
A Guide to Pricing Plans - jkuria
https://capitalandgrowth.org/answers/Article/3169972/The-Definitive-Guide-to-Pricing-Plans
======
elgfare
Having a price crossed out to give the impression of a sale is just straight
up lying. It's illegal here in Norway at least. The product must have been
sold a certain number of times for the crossed out price in order for it to be
legally presented as a "before" price.

[https://www.forbrukertilsynet.no/lov-og-rett/veiledninger-
og...](https://www.forbrukertilsynet.no/lov-og-rett/veiledninger-og-
retningslinjer/forbrukertilsynets-veiledning-prismarkedsforing#chapter-3-2)

~~~
bmn__
All the mind manipulation traps presented in the article are deceptive and
fraudulent. They all should be made illegal if they are not already.

~~~
sarfrazarshad
I wont agree to it. I would call them hacks, are hacks fraudulent?

~~~
bmn__
This post is precisely why sites like shithnsays and ngate exist.

I pity the sociopathic state of your mind.

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gk1
This is all about tricking people, and nothing about designing pricing to
match the value provided.

Pricing, especially for software products, is one of the biggest levers for
increasing revenue through new and even current customers. It’s very important
to get it right, and to experiment occasionally. (I know because I’ve done it
for companies.) It involves a lot more than growth-hacking the pricing page.

~~~
gridlockd
Why would you design a price for "value provided"? That's highly subjective to
the user. Users also generally only pay for what they expect to pay, not the
value they're getting.

For instance, some utility might save hundreds of hours and thousands of
dollars over the course of its usage, which is tremendous _value_. Yet if the
average user expects that it should cost no more than, say, twenty dollars,
that's what they'll be ready to pay.

This is why anchoring is beneficial, it gives you the opportunity to tilt that
expectation a little bit.

Is that "tricking the user"? Arguably, but since you can't know the value
users will actually get out of your product, any claims in that regard will
fall under "marketing BS" as well. Pick your bullshit wisely.

~~~
tptacek
I'm not Greg Kogan, of course, but...

It is indeed highly subjective to the user. So, part of the job of marketing
is, segment your market, decide which one is most lucrative, target them with
pricing that optimizes the outcome for that segment, and then adjust the
product packaging to give yourself the most flexibility to attempt to repeat
the process with the next segment of customers.

You learn the value your users get from your offerings by talking to them.

From 10+ years of watching this conversation recur on HN and talking to people
running businesses, it seems like probably one of the most common mistakes
business owners here make is trying to target an overly broad group of
customers, and setting a very low ceiling on their prices to make sure
everyone in that group can afford the product. That never seems to work well.
On the other hand: setting a price for your product that only works for
customers who can put it to extremely lucrative use? That's a strategy I've
seen succeed a _bunch_.

It all depends on your product and your company; you can win big with fixed
(maybe low) prices and a huge, undifferentiated customer base, if the stars
align. They seem not to most of the time.

~~~
gridlockd
I don't disagree with you at all. Segment your market. Focus on the most
lucrative group first. When you have done all that, apply the usual tricks.

That all implies that there is such a lucrative group that has the expectation
to pay a handsome sum for your product. It implies that there is no
competition that has already driven the price into the ground.

If your product is truly novel and there is no competition, better set a
higher price. You can always go lower and see how much more revenue you can
get. Over time however, competition will show up and put the price closer to
cost, or even below cost. Users will no longer expect to pay the older prices,
so they _won 't_ \- no matter how much value they get.

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davidajackson
> Yes, Product C is slightly cheaper than the most expensive option, but it
> offers less storage than any of the options.

Why would a business want wrong looking pricing on their pricing page,
"decoy"s aside? Seems that would deter people more. Makes the business seem
like it doesn't have its stuff together. Would you trust a company that seems
like it can't do simple math? I think the author may be getting at something
here--perhaps adding a third, unrelated or irrelevant option drives more
conversions, but nonsensical pricing doesn't seem like the way to do that.

~~~
Guest0918231
It would make more sense to have prices $40, $50, $60, where the $50 plan is
always on sale for $30. Then, you effectively have a $30 and $60 plan, and the
$40 is a decoy to make $30 seem like great value.

I designed a quick example below. That being said, I have no experience with
pricing strategies, and I feel like this example is missing out on users and
businesses that would be willing to spend $100.

[https://i.imgur.com/vzaoy8q.jpg](https://i.imgur.com/vzaoy8q.jpg)

~~~
listenallyall
$29 would likely work a whole lot better than $30

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csa
$28 would work better than $29... the main point still holds.

~~~
listenallyall
you have no evidence for that claim... the '9' effect has been studied
extensively

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goliatone
So, $39 would work better than $28?

