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Suppose you're making a new tool or software for other businesses. How would you price it? 
Here's a few things that I found working and some that did not:
Here's a few things that I found working and some that did not:
1. Per-seat pricing is not for everyone. If you can see your customers reusing the same few seats, they will. It works well when user identity is strong. Don't let your customers pay for nothing more than additional sets of credentials. Give them unlimited seats instead.
2. Volume pricing. Volume of what? One of my past companies (B2B2C) billed by MAU where the competition billed by API volume. We would win customers because our model was more scalable and predictable (in theory the cost structure grows linearly).
3. Self serve tiered pricing. This is hard and I'll never managed it to make it work like I wanted. Requires good marketing. Would you charge less to upsell/convert them later, or would you expand your subscribers at the expense of thinner margins?
4. Tiers. Prepare one or more pricing thresholds. For example if you're pricing by MAU:
1-9.9K MAU: included
10K-99.9K MAU:
100K-499K MAU:
500K-1M MAU:
1M MAU:
Then assign value based on your customer's revenue per user (they may give you a range).
1-9.9K MAU: included
10K-99.9K MAU:
100K-499K MAU:
500K-1M MAU:
1M MAU:
Then assign
value based on your customer's revenue per user (they may give you a range).
5. Tiers cont'd. My mental model is to factor pricing of my software as a % of their revenue per user. I can charge 3% of their revenue to a prospect with 300K MAU making $80 per user, but probably charge 0.3% if they're making $8 (made up numbers obviously).
6. Then again, it depends on what you're building. Don't assume this model works across different products. If your product is foundational (e.g. a checkout solution for an e-commerce), then you could even think of operating on a fixed per-user cost model.
7. Discounts. Don't leave money on the table. Always present the full price, and always offer discount. New customer discount; discount (or waive) implementation fee if they're switching from a competitor; and so on.
Always present both full and discounted prices.
Always present both full and discounted prices.
8. Value add. Maybe the price is still too high, or you're unsure. But you know it's the right amount of money. You can offer them a contract extension or additional support (or a further discount) if they agree to a publish a case study with you.
In my experience, pricing is the hardest thing; it involves a lot trial and error, and good knowledge of your prospect's cost structure (and of yours). Let me know if you have suggestions, or if I'm far off!
Thank you @jamie_maguire1 for the inspiration!
