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41 Comments

Stupid simple pricing tweaks that will make you more money

If you only have one or two price tiers, consider adding more.

First things first - if you only have one price point, considering adding a few more.

Stock Alarm went from a single price point of $4.99 to three tiers 5, 10, and $20.

50% of all new customers chose the $20 plan just because it was there!

Price based on your value metric

A value metric is one that grows side by side with the added benefits received from your product.

For example, an SEO tool might price based on the number of keywords tracked (the larger the company the more keywords it'll need to track, the more value they get from your product, the more they pay).

Katlinks, an SEO platform, prices based on a number of various value metrics that scale with the business:

  • Number of total backlinks - larger sites will have more links pointing at them
  • Number of rank tracking credits (it uses credits to track rankings so the more keywords you have, the more it costs)
  • Number of on-page audit credits (larger sites have more pages, thus they get more value out of the product and pay more)

A blog platform might price based on pageviews. The more popular the blog, the more value from the platform, the more you charge for that value.

You can always put in place caps so the prices do not get outrageously high.

Add an annual option and have it selected by default

Something as simple as adding an annual option can result in more up-front cash. This works particularly well on lower-priced products. Some people even prefer to pay for an entire year just to avoid monthly charges - sounds crazy but true (I'm one of those people).

Most companies offer a 20%ish discount for those who pre-pay for a year. Not a bad trade-off for 10 months' worth of cash upfront! Use this to reinvest in your business or to scale acquisition efforts.

Restrict features for lower tiers

This one will take a bit of trial and error unless you really understand your customers. Limited certain features on lower tiers will bump a portion of those would-be customers to the next tier.

Pintura's company license sales went up by 600% when Rik limited the Hobby tier to 1 developer and 1 project.

Recommend a pricing tier.

The path of least resistance is a metaphorical expression that states: given alternative paths, an object will take the path of least resistance. In other words, it'll go with the flow.

It turns out, in life, most people also go with the flow.

Think about your own shopping experience. Do you narrow down your product searches based on top reviews only? I know I do. This is us taking the path of least resistance, the sure thing, whatever you want to call it - just go with the flow.

We do this to save time, to reduce cognitive load (ie. we're lazy). Giving people an option that is clearly presented as the path of least resistance will automatically default some percentage of them to take that path. I know, wizardry level stuff!

Knowing this, you can apply this principle by recommending a specific price tier. Doing so, also anchors any surrounding objects to that price by visually guiding our attention to that object first.

Pintura, a javascript image editor does this well by emphasizing the ideal license for their preferred type of customer.

Pintura also does something else well, which brings me to my next point:

Show highest tiers first.

There are two paths to analyzing the page above. Most people will fall into one or the other:

  1. A person will look at the highlighted tier first, then at Enterprise (left to right) and back to Small business, before finally resting their attention on Hobby.
  2. In this situation, the middle Small Business tier acts as a reverse anchor - it looks considerably cheaper than the Enterprise tier so the person's attention is drawn back to the recommended tier. Since they had a quick glance to notice the much higher Enterprise tier, the Small Business license seems much more affordable. You can almost feel a sense of relief if you are a small team.
  3. A person will visit this page and notice the Enterprise tier first, thus anchoring themselves to this number. Any subsequent option looks considerably cheaper. With this insight, you quickly realize that it doesn't matter if the mid tier is $649 or $849 because they are both being compared to $2,499. The exception being another product with very similar features and value but one that is considerably cheaper.

An exception to the above is when you have tiers that increase based on some value metric, in which case it makes sense to show them in the order of increasing metrics. But, if you have an enterprise plan with a fixed charge, you could display it first.

Display prices annually, but per month by default.

Make your product feel more accessible by displaying the monthly price, even on the annual pricing tab. Go ahead and add the "billed annually as $X" part, but de-emphasize it.

The idea is not to trick anyone into any unexpected charges but to anchor them to that lower price instead of thinking actively about the larger annual charge.

Here is an example of Copy.ai that does it well:

Why have the annual tab selected by default?

Because your annual numbers will be lower than the monthly (when displayed as monthly) and when the user switches back to monthly, it'll feel as though they are paying more and "missing" that deal they just saw.

This is commonly referred to as loss aversion. Once a person established a reference point ($35 in our example image above), they are more sensitive to losses relative to that number (in our case, a loss in savings is when your price increases when switching over to monthly), than to gains. In other words, the loss of the discount is felt more deeply than when the discount is gained.

Divide your SaaS price tiers into smaller units (if applicable).

If your product pricing scales by some value metric, consider showing the price per that metric. For example, HotJar Business plans start at $99 (and you see $99 on the pricing page), but there is also a dropdown to choose how many daily sessions you might use up, and the price increases as more sessions are selected.

