Subscription Packaging and Pricing

POV: You’re a product marketer. Pricing and packaging just landed in your lap. ❌ No pricing manager. ❌ No budget for a consultant. Just you, Google Sheets, and a vague sense that “we should probably revisit our pricing.” Common scenario at Series A/B: ✅ You’ve found product-market fit. ✅ You’ve grown fast. Now you need to unlock the next level of growth. So where do you start? First and foremost: Don’t try to fix everything. Pricing touches everything. Before you jump in, understand what you can impact. HubSpot’s Sam Lee breaks pricing into 3 key areas: 1️⃣ Product Monetization: pricing metrics, plan design, packaging. 2️⃣ Commercial Strategy: discounting, sales enablement, channel pricing. 3️⃣ Back Office: Governance, analytics, decision-making flow. I’ll add one more: 4️⃣ Pricing plumbing: tech stack from CPQ through billing. Odds are, you can safely ignore 2️⃣ through 4️⃣ (for now). You probably can’t overhaul your quote-to-cash flow, redesign your deal desk, or implement new billing software. But Product Monetization? That’s where you can move the needle. Here’s how I’d tackle it (in order): Start with packaging. Look at your current plans. For each one, ask: • Does this plan solve a distinct job? • If you were the ICP, would your tiers make sense? This alone can uncover big wins. Often, just simplifying plans can improve conversion or help your sales team tell a better story. Next, take a closer look at features. An easy approach is the value matrix. It maps each feature by: • Relative preference (how much people want it) • Willingness to pay (how much they’d pay for it) You’ll end up with: → Core features: everyone expects them, no one’s paying extra. → Value drivers: people want them and will pay for them. → Add-ons: not for everyone, but high value for a niche. The last one is where most SaaS companies leave money on the table. From there, review usage thresholds. Even if you can’t change your pricing metric (heavy lift), you can still adjust thresholds. Look at usage caps across plans: • Are they aligned with actual customer usage? Competitor research helps here. Find arbitrage opportunities where you can offer more value for the same price or better align value with consumption. Lastly, look at price points. Yes, actual prices come last. Once your packaging, features, and thresholds are dialed, you can ask: • How do we want to be positioned in the market? • Which plan should be the hero (and are we making that clear)? A 10% price bump won’t fix a confusing plan structure. But a well-designed plan can make a higher price feel like a steal. In summary: ✅ Control the controllables. ✅ Think like your customer. ✅ Reassess feature bundling. ✅ Pressure-test your thresholds. ✅ Only then play with price points. You don’t need to be a pricing expert. You just need to use your product and marketing instincts. (And maybe pretend to be your ICP for a day.)

I've been quiet about this for months, but it's time to share. After 8 years running pure ecommerce brands, we've completely pivoted our business model: every product we launch now has subscription component. Not because subscriptions are trendy. But because economics are undeniable. Here's what happened when we added a $27/month subscription option to a beauty brand selling a one-time $59 product (with proper funnel in place too): -Customer Acquisition Cost remained identical -Average first-order value increased by 14% -Customer Lifetime Value jumped by 40% -Retention rate at 49% after 6 months The difference between struggling and thriving in ecommerce often comes down to unit economics. When your LTV is 1.5X your CAC, you're barely surviving. When your LTV is 4X your CPA, you can outspend any competitor. Subscriptions change the entire psychology of your marketing. When you sell one-time product or have sh*t funnel with sh*t upsells you need to convince customers to buy again and again. When you sell subscriptions you only need to convince them once. Then inertia works in your favor. Most brands approach subscriptions completely wrong. They treat them as a minor addition to their business, not a fundamental shift in their model. Our approach: We design products specifically to create ongoing value. Every new product must answer: "Why would someone continue using this month after month?" The first 14 days are also critical. We've built a 9-touch onboarding process that drives initial product usage and builds habit formation. We've built systems that track customer usage patterns and send timely reminders when they should be seeing results or need to reorder. Each subscriber receives exclusive content tied to subscription journey - improving results and creating deeper brand connection. Before each renewal, customers receive a preview of what's coming next and how it builds on their current results. Results: Our retention rates are now 2.7X industry average, and our CAC payback period decreased from 62 days to 32 days. Successful DTC brands of the next decade won't be selling products. They'll be selling ongoing transformations, delivered through physical products. If you're still focused solely on one-time purchases, you're building a business model that's increasingly difficult to sustain. The shift isn't easy. But it's necessary. And not making shift is harder in the long run.

