.png)
Frameworks, core principles and top case studies for SaaS pricing, learnt and refined over 28+ years of SaaS-monetization experience.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
In the competitive SaaS landscape, pricing can make or break your business. Yet many companies set their pricing strategy based on gut feeling rather than hard data. Google Optimize offers SaaS companies a powerful, free tool to run sophisticated pricing experiments through A/B testing, helping you make data-driven decisions that can significantly increase revenue and conversion rates.
Why SaaS Pricing Experiments Matter
For SaaS businesses, pricing isn't just a number—it's a strategic lever that directly impacts customer acquisition, retention, and overall business growth. According to Price Intelligently, a 1% improvement in pricing optimization can yield an 11% increase in profits. Despite this, many SaaS companies rarely test their pricing models.
The challenge is clear: how do you test pricing changes without risking customer backlash or revenue loss? This is where Google Optimize and structured pricing experiments come into play.
What is Google Optimize?
Google Optimize is a free testing and experimentation platform that integrates seamlessly with Google Analytics. It allows SaaS companies to conduct various experiments including A/B tests, multivariate tests, and redirect tests on their websites to measure how different variations perform against specific objectives.
While commonly used for testing website elements like headlines and call-to-action buttons, Google Optimize is equally valuable for conducting sophisticated pricing experiments that can transform your SaaS business model.
Setting Up Google Optimize for Pricing Experiments
1. Define Your Pricing Experiment Objectives
Before diving into the technical setup, clearly define what you're testing and why:
- Are you testing different price points for the same features?
- Testing different pricing structures (monthly vs. annual)?
- Evaluating premium features at various price tiers?
- Measuring the impact of different discount strategies?
Each experiment should have a specific hypothesis, such as: "Offering a 20% annual subscription discount will increase customer lifetime value compared to our current 15% discount."
2. Technical Setup in Google Optimize
Step 1: Create an account and link to Google Analytics
- Sign up for Google Optimize at optimize.google.com
- Connect your Google Analytics property
- Install the Optimize snippet on your website
Step 2: Create a new experiment
- Select "A/B Test" as your experiment type
- Name your experiment meaningfully (e.g., "Annual Subscription Pricing Test - June 2023")
- Define your objectives (usually conversion-related)
Step 3: Create variants
For pricing experiments, you'll typically need to:
- Create different versions of your pricing page
- Use the Optimize visual editor to modify pricing elements, or
- Create entirely different pages and use redirect tests
Best Practices for SaaS Pricing Experiments
1. Test One Element at a Time
The most reliable pricing experiments isolate a single variable. If you change both your pricing structure and your feature packaging simultaneously, you won't know which change impacted your results.
For example, test changing from $49/month to $59/month without altering the feature set. In a separate test, you might experiment with monthly vs. annual billing options.
2. Set Proper Targeting Parameters
Google Optimize allows you to target your experiments to specific user segments:
- New vs. returning visitors: You might want to test new pricing only on new visitors initially
- Geographic segmentation: Different markets may have different price sensitivities
- Traffic source: Visitors from different channels may respond differently to pricing changes
3. Determine Appropriate Sample Sizes
Pricing experiments often require larger sample sizes than typical web testing scenarios because conversion rates for purchases tend to be lower than for actions like signing up for a newsletter.
Use Google Optimize's built-in sample size calculator to determine how long your test needs to run. For pricing tests, plan for experiments lasting several weeks to gather statistically significant data.
4. Ethical Considerations in Pricing Tests
When conducting pricing experiments, consider these ethical guidelines:
- Transparency: Consider informing users that they're participating in a test
- Grandfathering: Honor existing customers' pricing when testing price increases
- Fairness: Ensure all segments of your audience have access to fair pricing options
Three Effective SaaS Pricing Experiments to Run
1. Testing Price Anchoring with Premium Tiers
Create an A/B test where:
- Variant A: Your current three-tier pricing structure
- Variant B: The same structure plus a new premium tier at a significantly higher price point
Even if few customers choose the premium option, its presence can make your middle tier seem more reasonable by comparison—a psychological effect known as price anchoring.
2. Monthly vs. Annual Subscription Incentives
Test different discount levels for annual commitments:
- Variant A: 10% discount for annual payment
- Variant B: 20% discount but presented as "2 months free"
- Variant C: Same 20% value but presented as "Save $X per year"
This tests not just the discount amount but also how the same discount is framed.
3. Feature Bundling and Unbundling
Test whether customers prefer all-inclusive pricing or à la carte options:
- Variant A: Single comprehensive package with all features
- Variant B: Lower base price with add-on options for premium features
This can reveal whether your customers value simplicity or customization more highly.
Analyzing Your Pricing Experiment Results
Google Optimize integrates with Google Analytics to provide detailed analysis of your experiments. When analyzing results:
Look beyond conversion rates: Examine metrics like average revenue per user (ARPU), trial-to-paid conversion rates, and churn indicators
Segment your results: Different user types may respond differently to pricing changes
Consider long-term impacts: Some pricing strategies might boost short-term conversions but harm retention
Statistical significance: Don't make decisions until your experiment reaches at least 95% confidence
Case Study: How Company X Increased Revenue by 30% Through Pricing Optimization
A B2B SaaS company specializing in project management software ran a series of pricing experiments using Google Optimize. Their most successful test involved changing from feature-based pricing tiers to usage-based pricing tiers.
The experiment showed that while the conversion rate remained similar, the average contract value increased by 23% with the usage-based model. Additionally, customer satisfaction improved because customers felt they were paying for exactly what they needed.
Conclusion: Continuous Pricing Optimization
The most successful SaaS companies view pricing as an ongoing optimization process rather than a one-time decision. Using Google Optimize for regular pricing experiments allows you to:
- Respond to changing market conditions
- Continuously improve your pricing strategy
- Build a data-driven pricing culture within your organization
While pricing experiments require careful planning and patience, they represent one of the highest-ROI activities available to SaaS companies. A methodical approach to testing using Google Optimize can lead to significant improvements in both conversion optimization and overall business performance.
Remember that pricing is not just about finding the highest number customers will pay—it's about aligning your pricing model with the value you deliver, creating a sustainable relationship where both your company and your customers win.