How do you decide which features go into each plan tier without giving away so much value in the lower tier that no one feels the need to upgrade?

Based on our saas pricing book, Price to Scale, you want to strike a careful balance between offering enough value in your lower tier to make it attractive while holding back enough premium features in higher tiers to drive upgrades. Here are several key strategies discussed in Price to Scale to help you navigate this challenge:

• Segment Your Customer Base:
Understand that your users have varying frequencies and use cases. Segment your customer base—such as heavy versus light users—and tailor feature sets to meet each group's core needs. As discussed on page 245, different cohorts might need different packages depending on how they use the product or the deal terms they originally negotiated.

• Good–Better–Best (or Tiered) Packaging:
One common method is to create a graduated package structure (Good, Better, Best) where each tier is designed to solve the primary needs of its target segment. In this setup, although the lower tier (often the “Good”) is valuable by itself, the higher tiers (“Better” and “Best”) include advanced features that deliver additional value and justify the higher price point. (See page 29 for a discussion on how this approach caters particularly well to segments like SMB and Mid-Market.)

• Modular Approach:
Instead of simply stacking up the same features with small variations, consider a modular approach. This involves attributing value to distinct modules, which can then be bundled into different plans. This method allows you to highlight critical value-add features exclusively in the upgrade tiers while keeping the base package lean yet effective. This differentiation helps customers recognize a clear, compelling incentive to move to a higher tier.

• Naming and Positioning:
Even small tweaks in how you name and market tiers can make a difference. Instead of using labels that suggest just slight upgrades, consider more distinct names (for example, “Premium” vs. “Advanced”) and adjust the feature set accordingly so that the higher tiers feel significantly more valuable. As noted in the book, using alternative line-ups rather than simple discount variations minimizes easy comparisons that might otherwise undercut the incentive to upgrade.

• Practical Trade-Offs and Testing:
Always be ready to adjust. Use real-world data and customer feedback to test whether the lower tier is giving away too much. If you notice that most users are not transitioning to higher tiers, it might be time to reassess the features included in the base offering or introduce add-on options, as described by our book’s recommendations.

In summary, Price to Scale advises that determining which features go into each tier involves a combination of thoughtful segmentation, a graded value structure (either via Good–Better–Best or a modular approach), and strategic naming/positioning. By delivering just enough value in the lower tier to engage users while reserving high-demand features for premium packages, you can effectively drive upgrades while catering to diverse customer needs.

Get Started with Pricing-as-a-Service

Join companies like Zoom, DocuSign, and Twilio using our systematic pricing approach to increase revenue by 12-40% year-over-year.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.