Create lowered its prices. Why'd we do this? Is this just yet another example of me being a generous, standup, and handsome guy? Maybe, but there's more to it. First, the changes: - 1 Month Subscription: $60 --> $44 (↓27%) - One-Time Purchase: $70 --> $55 (↓22%) - Multimonth offerings are also coming down in price We'll be automatically transitioning all active subscribers to this lower pricing (saving at least $16/mo) and offering it to all new customers going forward. Here's why: - Price point is the top complaint we get from customers. No shocker here. But the feedback was consistent and strong enough that we thought it required re-evaluation. - Create is the premium product in our category: best ingredients, only NSF for Sport, made in US, etc. But the category is now filled with low-priced, crappy, and flat-out fake product. We won't match their pricing, but we need to make it an easier decision for the customer to choose the best quality product. - We now offer the Daily Performance Gummy, starting at a reasonably priced $65/mo. This pricing change brings our Core product in-line with that architecture. - Lower pricing will allow us to reach more customers and onboard more folks to a new creatine routine. How are we doing this? Is Create just going to take a massive margin hit? - Our business has scaled tremendously since we first set our pricing. Our first PO was 60,000 gummies. We now regularly place 10M gummy POs. As we've scaled, our unit costs have come down significantly. - Our strong subscription base and loyal customer base means we don't need to extract as much value out of customers on their first order. Margin can be captured over the course of multiple (and now predictable) orders. - We're going to rely less on discounting. Historically we've been quite splashy with discounts, in part because the MSRP was too high. With a rationalized MSRP, we'll do less discounting. Or, maybe I really am just a generous, standup, and handsome guy. Let's see how this one plays out.

Pricing your product is one of the most critical decisions you’ll make. Follow this step-by-step flowchart to craft a pricing strategy that aligns with your business goals and market conditions: Step 1: Assess Your Business Goals What are you optimizing for? → Maximize revenue: Lean toward dynamic or value-based pricing. → Gain market share: Consider competitive pricing or freemium models. → Increase customer lifetime value: Explore subscription models. → Establish brand positioning: Premium pricing could reinforce your brand. Step 2: Analyze Your Costs Break down all expenses: → Direct costs: Materials, production, and labor. → Indirect costs: Overhead, marketing, and R&D. → Add your desired profit margin. Step 3: Research Your Market Understand external factors: → Customer segments: What are they willing to pay? → Competitor pricing: Benchmark to see where you stand. → Market trends: Anticipate shifts (e.g., tech adoption, economic conditions). Step 4: Consider Product/Service Attributes What makes your offering unique? → Differentiation: Unique features may warrant premium pricing. → Perceived value: Does the value align with your price? → Lifecycle stage: New products may benefit from penetration pricing; mature ones might shift to optimization strategies. Step 5: Choose a Basic Pricing Strategy Pick the foundation: → Cost-plus pricing: Add a fixed margin to your costs. → Value-based pricing: Price based on customer perceived value. → Competition-based pricing: Match or beat rivals. → Dynamic pricing: Adjust prices in real time based on demand. Step 6: Refine Your Pricing Model Customize your approach: → Fixed vs. Variable: Predictable pricing vs. flexibility. → Tiered/Package Options: Create levels for different customer needs. → Subscription vs. One-time: Build recurring revenue streams or charge upfront. → Freemium: Provide a free basic version to attract users, upsell later. Step 7: Test and Optimize Iterate based on feedback: → Price sensitivity testing: Understand how price changes affect demand. → Sales data: Analyze performance metrics like conversion rates and churn. → Customer feedback: Does the value align with their expectations? Step 8: Implement and Monitor Roll out and keep improving: → Track key metrics: Revenue, margins, CAC (customer acquisition cost), and LTV (lifetime value). → Refine over time: Adjust as markets and customer needs evolve. Pro Tip: Pricing isn’t set in stone. Stay agile and regularly revisit your strategy to ensure it supports your goals and adapts to market dynamics. 💬 Which pricing model are you using right now, and how is it working for you? Drop your thoughts in the comments! 👇 #pricingstrategy #productmanagement #businessgrowth

