Pricing is an art and a science. Get it right, and customers feel like they’re getting a fair deal. Get it wrong, and poof, your revenue goes down the drain.
We’re gonna take a bit of a different approach to analysing these. We all saw the 9 moral alignments memes, they’re quite funny. Same format can be applied here.
We’re going to shortly analyze each one, tell you what actually works, and hear from our Oddsbreakers on pricing structures they’re exploring for their products.
You pay once, you get the product, no surprises. This is the pricing model people trust the most. It’s upfront, fair, and easy to understand. Businesses using this tend to build long-term goodwill but may struggle with scalability.
Great for: digital downloads, coaching, and lifetime licenses.
A well structured subscription service that provides real ongoing value without hidden fees or forced commitments. Customers stick around because they want to, not because they feel trapped.
Think Netflix, Notion, or any SaaS with a clear and fair offering.
This model thrives on trust and goodwill. Customers choose how much to pay, and businesses rely on the honor system.
This has worked well for indie musicians and Humble Bundle but isn’t a stable revenue model for most businesses.
Structured, clear, and logical, tiered pricing gives customers options while making sure that each level gets its money’s worth. If done well, it balances fairness and business growth. If done poorly, it leads to analysis paralysis.
You pay for exactly what you use. No more, no less. While this seems fair, it can sometimes lead to unpredictable costs for customers. AWS and cloud services operate like this, but customers often wish they had clearer pricing forecasts.
Engagement unlocks discounts. Apps like Duolingo offer incentives based on usage streaks. When done right, it keeps customers engaged. When done wrong, it feels manipulative.
The kind of pricing that requires a spreadsheet to decode. Many SaaS companies do this to nudge customers into higher tiers by strategically withholding features. It’s technically fair, but the complexity often leads to frustration.
It’s easy to sign up, but canceling feels like navigating a maze. Some companies intentionally make the cancellation process hard. Customers don’t forget this kind of frustration, and it often backfires.
The worst of the worst. Airlines charging extra for seat selection, ‘free’ design tools that won’t let you export without paying, or surprise service fees at checkout. This model thrives on deception and short-term gains, and customers hate it.
Be Transparent. No one likes surprises at checkout. Make pricing clear and upfront.
Offer choices, but not too many. When you offer too many choices people experience something called “Paradox of choice”, which means they feel confused and end up leaving without taking any action.
Charge based on value. The more a customer gets, the more they should pay. Don’t create artificial limitations just to force upgrades
Make It easy to cancel. Seriously, don’t be a jerk. If someone can as easily subscribe as they can cancel the service they will be happier with your product in the long run.
Build cool sh*t. As long as you product solves a problem, or brings value to the customer in one way or another, you will generate revenue.
As a user i hate missing transparency. if there is no obvious pricing page, i declare the business as shady. if the pricing page makes no immediate sense, i avoid at all costs. simple and understandable is the bare minimum. also, a big no-go is making features paid that were once free.
For goodwatch i am going for a long term strategy. the main product will be free forever with the best possible user experience which means no ads either. the only way i'll accept payment is per donations if enough people from the community will ever request that.
The main goal is to build an audience and gain their trust and loyalty. once my reach is big enough, I'll pitch new product ideas and validate them quickly. those will be monetized from day 1 and could use similar tech behind the scenes for other niches.
I was reading Through Lean Startup again recently, and that gave me some thoughts. When it comes to payment systems, the best one is the one that is easiest to understand. A lot of companies forget this.
I use Asana, and like all other companies that now do pay-per-seat-per-month, I found that I had to spend days to get an understanding of how the batch sizes, feature tiers, and commitment levels affected my price.
Then, months + a LinkedIn reachout to an executive to figure out how I could optimize it. It has to be the worst experience in purchasing I've ever had, and I only stayed because of my prior time investment in their free tier.
We're switching to a simpler model for Conversatum of free/pro and allowing users to scale the amount of resources they purchase. It's simple, follows just-in-time principles, and it's easy to explain!
For BuilderFive we charge marketers (ie. business owners) on commission after we verify 10 customers who have purchased from their shop that month.
Commission costs per cashback deal are priced based on the conditions customers need to meet in order to redeem their deal. For example, a get $1 off any menu item may cost the marketer $1.50 for each verified customer - but if they want to make it constrained to a specific item, at a specific time, then it could cost $2 or more
This increased profit margin gives Builderfive future room for an affiliate marketing program that incentivizes marketers to push deals with difficult-to-meet conditions for higher pay
When we have 20 groups of 10 people and each person goes out for coffee just ONCE that week, we make $200 that week. We're working with students in Austin... they go out for coffee every day
We price based on the least we can feasibly price. We're in sort of a commoditized market so the really competition is quality for cheap. For machines, we charge based on power, bandwidth, and any other service costs we might encur, then we add a small markup to it. We try to keep all machines with a payback period of less than 8 months.
Since we're not really a SaaS company, we can't charge whatever we want to. But most of the time we charge whatever we can, is reasonable, and affordable. Ideally we charge based on the cost of resources (Eg. RAM, Core count, Storage, Bandwidth, Ports, IPs, etc.) But sometimes we do take loss leaders to get our revenue count to be more stable, etc.
