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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 my understanding of tiering approaches in pricing strategies, here are the key differences between good-better-best and feature-based tiering:
Good-Better-Best Tiering
Good-Better-Best is a pricing strategy that offers three distinct service or product tiers, each at different price points and providing incrementally more value:
- The "Good" tier offers core functionality at an entry-level price
- The "Better" tier includes additional features at a mid-range price
- The "Best" tier provides the complete feature set at a premium price
This approach creates clear distinctions between offerings and guides customers to the tier that best matches their needs and budget. It simplifies the buying decision into three straightforward options.
Feature-Based Tiering
Feature-based tiering focuses on creating multiple tiers by strategically distributing specific features across different pricing levels. Key characteristics include:
- Each tier is defined by access to specific feature sets
- Features are prioritized based on customer value (often using research methods like Max Diff analysis)
- The model allows for more granular control over which capabilities are available at each price point
This approach enables more precise feature distribution based on customer segment needs and willingness to pay.
Key Differences
Structure Flexibility: Good-Better-Best follows a fixed three-tier model, while feature-based tiering can have any number of tiers
Value Perception: Good-Better-Best creates simpler "stepped" value perception, while feature-based tiering enables more nuanced value differentiation
Feature Organization: Good-Better-Best typically adds features cumulatively across tiers, while feature-based tiering may reserve specific features exclusively for certain tiers
Decision Complexity: Good-Better-Best reduces customer decision complexity, while feature-based tiering can offer more precise matching to specific needs
The right approach depends on your product complexity, market positioning, and how customers perceive value in your offering. Our pricing methodology includes analyzing tier/package performance across metrics like average deal size, upsell rates, and discounting to determine which structure best optimizes your pricing strategy.