and the moment you establish your pricing, you determine your TAM. Getting the pricing metric right is, by far, the most important one. The key is to imagine the future: when you are a large and successful company, how have you changed the world, and what metric correlates best with your success? Hitch your financial wagon to that metric! If you are Figma, success is all designers using the app; therefore, the pricing metrics is per designer seat. If you are VMware, success is all workloads run in virtual machines; therefore, the right pricing metric would have been a virtual machine. A pricing metric is like the genie in a bottle: once you get it out, it is tough to rein it back or change it. The pricing model is about when and how frequently you charge. Recurrent subscriptions are the predominant model for SaaS apps, and usage-based pricing is the model for infrastructure solutions. Usage-based pricing creates a beautiful alignment of incentives but is less predictable. Upfront credit purchases and commitments are efforts to make usage-based practice more aligned with the rigid corporate budgeting processes. You can be the premium solution or the affordable one. Both are legitimate approaches. But your pricing needs to be consistent with the rest of your strategy: with your product and distribution channels.  You can’t have an affordable solution distributed through an expensive enterprise sales force. In this case, you need to sell either online or through inside sales—the product better be simple and the sales cycle quick. Many technical founders are shy about asking for a lot of money for their product. Don’t be. If customers like the product and it delivers value, they will gladly pay for it. Unless you hear customer complaints that you are expensive, then for sure you are underpricing. Calculate the ROI of your product, and take 20% of that value as your price point. How much it costs you to build the solution should not guide your pricing. But you should do a sanity check that you have a decent gross margin. Most companies start by selling a single package. Over time, they realize that different customer segments have different maturity levels and willingness to pay. To price discriminate between these segments, you need to introduce multiple packages.  Start by creating a customer maturity curve to inform your decisions on how many packages you need. The trick is to have the smallest number of packages to cover the broadest range of customer needs. Your packages will change and evolve quickly as your product matures. 

Set and forget is not a pricing strategy ! Price--> Design--> Build We know that's what everyone says, but thats an oversimplification of what the entire process should look like. The assumption your pricing was correct in the pre-design phase and doesn't need change is dangerous, dangerous, dangerous !! I have seen too many physical and software products change drastically between initial design to final delivery. Product owners will typically assume that pricing still holds. You have to change that philosophy. In the real world we need a lot more iteration in price: Step 1: Initial Price: This stage you quantify the value and set an initial target price. This is a combination of internal/external research, some value quantification and pricing knowledge. Step 2: Design: With that price info, the product team designs a product that hits product and profitability targets. This is also where you need to keep track of the product margins. Often product will go design a better product at the expense of higher cost, and margins suffer before launch. Step 3: Reprice: Now that we know the new design constraints that impact the profitability, this stage gives you the opportunity to reprice the product based on the design. If substantial value has been added, price should go up. Do not fall into the 'lets over deliver on value and keep price same' trap. Step 4: Build: Now with that new price info and product roadmap the product goes through the build stage. Step 5: Pre launch reprice : Now significant time may have passed since last price review. The market for the product, the economy etc may have changed. This stage can assist in making last changes before product goes out. Good time to also establish guardrails for price performance, discount strategy, or sales strategy. Step 6: Launch: Goes without saying the product is out in the real world. Great way to capture feedback. Also a stage where performance is measured against the price guardrails. Step 7: Reprice 3: Based on sales feedback, you start charting next steps. Selling too slow, you may need discount or reprice. Selling too fast, it may be overdelivering on price vs value. Pricing metric may need change. Fx may have changed. This is the price adjustment stage, should be annual or semi annual. You can incorporate these steps into new product introduction framework or annual or semi annual pricing strategy process, either ways it will help establish good pricing principles in the org. I know of many products that once designed were never repriced years into its life.. Surely things must have changed all those years... Think of Pricing as a lifecycle !! -------------------------- We are in #Pricingtribe.

