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Frameworks, core principles and top case studies for SaaS pricing, learnt and refined over 28+ years of SaaS-monetization experience.
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Based on Price to Scale, the best way to A/B test pricing changes without confusing or alienating customers is to keep your testing strategy simple, clearly segmented, and well-communicated. Here are the key principles drawn from our pricing strategy book:
• Simplify Your Options:
Avoid overwhelming customers with too many tiers or overly similar options. As outlined on page 243, testing fewer, more distinct pricing tiers—even if they don't perfectly match every customer's needs—can actually lead to higher conversion rates by reducing choice paralysis.
• Differentiate Test Versions:
Instead of simply discounting existing plans (which makes it easy for customers to directly compare and perceive inconsistencies), consider creating a new lineup with a fresh name and modified features. This approach, mentioned on page 245, prevents customers from simply comparing the old versus the new offerings and helps maintain clarity in communication.
• Segment Your Audience:
Test pricing changes on a broader audience rather than only pre-existing customers. The book emphasizes that relying solely on known visitors can lead to skewed results (customers already inclined to buy at a discounted rate). Instead, segment your customer base to capture insights from different cohorts, such as frequent users versus those who obtained initial discounts.
• Communicate Transparently:
When rolling out test prices, be proactive by offering alternatives and clearly explaining any conditions—whether it's an upgrade option for the same price or a conditional discount (such as a commitment to a longer term). This transparency helps in setting the right expectations without making customers feel confused or undervalued.
In summary, by designing your A/B tests to use fewer, well-differentiated pricing options, clearly segmenting your audience, and being transparent about the changes, you can effectively test pricing without alienating or confusing your customers. This approach not only gathers meaningful data but also preserves a positive customer experience, as highlighted throughout Price to Scale.