[GTM glossary](/glossary.txt) Pricing strategy

GTM Strategy & SaaS Metrics

# Pricing strategy

Also known as: saas pricing strategy

In short

Pricing strategy is the method a company uses to decide what to charge, how to package its product, and how price changes with usage, customer size, or contract length. It connects what customers value to what the business needs to earn.

In B2B SaaS, pricing is a go-to-market decision, not only a finance one. It shapes who can buy, how sales conversations go, how fast deals close, and how accounts expand.

## Common pricing models

* **Seat-based:** Price per user. Simple to explain and tied to team size.
* **Usage-based:** Price scales with consumption. Aligns cost with value but makes spend harder to predict.
* **Tiered:** Good, better, best plans with increasing features and limits.
* **Flat rate:** One price for everything. Easy to buy but leaves value on the table at the high end.
* **Hybrid:** A platform fee plus usage or seats.

---

## How to set a pricing strategy

### 1. Define the value metric

Choose what you charge for, such as seats, records, or credits, so that price rises as customers get more value.

### 2. Understand willingness to pay

Interview customers and review won and lost deals to learn how buyers weigh price against alternatives.

### 3. Package by segment

Design plans around distinct customer types, with limits and features that separate them.

### 4. Test and revisit

Run changes on new customers first, and review discounting, win rates, and expansion after launch.

---

## Pricing and GTM alignment

* **Self-serve:** Needs visible, simple prices and low commitment.
* **Sales-led:** Can use custom quotes, but needs rules for discounting.
* **Expansion:** The pricing model should make it natural for accounts to grow spend as they succeed.

---

## Common mistakes

* **Pricing from cost alone:** Customers pay for value, not for your costs.
* **Copying others:** Competitor prices reflect their own product and market.
* **Too many plans:** Complex packaging slows buyers and confuses reps.
* **Unchecked discounting:** Constant discounts teach buyers to wait and erode margins.
* **Never revisiting:** Review pricing at least yearly as the product and market change.

---

## Pricing strategy FAQs

**What is pricing strategy?**

Pricing strategy is the approach a company uses to set prices and package its product. It considers customer value, competitors, costs, and growth goals, and covers decisions such as pricing model, tiers, discounts, and how price scales with usage.

**What are the main types of SaaS pricing strategy?**

Common models are seat-based, usage-based, tiered, flat rate, and hybrid pricing. Each links price to a different value metric, so the best fit depends on how customers get value and how predictable you want their spend to be.

**How do you choose a pricing strategy for a B2B product?**

Pick a value metric that grows as customers benefit, learn what buyers will pay from interviews and deal data, design plans for distinct segments, and test with new customers. Then monitor win rate, discounting, and expansion.

**How often should you review your pricing strategy?**

Review pricing at least once a year, and sooner after major product launches, changes in your target market, or shifts in discounting and win rates. Test changes with new customers before applying them to existing accounts.

Share term

---

## More related phrases

* [Business model](/glossary/business-model.txt)
* [Gross margin](/glossary/gross-margin.txt)
* [Markup](/glossary/markup.txt)

## Similar phrases

* [Credit-based pricing](/glossary/credit-based-pricing.txt)  
Credit-based pricing sells prepaid credits that customers spend on actions or features, so cost scales with how much they actually use the product.
* [Seat-based pricing](/glossary/seat-based-pricing.txt)  
Seat-based pricing charges customers a fixed fee for each user who has access to a product, so revenue scales with headcount rather than usage.
* [Usage-based pricing](/glossary/usage-based-pricing.txt)  
Usage-based pricing charges customers according to how much of a product they consume, such as records processed or messages sent, instead of a flat fee.
* [Go-to-market strategy](/glossary/go-to-market-strategy.txt)  
A go-to-market strategy is a written plan that defines the target customers, message, pricing, channels, and sales approach for bringing a product to market.
* [Average revenue per user (ARPU)](/glossary/average-revenue-per-user.txt)  
Average revenue per user (ARPU) is the revenue earned per user or account in a period, showing how much each customer is worth on average.