~~~
listenallyall
Was this comment really worth exposing the fact that you don't understand why
nearly every store in America prices with 9's?

But since you asked... lowering the price by $11 will require 28% more unit
sales to cover the difference. Normally 28% more units would increase COGS,
resulting in less profit on equivalent sales, requiring even larger unit
growth, but we're talking about software here so let's ignore that.
Regardless, I couldn't tell you which works better without some more data.

I will bet you, however, that $39 will outperform $40 in total revenue and
profit.

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erikrothoff
Honestly, this just feels like marketing bull. What conversion effects are
realistic to expect after implementing any of these? My experience after
trying a couple is zero change in conversion and zero change in any customer
satisfaction metric. It might work if you have product market fit and need to
optimise the last 3% in conversions.

~~~
csa
1\. Yes, you do need product market fit. While there can be some benefit in
overall conversion rate, the larger improvement will usually be in people
being willing to pay a higher price and/or selecting a more expensive plan.
These up sells are basically free money.

2\. In most cases, a 3% improvement from a pricing page that previously did
not implement any of these ideas would be a _very_ low rate of improvement.

3\. If you think that this is marketing bull, then I am guessing you simply
haven’t tried to run any experiments like this or read about folks who
diligently did. All of these ideas are rock solid.

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lmeyerov
This is pretty bad advice: the more imp thing is figuring out pricing plans
that increases consumption and scale. These are games you play after you
figure that out. 10% boost is cool, expontential and magnitudes growth is your
real business.

Ex: can you get a tier for light users that converts when they're ready, goes
up as they get addicted and happier, and then again as they go pro? Are the
numbers aligned with their constraints/need/journey? Playing with color order
matters way less and wastes your time from figuring this kind of stuff out.

In contrast, for this hack stuff, the a/b testing people have realized for
most co's, a lot of work to maintain for only limited benefits, so only do
when you make enough money to layer on the maintenance $ for the limited lift.

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turkeywelder
As a consumer I'm really not a fan of these techniques. I'm biased but our
SaaS just has one price, no annual discount, no messing. It seems to be
working out. I think people appreciate the straightforward approach when
everything these days seems to have a pricing table.

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seanwilson
> I'm biased but our SaaS just has one price, no annual discount, no messing.

I offer an annual discount for a product of mine, primarily because for a one
year plan it only costs me a single transaction cost from my payment processor
instead of x12 transaction costs.

~~~
turkeywelder
Nothing at all wrong with it. It's just something we haven't done yet.
Priorities, features and bugs all battle for our limited resources.

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Xunxi
This nugget from 2012 [https://www.kalzumeus.com/2012/09/21/ramit-sethi-and-
patrick...](https://www.kalzumeus.com/2012/09/21/ramit-sethi-and-patrick-
mckenzie-on-why-your-customers-would-be-happier-if-you-charged-more/)

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wackget
That website looks (and reads) like one of those single-page secret ebook
sales web pages from the 90s.

~~~
jkuria
We are working on the look and feel but there is lots of great content.

What do you think of these mockups:

[https://theconversionwizards-
my.sharepoint.com/:i:/p/jasper/...](https://theconversionwizards-
my.sharepoint.com/:i:/p/jasper/EeSqcKq53LJMt5dsYTeOldABKOG49X0WP4Smgfws8sqDyA?e=PpQCCi)

[https://theconversionwizards-
my.sharepoint.com/:i:/p/jasper/...](https://theconversionwizards-
my.sharepoint.com/:i:/p/jasper/EROp2SosfyVJjNXCXJlxL80BGZjOVKJ1esadLMGMw3PUeQ?e=PnVhHT)

~~~
aurbano
I'll try to give some subjective constructive criticisim.

Honestly, it feels "clickbaity". I guess it's due to the topics typically
being found in content aggregating websites, or the question format.

Take for example the top post right now on HN: "It's Time to Build" by Marc
Andreessen - it would've been a completely different vibe if he called it
"What are the Top Countries in the World Not Doing Right?" or something like
that.

