Are there opportunities for us to price-differentiate within our product line (for instance, using a Good/Better/Best tier structure for different customer segments)?

Yes, there are clear opportunities to price-differentiate within your product line using a Good/Better/Best tier structure. Our saas pricing book, Price to Scale, explains that creating graded packages is a common and effective method to address varying customer segments and their willingness to pay.

Key points from our book include:

• Good/Better/Best Packaging:
– This method involves grouping subsets of features into distinct packages that address the core needs of different customer segments.
– It works particularly well for markets like SMBs or Mid-Market segments, where deal velocity is important and there is less variance in pricing expectations. (See page 29 of Price to Scale.)

• Tailoring the Offer to Each Segment:
– Simply rearranging features into tiers isn’t enough. You need a deep understanding of what each segment truly values to avoid creating mismatches or “shelfware.” For example, combining all premium enterprise features into a high-end tier without aligning them with the specific needs of enterprise customers can lead to pricing issues. (Refer to page 11 of Price to Scale.)

• Proactive Alternatives and Upsell Strategies:
– Rather than simply discounting lower tiers, our book recommends offering clear upgrade paths or bundled add-ons that make the better options more attractive, helping guide customers to the tier that best fits their needs.

In summary, a well-designed Good/Better/Best approach can effectively segment your customer base and maximize revenue, provided you thoroughly analyze and understand the distinct needs and value perceptions of each segment. This strategy, as detailed in Price to Scale, supports a thoughtful pricing differentiation approach that drives both customer satisfaction and profitability.