Pricing and Packaging SKILL.md

This is the exact file agents read, including the credit header and licence notice. Save it as pricing-packaging/SKILL.md.

---
name: pricing-packaging
description: "Review and redesign pricing and packaging: value metrics from seats to usage, outcome and hybrid models, good-better-best tiers fenced by needs, upgrade triggers and add-ons, willingness-to-pay research with Van Westendorp, conjoint and win-loss, price points, discount policy, fair price changes for existing customers, pricing page clarity and post-change metrics. Use whenever someone asks about pricing strategy, packaging, plans and tiers, value metric, per-seat versus usage pricing, discounting, price increases, willingness to pay or why customers stay on the cheapest plan."
license: CC-BY-4.0
metadata:
  author: Afeez Adebayo
  author_url: https://afeezadebayo.com
  author_linkedin: https://www.linkedin.com/in/afeez-adebayo/
  author_x: https://x.com/za_icon
  source: https://afeezadebayo.com/skills-md/marketing/product-marketing/pricing-packaging/
  category: marketing
  subcategory: product-marketing
  version: "1.0.0"
  created: "2026-10-10"
  updated: "2026-10-10"
---

# Pricing and Packaging

Pricing is one of the most powerful levers in a business and one of the least examined. Many companies set prices once by copying a competitor or adding a margin, then leave them for years. Packaging (which features go in which plans, and what customers pay for) matters as much as the price itself: the wrong value metric caps expansion, the wrong tiers push customers onto plans that don't fit, and unchecked discounting quietly erodes revenue.

This skill reviews and redesigns pricing and packaging: value metrics, tiers, feature allocation, willingness-to-pay research, discount policy, price changes for existing customers and pricing page clarity.

## Operating principles
1. **Price to value.** Customers pay for outcomes; the value metric should grow as their value grows.
2. **Package for segments.** Each tier should fit a clear customer type and buying situation.
3. **Research before changing.** Willingness-to-pay research and win-loss reduce guesswork.
4. **Simplicity sells.** Buyers should find the right plan in seconds.
5. **Treat existing customers fairly.** Price changes need notice, explanation and transition terms.

## Value metric options
| Metric | Fits when | Watch out for |
|---|---|---|
| Per user (seat) | Value grows with people using it | Discourages adoption across teams |
| Usage (API calls, messages, transactions) | Value tied to volume | Unpredictable bills |
| Outcome-based (revenue processed, leads) | Clear, measurable outcome | Hard to measure or attribute |
| Feature tiers | Segments need different capabilities | Feature bloat in top tiers |
| Flat fee | Simple product, one segment | Leaves money on the table with large customers |
| Hybrid (platform fee + usage) | Base value plus variable consumption | Complexity |

## Packaging principles
| Principle | Example |
|---|---|
| Good, better, best | Starter for small teams, Growth for scaling teams, Enterprise for security and control |
| Fence by needs, not by crippling | Enterprise gets SSO, audit logs and SLAs, not basic features removed from lower tiers |
| Clear upgrade triggers | Limits on usage or seats that customers hit as they get more value |
| Add-ons for niche needs | Advanced analytics as an add-on rather than forcing a higher tier |

## When to use, and when not to
Use it for new products, when win-loss shows price or packaging problems, when most customers sit on one plan, when discounting is high, before entering new segments and in annual pricing reviews.

Don't use it to optimise pricing page design in isolation (the Conversion Rate Optimization skills) or for financial modelling beyond pricing decisions.

## Inputs to ask for, in one message
1. Current pricing, plans and feature allocation.
2. Plan distribution, ARPU, expansion and churn by plan.
3. Discount data: frequency, depth, approval.
4. Win-loss and sales feedback on price.
5. Competitor pricing (public).
6. Usage data: which features and limits customers use.

## Workflow

### Step 1. Diagnose
Plan distribution, upgrade rates, discounting, price-related losses and churn by plan.

### Step 2. Find the value metric
Which usage measure grows with customer value and is easy to understand and predict?

### Step 3. Research willingness to pay
Interviews, Van Westendorp price sensitivity questions, conjoint or MaxDiff surveys for feature value, and win-loss evidence.

### Step 4. Design packaging
Tiers mapped to segments, features allocated by need, add-ons, limits as upgrade triggers.

### Step 5. Set prices
Anchor on value and research, check against competitors and unit economics.

### Step 6. Set discount policy
Allowed discounts, approval levels, trade-offs (annual prepay, multi-year, case study).

### Step 7. Plan the change
For new customers first; for existing customers, notice periods, grandfathering or transition offers.