Most marketers obsess over getting more traffic to their offers. But what if the secret to more revenue isn't getting more people to your page... But changing how you structure your pricing once they're already there? That's exactly what The Economist discovered when they implemented a psychological pricing strategy that instantly increased their subscription revenue by 43%. The best part? You can implement this same strategy in your business today with zero additional ad spend. Here's how they did it... The Economist originally had two subscription options: 1️⃣ Web-only: $59 2️⃣ Print + Web: $125 With these options, 68% chose the cheaper web-only subscription. Pretty standard. Then they added a strategic "decoy" option: 1️⃣ Web-only: $59 2️⃣ Print-only: $125 3️⃣ Print + Web: $125 Notice something interesting? The print-only and print+web options are the SAME price. But one clearly gives you more value. The results were mind-blowing: 📊 Web-only dropped from 68% to just 16% 📊 Print-only: 0% (nobody chose it) 📊 Print + Web jumped from 32% to 84% Their average revenue per customer surged from $80 to $106, which was a 32.5% increase from adding one strategically designed option. This is the "decoy effect" in action. It works because our brains don't assess value in absolute terms but through comparison. We see this everywhere once you start looking: For example, movie theaters do this with popcorn pricing (noticed how the medium is suspiciously close to the large?). Here's how to implement this in your business: 1. Identify your premium option (highest profit margin) 2. Create a slightly inferior option at the same (or higher) price 3. Keep your entry-level option at a lower price 4. Display all options side-by-side Remember that your customers aren't buying your product…they're buying the difference between your options. That's why The Economist's strategy works so effectively. They engineered a pricing structure that makes the highest-value option feel like an obvious choice. Stop trying to convince people your product is worth the price. Instead, restructure your pricing so your premium offer becomes the obvious choice through comparison. P.S. Comment "Brain Hacks" for a free sheet with 81 of the most powerful cognitive biases you can implement in your marketing to increase sales!

Too many companies don’t realize that in usage-based pricing, billing is part of your product.  It’s a key part of communicating your product’s ongoing value to customers. So treating it like an afterthought is a fast track to losing trust. When price equals usage, your pricing model is a full-on customer experience— not just a finance decision. Your billing’s got to feel like part of the product, and not an “oh, btw” or a bare-bones invoice that shows up weeks later. Confluent is a great example of what good looks like: → Usage dashboards embedded right inside the product show customers their current usage and spend data.   → Proactive notifications tell users when they’re approaching spend or usage thresholds.   → And their API lets customers build their own billing dashboards for a fully custom view. Confluent isn’t waiting for support tickets or hoping users figure it out.  They’re multi-channeling the right info, at the right time, in the right place, with emails to notify users of expanding or contracting usage, in-product alerts, and even letting customers set up Slack notifications.  Why? Because they know the fastest way to tank a pricing transformation is poor communication. That’s the new bar in a UBP world.  → Over-communicate value before you ever mention price.   → Forecasting tools, spend alerts, and in-product insights aren’t nice-to-haves—they’re table stakes.   → Your support, sales, and marketing teams need aligned, proactive messaging at every touchpoint.   → Package pricing changes alongside real product improvements—and frame them that way.  If customers feel like a pricing change is a surprise, you’re already playing catch-up.  If they feel like it’s adding value? You’re reinforcing trust. Most companies treat billing like a system of record. But in usage-based pricing, it’s a product surface.  And it needs to be designed like one. This is step 4 in our pricing transformation playbook. (And probably the most overlooked.) Get the full 4-step playbook on the blog—link in comments.