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Estd 4.22.2023
When using a growth-linked pricing metric, it’s crucial to align price increases with the clear added value your solution delivers. In our book Price to Scale, we emphasize that your pricing model should reinforce a partnership mentality—one where the customer feels you share in their success rather than penalizing it.
Here are a few key strategies discussed in our book:
• Align with value metrics: Instead of charging solely based on a growing metric like employee count or customer numbers— which might feel like you’re benefiting from their growth at their expense—consider coupling your pricing to a metric that closely ties to their ROI. For example, our example of using revenue as a primary metric shows how a customer feels that as they grow, you grow with them.
• Ensure predictability: As outlined in Price to Scale (see our criteria on predictability), your pricing increments should be predictable and transparent. This helps customers forecast costs and understand that any adjustments come with clear benefits rather than arbitrary price hikes.
• Communicate the value proposition: It’s important to clearly articulate why your metric makes sense. If your pricing model rewards them for increased usage or expansion across products, then they’re more likely to see the added cost as a reinvestment into growth.
In summary, by anchoring your pricing to a metric that reflects shared success, ensuring predictable pricing, and communicating the direct value they gain, you avoid the perception of penalizing growth while deepening the trust and partnership with your customers.