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  1. 4

    I think it's misleading to show annual/biennial/triennial and have it selected by default.

    Bluehost - just $2.95/month. Give us $107 now
    Another app - just $45/month. Then $99 if monthly
    Yet another app - $2.67/week. Gimme $140 billed annually

    We, as indie developer and creators, can do better than this.

    1. 3

      I don't see a problem here as you are still showing what the annual costs are. I didn't say leave it out. Plus, when you pull out that CC it is pretty clear what you're paying.

      Per the article, the idea is to anchor the price mentally, not to trick or mislead. We're aiming for loss aversion, that's all. If that seems tricky to you, then perhaps never shop again? You'd be amazed at behavioral psychology being used against you in a grocery store.

      1. 1

        I didn't relate it to the article. That's a general feeling. Some like annual plans and prefer seeing that but a lot of us still hate it. I have seen most brands that voice their opinion on ethics avoid this.

        1. 1

          Thanks for sharing your opinion. Everyone feels differently about these things. Personally, I prefer the annual option on most products so to me this is actually helpful. I'd love to see which companies say those things though, as I bet a lot of it is blowing smoke.

    2. 1

      Totally agreed. I’m surprised how such grey ux patterns as these, mostly used by greedy Corps, is getting traction here on IH :(

    3. 1

      Totally agree with that. It's misleading: the users see the big monthly price, don't see that it's annually, and have the impress that there is some weird shenanigan going on a few screen later (in the best case). I saw some angry tweets of people feeling deceived by this practice, too.

      1. 1

        Why would they be angry if they are on the annual tab? lol

        1. 1

          It's not just the tab. Everywhere including social media posts, Twitter bio, home page hero section, landing pages, Fb ad campaign images and more proudly say "starting at $45". And then they'll see a $500+ popup asking for our credit card.

          Sure it's a great pricing optimization/revenue tactic for founders but not great user experience. I will never purchase anything from companies that practice these tactics or similar (unless they have a product I really need and there are no alternatives).

          Example of a large ethical brand that doesn't follow this practice: Shopify. Their biennial pricing comes down to about $23.20/month. But you'll never see this anywhere on their marketing properties. Click on upgrade, click biennial tab and you'll see it it. Everywhere else it's $29/m.

          Your other tips are great. It's just that this practice is a bit misleading. Call it gray.

          Edit: this comment of mine was down below and yet people took notice and have voted + shared their opinion on this. That alone is a huge remark.

          1. 2
            1. You're making an assumption about where the traffic comes from and what it says.
            2. It has nothing to do with UX. If I am a store that sells boxes of canned juice, it is up to me whether I want to display total pricing or per box of juice pricing... the UX is the same, different presentation.
            3. I do not think it is unethical in the slightest sense, and this is your opinion, you are entitled to an opinion. What one company does or doesn't do is irrelevant to this conversation. They have people over there with their own opinions and that doesn't make the other any more right or wrong.
            4. The fact that anyone upvoted your comment just reflects on a) their opinion or 2) their misunderstanding of what I stated. In any case, it's everyone's own interpretation.
            1. 1

              My point is (not to you, to anyone doing this, so don't take it personally) if you sell monthly subscriptions say $50/m. If you sell annual subscriptions say $600/yr.

              Don't show $50/m but then show $600. It's not great UX and misleading and shady. Let the customers click the Annual tab or select that if that's what they want. I'm a people person. No amount of data or theoretical explanation can have people like me buy from companies that follow pricing tactics like this. Let's agree to disagree : )

              1. 1

                I never suggested to show $50/mo and then show $600... I don't even know what this means to be honest.

                I said that if you have an annual plan, it is perfectly fine to show that by default. It's no different that showing a bulk discount at a store (most annual plans offer a discount). As someone who usually buys annual plans, I would actually prefer this. I see no ethical problems whatsoever.

                I am not advocating for tricking anyone by not displaying the monthly price, or showing monthly and charging annually, or any of that.

  2. 3

    Sometimes it is worth having an "Enterprise" plan, where the main new feature is ability to speak to a person. (Something like "Phone Support") I have found that a lot of bigger firms will pick this so they can get faster responses.

    If charging 3 - 4x your normal prices is what it takes for it to be worth picking up the phone to you, consider it. Bigger businesses like the security of having a voice on the other end of the line.

    1. 1

      Exactly! There's always a way to add more value to people who want it!

  3. 3

    I would also add a trick of having the most critical answers embedded in your pricing page as an FAQ or similar.

    There might be a lot of uncertainty pre-purchase that you want to eliminate:

    • The best way to eliminate uncertainty is by providing answers.
      You use this information to improve your pricing page:

    • adding FAQs,

    • rewriting bits of your pricing copy
      and generally including more "risk-reducing" data points (numbers).

