Context Slice Pricing Strategy Framework
Pricing is one of the highest-leverage decisions. A 1% improvement in price often delivers more bottom-line impact than 1% improvements in cost or volume.
Common Pricing Models
Subscription (SaaS)
Best for: Software, recurring services, content platforms
| Variant | How it Works | Pros | Cons |
|---|---|---|---|
| Flat-rate | One price for everything | Simple, predictable | Leaves money on table |
| Tiered | Good/Better/Best tiers | Captures willingness to pay | Tier design is hard |
| Per-seat | Price × number of users | Scales with customer size | Encourages seat minimization |
| Usage-based | Pay for what you use | Fair, scales naturally | Unpredictable revenue |
| Hybrid | Base + usage | Best of both | Complex to communicate |
Transaction-Based
Best for: Marketplaces, payment platforms, commerce
| Variant | How it Works | Pros | Cons |
|---|---|---|---|
| Percentage | % of transaction value | Scales with success | High-value transactions feel expensive |
| Flat per-transaction | Fixed fee per transaction | Simple, predictable | Punishes small transactions |
| Tiered rates | Lower % at higher volumes | Rewards growth | Complex to track |
Value-Based
Best for: Enterprise, consulting, high-touch services
| Variant | How it Works | Pros | Cons |
|---|---|---|---|
| Outcome-based | Pay for results delivered | Aligned incentives | Hard to measure/attribute |
| Value pricing | Price based on customer value | Maximum capture | Requires value quantification |
| Success fees | Base + bonus for outcomes | Shared risk | Complex negotiations |
Pricing Strategy Evaluation Template
## Pricing Strategy Brief
### Current State
- **Current model:** [Description]
- **Average deal size:** $[X]
- **Price points:** [List]
- **Discounting prevalence:** [X]%
### Strategic Goal
[What are we optimizing for? Growth? Margin? Market share? Retention?]
### Model Options
#### Option 1: [Model Name]
**How it works:** [Description]
| Dimension | Assessment |
|-----------|------------|
| Revenue potential | [High/Medium/Low] |
| Implementation effort | [High/Medium/Low] |
| Customer perception | [Positive/Neutral/Negative] |
| Competitive positioning | [Differentiated/Parity/Disadvantaged] |
| Scalability | [High/Medium/Low] |
**Pros:**
- [Pro 1]
- [Pro 2]
**Cons:**
- [Con 1]
- [Con 2]
**Best if:** [Scenario where this wins]
#### Option 2: [Model Name]
[Same structure]
#### Option 3: [Model Name]
[Same structure]
### Competitive Context
| Competitor | Model | Price Points | Positioning |
|------------|-------|--------------|-------------|
| [Comp 1] | [Model] | [Prices] | [Position] |
| [Comp 2] | [Model] | [Prices] | [Position] |
### Recommendation
**Recommended model:** [Choice]
**Rationale:**
1. [Reason 1]
2. [Reason 2]
3. [Reason 3]
**Implementation considerations:**
- [Consideration 1]
- [Consideration 2]
**Risks to mitigate:**
- [Risk 1]: [Mitigation]
- [Risk 2]: [Mitigation]Pricing Principles
Anchor High
Start pricing discussions with the highest-value option. Customers anchor on the first number they see.
Good-Better-Best Works
Three tiers capture most willingness-to-pay variance. More than three creates decision paralysis.
Price on Value, Not Cost
Customers don't care what it costs you. They care what it's worth to them.
Simplicity > Optimization
A slightly suboptimal price that customers understand beats a perfectly optimized price that confuses them.
Segment Intentionally
Different customers have different willingness to pay. Segment by value, not just company size.
Context Questions
Before analyzing pricing, ensure you know:
- Current model: What's the pricing structure today?
- Goal: Growth? Margin? Market share? Retention?
- Customers: Who are the primary segments?
- Competition: What do alternatives cost?
- Value drivers: What do customers pay for?
- Constraints: What can't change (contracts, regulations)?
Common Pitfalls
- Racing to the bottom: Competing on price rarely works long-term
- Complexity creep: Adding pricing options until no one understands
- Ignoring psychology: Price endings, anchoring, and framing matter
- One-size-fits-all: Missing segmentation opportunities
- Fear of increase: Many companies underprice; raises are often easier than expected