Your buyers are not one market, they are three or four

Your buyers are not one market, they are three or four

The single biggest pricing mistake is treating everyone who might buy from you as one undifferentiated crowd and picking one price for all of them. Your prospects do not value your product equally. A solo operator and a fifty-person team get wildly different value, and charging them the same number means you either scare off the small buyer or undercharge the large one.

Good pricing segments. You group buyers by how much value they get and how much they can pay, then you build an offer for each group. The classic shape is three tiers, sometimes four. A starter tier that gets a price-sensitive buyer in the door, a middle tier where most of your revenue lives, and a top tier that captures the buyers for whom price is almost irrelevant because the outcome is large.

The segments should map to a real difference in how people use the product, not just a paywall on the same thing. Tie each tier to a value metric that grows with the customer: seats, contacts, volume, revenue processed, whatever scales alongside the outcome they get. When the customer grows, your price grows with them, and that is the engine of net revenue retention.

Be deliberate about the top tier. Most founders cap their pricing far too low because they imagine the smallest buyer and price for them. There is almost always a segment willing to pay several times your current top price, and you will never find them if your highest tier is modest. Build a tier for the buyer with the biggest problem, even if few people choose it. Its real job is to make the middle tier look reasonable.

INTERVIEW EWOUD: How do you decide where to draw the lines between tiers for a B2B product, and have you ever discovered a high-paying segment you were not serving? What happened to revenue when you added a higher tier?