### Step 8. Update the pricing page and enablement
Clear plan names, who each plan is for, comparison table, FAQs; sales training on new packaging.

### Step 9. Measure
Conversion by plan, ARPU, expansion, discounting and churn after the change.

## Van Westendorp questions
1. At what price would this be so expensive you wouldn't consider it?
2. At what price would it be expensive, but you'd still consider it?
3. At what price would it be a bargain?
4. At what price would it be so cheap you'd question its quality?
Plotting answers shows an acceptable price range. Use it alongside interviews and real buying behaviour, not alone.

## Pricing page checklist
- Plan names describe who each plan is for (Starter, Team, Business), not abstract labels.
- One line per plan on the customer it suits.
- A recommended plan highlighted for the main segment.
- Clear value metric and limits, with an example bill for usage pricing.
- Comparison table grouped by outcome, not a raw feature dump.
- FAQs on billing, upgrades, cancellations and discounts.
- Enterprise path with what it includes and how to talk to sales.

## Discount policy example
| Discount | Allowed when | Approval |
|---|---|---|
| Up to 10% | Annual prepayment | Account executive |
| 10 to 20% | Multi-year or large volume | Sales manager |
| Over 20% | Strategic logo with case study commitment | Revenue leader |
Every discount trades for something: commitment, payment terms, references or volume.

## Communicating a price increase
- Give clear notice (often 30 to 90 days, or per contract).
- Explain what has improved and why prices are changing.
- Offer options: lock in current pricing with an annual plan, or move to a better-fitting plan.
- Brief support and success teams with answers before the announcement.

## Edge cases and judgement calls
| Situation | What to do |
|---|---|
| Most customers on the lowest plan | Check whether limits and features push growing customers up |
| Heavy discounting | Tighten policy, require trade-offs, review list prices |
| Usage pricing causes bill shock | Add caps, alerts or committed-use tiers |
| Enterprise deals priced ad hoc | Create an enterprise package with clear components |
| Price increase for existing customers | Give notice, explain added value, offer annual lock-in |
| AI features with real compute costs | Consider usage-based add-ons or credits |

## Handoffs to related skills
- Value and segments: `positioning`, `ideal-customer-profile`
- Price objections and losses: `win-loss-analysis`
- Launching pricing changes: `product-launch`
- Sales enablement for new packaging: `sales-enablement`
- Pricing page conversion: the Conversion Rate Optimization skills

## Worked example
A collaboration SaaS charged per user with three tiers, but 70% of customers stayed on the lowest tier and expansion was weak. Usage data showed value grew with the number of active projects, not seats, and many teams limited seats to save money, reducing adoption. Research found buyers valued admin controls and integrations most at higher tiers. The new packaging moved to a platform fee plus project-based limits, put SSO and audit logs in the top tier, and offered unlimited viewers to encourage adoption. Existing customers kept their prices for a year with an option to switch. Upgrades and net revenue retention improved over the following quarters.

## Output format
```
# Pricing and packaging review: <product>, <date>
## Diagnosis (plan distribution, discounting, losses)
## Value metric recommendation
## Willingness-to-pay findings
## Packaging (tiers, features, limits, add-ons)
## Price points and rationale
## Discount policy
## Change plan for new and existing customers
## Metrics
```

## Common mistakes
- Copying competitor prices without understanding value.
- A value metric that discourages adoption.
- Too many tiers or confusing plan names.
- Unlimited discounting by sales.
- Surprising existing customers with increases.

## Questions to ask before you change pricing
- What usage measure grows as customers get more value?
- Which plans do customers choose, and why?
- How much discounting happens, and why?

## Self-check before you answer
- Is the value metric aligned with customer value?
- Do tiers map to clear segments with upgrade triggers?
- Is research used, not just competitor copying?
- Are existing customers treated fairly in the change plan?

## Further reading
- Madhavan Ramanujam and Georg Tacke, Monetizing Innovation (2016)
- Patrick Campbell and ProfitWell (Paddle) pricing research: https://www.paddle.com/resources

---
Created by Afeez Adebayo, Marketing, SEO & Growth Expert
Website: https://afeezadebayo.com
LinkedIn: https://www.linkedin.com/in/afeez-adebayo/
X: https://x.com/za_icon
Source: https://afeezadebayo.com/skills-md/marketing/product-marketing/pricing-packaging/

Licence: CC BY 4.0 (https://creativecommons.org/licenses/by/4.0/). You may copy, share and adapt this skill, including for commercial use, as long as you credit Afeez Adebayo and link to the source URL above. Keep this notice in any copy or adapted version.