I have spent years in the highs and lows of the consumer goods industry but never seen a pricing climate quite like this. Manufacturers are getting squeezed from every direction-tariffs, skyrocketing raw material costs, and relentless supply chain disruptions. The old playbook of raising prices to cover costs? That’s dead. Why? Because consumers are feeling the pressure too. A 2024 Nielsen report makes it clear: today’s shoppers are scrutinizing every dollar they spend, and brands that aren’t strategic about pricing risk losing market share fast. Here’s what I’m seeing from top CPG brands that get it: 1️⃣ Walmart is investing heavily in AI-driven pricing models to keep costs competitive-e-commerce now makes up 18% of total revenue. 2️⃣ PepsiCo is doubling down on pack-size innovation, offering smaller, affordable options to maintain volume without excessive discounting. 3️⃣ Luxury brands are using price elasticity models, testing demand thresholds before rolling out increases-avoiding consumer pushback. 4️⃣ Supply chain resilience is non-negotiable. Companies are shifting manufacturing away from China, despite short-term cost spikes, to avoid future geopolitical risks. The smartest brands aren’t just reacting. They’re rethinking. They’re moving toward Revenue Growth Management (RGM) frameworks that help them: ✅ Optimize pricing and promotions (because blanket price hikes are a losing game) ✅ Focus on margin-smart growth, not just revenue ✅ Leverage data analytics to make smarter, faster pricing decisions Brands that don’t evolve risk eroding profitability or pricing themselves out of the market. CPG leaders who master strategic pricing, operational efficiency, and consumer-driven value creation will own the future of this industry. Are you adjusting your strategy, or just reacting to rising costs? Because in 2025, only the most adaptable brands will win. #CPG #FMCG #PricingStrategy #RevenueGrowth #ConsumerGoods

Gone are the days of careful feature comparisons and middle-ground choices. Welcome to the era of the Bifurcation Effect. In the pre-software world of scarcity, consumer decisions followed a multi-factor process. The result was a normal distribution curve. But in today's abundance-driven market, we're witnessing a dramatic shift – the Bifurcation Effect. Here's how Enzo Avigo and I explain it: 𝟭. 𝗣𝗼𝗹𝗮𝗿𝗶𝘇𝗶𝗻𝗴 𝗣𝗿𝗲𝗳𝗲𝗿𝗲𝗻𝗰𝗲𝘀 Imagine a Taylor Swift concert. In a scarce market, you'd see a bell curve of interest. But in our abundant world, preferences gravitate to extremes: • Die-hard fans: "I'll pay anything!" • Indifferent consumers: "Netflix and chill, thanks." The middle ground? It's vanishing. As a result, Taylor Swift tickets are incredibly expensive. 𝟮. 𝗦𝗼𝗳𝘁𝘄𝗮𝗿𝗲 𝗮𝘀 𝗧𝗵𝗲 𝗨𝗹𝘁𝗶𝗺𝗮𝘁𝗲 𝗔𝗯𝘂𝗻𝗱𝗮𝗻𝗰𝗲 Software takes this bifurcation to the extreme. We're talking: • The "Holy Grail" product • The "It'll do" budget option Why? Because in a world of endless choices, we're hardwired to simplify. We don't have time for spreadsheet comparisons anymore. We go to either extreme. Skeptical? Look around. How many times have you chosen a product purely based on its reputation or price point, without diving into the nitty-gritty? 𝟯. 𝗣𝗼𝘀𝗶𝘁𝗶𝗼𝗻 𝗬𝗼𝘂𝗿𝘀𝗲𝗹𝗳 𝗶𝗻 𝗮 𝗕𝗶𝗳𝘂𝗿𝗰𝗮𝘁𝗲𝗱 𝗪𝗼𝗿𝗹𝗱 For founders and PMs, this means the game has changed. It's no longer about moving people through awareness funnels. Your mission? Create an irresistible gravitational pull. You're not just building software; you're crafting desire. Think about it: Today's software products look more like consumer brands than traditional tech companies. It's not about features; it's about identity. 𝟰. 𝗣𝗿𝗶𝗰𝗶𝗻𝗴 𝗶𝘀 𝗣𝗮𝗿𝘁 𝗼𝗳 𝗬𝗼𝘂𝗿 𝗣𝗼𝘀𝗶𝘁𝗶𝗼𝗻𝗶𝗻𝗴 In this light, pricing isn't just about premium vs. budget anymore. It's a strategic tool that defines your company's identity and market position. Consider Basecamp's rejection of per-seat pricing, positioning them as champions of simplicity and transparency. Or open-source companies like Sentry and Cal, whose on-premise options showcase their commitment to community and user control. Your pricing is a tool for your positioning. Once you understand that, answering tactical questions is much easier. 𝗧𝗵𝗲 𝗧𝗮𝗸𝗲𝗮𝘄𝗮𝘆𝘀 1. Position boldly or get lost in the noise 2. Align everything – product, marketing, pricing – to claim valuable mental real estate 3. Remember: In this bifurcated world, you're either the best or the cheapest. There's no comfortable middle anymore. Still not convinced? Look at the giants – Apple, Tesla, Notion. They're not just selling products; they're selling identities and aspirations. The Bifurcation Effect isn't just a theory. It's the new reality of the software world. Ignore it at your own peril.