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joosters
_...Yet, this formula has never before been stated. That is, until now._

...page goes on to detail things that have been widely published and discussed
all over the place.

~~~
jkuria
The independent findings have been published but no one had put them into a
cohesive whole "formula".

All the technologies Tesla uses existed but no one had created a Tesla :)

~~~
csa
All of these ideas were discussed in a pricing seminar I had in the early 90s.

For anyone who has studied pricing the least bit, these ideas, even put all
into one page, are not particularly novel.

The hard part, imho, is to get people to actually believe these ideas work. As
replies on this thread show, there are doubters even though these ideas are
just pricing fundamentals.

~~~
vikramkr
Yeah I was surprised by how this article tried to oversell itself as if it was
revealing some fundamental secret. This stuff is marketing and pricing 101.
Reading that the author thinks presenting it in this way is somehow novel is a
red flag for me that they aren't experts or qualified to be presenting this
material, since experts and practitioners should be more than familiar enough
with these tactics to know that this is like the most basic set of pricing
tactics anyone would learn.

What would be more powerful is a "formula" for figuring out the exact
willingness to pay for a product to know what number to anchor/distract around
as your target number. Figuring out willingness to pay is one of the actually
hardest problems out there that a never before seen formula would be
interesting for. But like, the anchoring effect? That's not even marketing
101, that's covered in AP psychology

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lifeisstillgood
I like the Golden Ratio approach (b+a : b as b:a). So you get a simple 5-3-2-1
approach

49 - 29 - 19

for your pricing plans. Or I guess

125 - 74 - 49

It's just easier to remember a fibonacci sequence than worry about marketing
research.

What surprises me however is the reverse ordering

'''Reordering the pricing table in descending order from fastest/most
expensive to lowest/cheapest resulted in a 14.9% increase in overall
orders.'''

I am not sure this carries from pricing - I recently bought a new ISP
connection at home (lockdown, plus fibre to house suddenly became available).
I went for the most expensive- partly because the _feature set_ was easily
rankable. I could get 300, 600 or 1Gb - so going for the top level seemed easy
(plus lockdown panic).

But with features that don't rank (a book, a book with video course, a book
with two hour consult with author), suddenly I am not comparing the same
feature (download speed) but more of it, I am having to ask do I want this
extra feature at all - i am in effect not making a pricing decision but making
a feature choice decision, proxied by price.

So I am not sure the research carries over. And that leads me back to the easy
version of use the fib.

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noncoml
Can someone send this to dropbox please? Their pricing plans make absolutely
no sense. Maybe they can get some ideas

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csa
This article does a very good job of explaining (with examples) some of the
fundamentals of pricing plans. It describes the basics of the “blocking and
tackling” if pricing that so many businesses get wrong.

If you own a business, especially in the current environment, I would strongly
suggest exploring the ideas in this article.

------
samdung
Perhaps relevant: What makes a good subscription billing system?
[https://dev.to/shoplytics/what-makes-a-good-subscription-
bil...](https://dev.to/shoplytics/what-makes-a-good-subscription-billing-
system-3id6)

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na85
FTA:

>And, unless you’re an old Grandpa, you probably don’t care about reading a
paper copy.

Maybe I just have a strange peer group but I and most of my friends prefer
hard copies. I pay for a paper subscription to The Economist, for example.

In my experience it's the boomers that are buying phone-based magazine or
newspaper subscriptions. I can't think of a worse reading experience.

------
sarfrazarshad
Great read. Pricing products was always not clear to me. I think the article
makes a lot of sense for Saas products. But, the only thing I am not so clear
about is how can there be such a huge difference between 3 price options and 4
options.

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AnonC
The key points and references were good, but the examples failed to make an
impact for me. Some of the examples look meaningless, like the one for decoy
pricing.

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dahdum
On tablet the share widget on the left covers the content and follows you down
the page, making it near unreadable.

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brentis
I've mixed my plans over time and features recently.

LMK what you think.

Basic: 10.99/mo

PRO: 24.99/mo

PRO Semi-annual:$99/6 mo.

~~~
csa
Without knowing what your product is or what your market is, my default
comment is that you could probably change it to 38, 98, and 198 and increase
total revenue while ridding yourself of a small number of customers that eat
up a lot of customer service time.

The 6-month pricing seems unnecessarily manipulative.

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nsarafa
Curious to read this, but the images won't load

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moonlighter
They started loading for me after reloading the page without Content Blockers.