    For example you will see that some companies use clear but DIFFERENT CTAs on pricing pages, which aren't on other parts of their site (i.e. https://www.intercom.com/pricing?tab=1) .

    These are great to remove purchase paralysis.

    Remove the fear that the product might not be right for the buyer, requiring CC details or other.

    Finally I think it’s important to always include testimonials that resonate with your audience. Humans love to relate to other humans who are taking similar paths as the one they’re on. So I always say to use these stories (gathered from email exchange with customers / talking to people) to back up your product’s benefits, removing purchasing anxiety, and highlighting the good outcomes.

    1. 1

      I second to this, the FAQ section is an awesome addition to the pricing page. In addition to mentioned benefits, it makes your pricing page look less boring :)

      Also, you should add all the "money-back guarantee" and "securely processed payments" badges you have.

    2. 1

      All excellent additions! What are you seeing on Intcom's pricing page because I may be seeing an A/B test.

      1. 1

        Thank you - I love engaging with these articles!

        Pricing page: "Try for FREE"
        Homepage: "Get started"

        1. 1

          Oh okay, I see what you mean now - yep, I see the same thing. Great point!

  4. 2

    These are really nice and helpful points @genemachine . Job well done!!

  5. 2

    I would never have thought to put the higher prices first. That's brilliant! Thank you.

    1. 3

      Indeed. I found that weird when I first noticed it on Pintura. But at the same time I could see why. Then I realized that other sites do the same. For example, Apple shows the high end iPhone/iPad first. I guess we are not used to see this approach in SaaS.

      One side effect with this approach is that you need to explicitly state the differences between each plan. So you can not use something like 'whatever was included in the previous package plus these extra three features'

      Also, I believe that with this approach you are kinda forced to read the pricing table from a different point of view. So instead of reading what you can get by spending more money, you are reading what you are losing by 'compromising' to the cheaper version.

      1. 1

        It's wonderful because psychologically it creates the experience of, "oh, that's expensive" followed by, "oh, that's better". The people who want "the best" will always choose the most complete package. It's the people who are hesitant, those on the tipping point, who you want to somehow ease their discomfort and compel to move towards making the purchase decision. They are the marginal difference and this accomplishes that.

        It's like when you have to let someone go from your company. Most inexperienced people beat around the bush and work up to and end with the bad news. It's so much better to start with a frank statement of the bad news followed by kindness. That way you move towards the healing right away. Always leave things as positive as you can even in tough situations.

        Seriously, you've given me a great gift with this post and I'm grateful.

  6. 2

    this is reeeeaaaallly good! Thanks for organizing it all and spelling it out. The post just earned a bookmark on my browser and an upvote!

    1. 1

      🙏🙇‍♂️ appreciate the kind words!

  7. 2

    Very deep and thoughtful overview, thanks for writing it 🔥

  8. 2

    Well than Damn, I'm adding anual pricing plans to Twayobiz right now.

    1. 1

      Let me know how it goes! can DM on Twitter @cogentgene

  9. 1

    Thanks for sharing Gene, helps us learn more about UX and also mental decision

  10. 1

    Wow! Great post, Gene. Bookmarked ✅
    And I just followed you on Twitter 🙃

    1. 2

      Thanks, Dennis, appreciate it!

  11. 1

    I wouldn’t recommend any of these grey UX patterns if you actually truly value your customer. Read up and educate yourself on pricing strategies and apply them transparently.

    1. 1

      Recommending a price tier is grey UX pattern? ok buddy...

      1. 2

        Yes! Each of these intentionally mislead the customer and lure them into your perfectly set up price traps based on decreasing the transparency and obfuscating the real value proposition.

        Quite disgusting in my opinion actually. Buddy!

        1. 1

          Adding price tiers - misleading. Pricing based on value provided - misleading. Showing customers that they can save 20% by paying for a full year - misleading. Showing customers that it's not as expensive as they think - misleading. Making it easy for customers to decide which tier would most likely meet their needs - misleading.

          I think I'm done with your trolling.

  12. 1

    Some nice tips Gene! I have the annual pricing as the default one, and there's a clearly visible option to switch to monthly, and yet some people still ask "Do you have monthly pricing"? 😅

    1. 2

      Checked your price chart. I personally find it a little crowded up top, I think there's a bit of room to make it look more clear that this is annual. Also, try adding "billed annually as $X" under the price.

      1. 1

        Good suggestion thanks!

        1. 2

          Yeah, np! Let me know if you'd like me to mock it up for you.

  13. 1

    Let me know if you've tried other things and had great results!

  14. 1

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