There isn’t one pricing strategy that drives upgrades. What works depends on how and when customers realise value. A recent PricingSaaS breakdown highlighted five different approaches teams are using. They’re not silver bullets, but each solves a specific mismatch between pricing and usage. 1. Change the billing cadence ↳ Moving from monthly to quarterly or annual billing gives customers more time to see value before a renewal decision. ↳ This works best when time-to-value isn’t instant and early churn is driven by impatience rather than lack of fit. 2. Rethink what you meter ↳ Some teams removed limits like user caps and shifted to usage metrics closer to real value. ↳ The upgrade trigger becomes growth in usage, not hitting an artificial ceiling. 3. Use add-ons as a discovery path ↳ Add-ons let customers try advanced capabilities without committing to a higher tier. ↳ They work well when value is clear only after hands-on use. 4. Price onboarding and support intentionally: ↳ Defaulting to self-serve onboarding and reserving human support for higher tiers aligns cost with commitment. ↳ It also signals where the product expects customers to be more serious. 5. Adjust the entry point: ↳ Raising the floor price or tightening the lowest tier can naturally push customers toward plans where upgrades make more sense economically. Across all five, the pattern is alignment. Pricing works when it follows customer behaviour, not when it tries to correct it. Which part of your pricing feels most disconnected from how customers actually use your product today?

🎯 Here's a counterintuitive truth about SaaS: While most companies obsess over their homepage, it's actually the pricing page that separates window shoppers from serious buyers. Why? In B2B, the economic buyer (who controls the budget) and the champion (who champions your solution) have different priorities. The buyer zeroes in on pricing, while the champion focuses on value proposition. Here are 3 proven tactics that transformed our pricing page conversions: 1. Job-Based Pricing Tiers: We scrapped generic "Free/Pro/Business" labels and aligned our tiers with customer jobs-to-be-done: "Free", "Tracking", "Collaboration", and "Prioritization & Planning". This clarity helped us successfully implement pricing from $9 to $199/month, as customers could easily match their needs to perceived value. 2. Feature Visualization: Don't just list features in a comparison table. Adding short feature videos on hover, letting prospects instantly grasp what they're buying. Bonus: The view analytics reveal which features truly matter to potential customers. 3. Strategic Feature Distribution: How you spread features across tiers and set usage limits has a bigger revenue impact than adding new product features. Smart limitations naturally guide users toward higher tiers—and it's far less resource-intensive than building new functionality. 💡 Key Takeaway: Your pricing page isn't just about prices—it's a strategic tool for qualifying prospects and maximizing revenue. Small tweaks here often deliver better ROI than major product changes. What creative pricing page strategies have worked for your SaaS? Share your experiences below! 👇 #SaaS #ProductStrategy #PricingStrategy #ProductManagement #Growth

Our most underestimated pricing tool? AI. It’s easy to assume that pricing is all about intuition or guesswork, but AI is transforming how businesses approach price optimization. However, AI isn’t a one-size-fits-all solution—it’s a tool that, when used right, can drive smarter, data-backed decisions. Here’s why AI matters for your pricing strategy: → Dynamic Adjustments AI helps businesses adjust pricing in real-time, responding to shifts in demand, market conditions, and competitor activity. It ensures prices are always competitive and aligned with the market. → Data-Driven Insights By analyzing large sets of data—like past sales, customer behavior, and trends—AI helps identify the best price points to maximize profit without alienating customers. → Personalized Pricing AI enables businesses to tailor prices to individual customer segments, increasing both loyalty and conversion rates while optimizing profit margins. → Simulated Scenarios AI allows companies to simulate different pricing strategies and predict their outcomes. This way, businesses can test new approaches without taking unnecessary risks. So, how can you leverage AI in pricing? → Start Small Begin by integrating AI tools that align with your existing pricing strategies, and gradually scale as you learn. → Combine AI with Human Insight AI is a powerful tool, but it needs human judgment to adapt to the nuances of the market and customer sentiment. → Embrace Dynamic Pricing Implement AI-powered dynamic pricing models that adjust in real-time based on factors like demand and competitor actions. AI isn’t just a trend—it’s a game changer for smarter pricing strategies. It’s time to stop guessing and start optimizing. How are you using AI to optimize your pricing strategy? Let’s talk!