Why your SaaS pricing isn’t working (and what it reveals about your product strategy)

You launch a new pricing model expecting stronger conversion, better expansion or less discounting. Instead, customers resist the price. The new plans attract little interest. Sales continues to discount. Conversion remains weak.

The immediate conclusion is often that the pricing model is wrong. Perhaps the price is too high, the tiers need adjusting or Sales needs firmer discounting rules.

Sometimes that is true.

But pricing that is not working can also expose a deeper problem: the company has not aligned what the product has become, how it is positioned and how customers perceive its value.

Pricing tells customers what they are buying

Pricing is not just a financial decision. It is part of the product story.

The way a product is packaged tells customers which capabilities belong together, which problems it solves and how the value should grow as their needs evolve. The pricing metric tells them where the company believes that value comes from.

If the positioning says the product delivers one kind of value while the pricing charges for something else, customers receive two different messages.

A platform may be positioned as a way to automate an important workflow, for example, but still charge customers for every individual action they perform. The company is asking customers to value the outcome while its pricing focuses their attention on the inputs. This disconnect can make an otherwise logical pricing model difficult to understand or justify. It can also discourage the very behaviour customers need to experience the product’s value.

What I found when I reviewed pricing at Puzzel

When I joined Puzzel, pricing was largely based on the number of seats. There was no clear pricing list and no shared internal understanding of all the components included in the platform. Customers were effectively buying a collection of features, often at the same price, while discounting varied significantly between deals.

This created problems internally and externally.

Customers struggled to understand the value they were receiving. New salespeople struggled to learn what could be sold because much of that knowledge lived in the heads of long-standing Product and Sales employees.

The pricing problem was therefore not simply about finding a better number.

I started by creating a complete view of the platform and all its capabilities. I interviewed customers, conducted quantitative research and analysed competitors to understand what they offered, how they packaged it and which parts of the market they served.

That work revealed a set of use cases that mattered to our ideal customer profile. Together with the team, I used those use cases to create progressive packages that customers could understand and that supported the company’s land-and-expand strategy. Working with Sales, Product and Marketing, we then aligned on packaging and pricing that made it simpler for customers to understand what to buy and what they would get from it. The new structure also encouraged customers to buy more and supported cross-selling.

The result was more than a new pricing structure. It gave the GTM teams a shared understanding of what the platform was, who it was for and how its value should grow over time.

How SaaS pricing strategy can discourage product usage

At Scoutbee, I saw the same principle play out differently.

Customers paid according to the number of supplier searches they could perform. But running searches was how they discovered value from the product. Because every search consumed a limited credit, customers became cautious about using them.

Some customers avoided running searches because they wanted to preserve their allowance. Later, unused credits were forgotten and the product itself became easier to forget. That made renewal and expansion across large enterprise accounts much harder.

Working with Sales and Product, we moved towards seat-based pricing that encouraged customers to run more searches and involve more colleagues. The original pricing discouraged customers from using the product. The new model encouraged greater usage, helping customers achieve better results and making renewal and expansion more likely.

This is why the pricing metric matters. It does not simply determine how much customers pay. It can influence whether they use the product enough to become successful with it.

Pricing should be considered while the product is being developed

The relationship between pricing, product strategy and customer value is not limited to smaller SaaS companies. There are clear lessons to learn from larger companies that have successfully aligned the three.

In an interview with Metronome, Ryan Campbell, Director of Product Finance at Snowflake, explains that pricing is downstream from product and company strategy. Before deciding how to charge, a company needs to understand how it wants to be perceived and where it wants to play.

His example is simple. If Snowflake wants customers to bring more data into its platform, making data ingestion expensive or difficult to predict would work against the product strategy. Snowflake applied this thinking when it changed the pricing of Snowpipe. Customers had previously been charged according to how long the service ran, a metric they could not easily anticipate. Snowflake moved to charging according to the volume of data ingested because customers understood how much data they wanted to move, making costs simpler and more predictable.

Snowflake is a strong example of how pricing can support product strategy and customer value. The lesson is not that every company should copy its usage-based model. The right pricing model depends on how each product creates value and how customers use it.

What companies should follow is Snowflake’s practice of choosing a pricing metric that customers can understand and that supports the behaviour needed to achieve value.

But the most important lesson from Snowflake is that pricing should be considered while the product is being developed, not added as an afterthought once the product is ready to launch.

Pricing decisions influence how customers use the product, how quickly they experience value and whether the product supports the company’s wider strategy. Bringing Product, Finance, Marketing and Sales into those decisions early makes it less likely that the pricing model will contradict the product strategy or discourage the customer behaviour the product was designed to create.

Clay changed its pricing when its positioning changed

Clay provides another example. In an unusually transparent pricing announcement, the company explains that its product and the way customers used it had evolved, but its pricing had not kept up.

Its original credit-based pricing made sense when customers primarily used Clay to enrich and export lists. But the product evolved. Customers were increasingly using it to score leads, automate outbound activity and orchestrate broader GTM workflows.

Clay recognised that its pricing still made the company look like a data enrichment product, despite its new positioning as an end-to-end GTM platform.

It therefore separated the cost of data from what it calls “Actions”, the orchestration work Clay performs across enrichments, AI tasks, APIs and third-party platforms. It also reorganised its plans around customers’ needs and stages of growth rather than differentiating them mainly by credit volume.

Clay accepted some revenue risk by making valuable capabilities more accessible. Its bet was that customers who could use more of the platform would achieve better outcomes and grow with it.

This is a strong example of pricing being changed to reinforce what a company wants the market to understand its product has become.

When pricing resistance is really a clarity problem

If new pricing is not producing the expected results, the answer may not be another round of price adjustments. More discounting, declining conversion and weak uptake of a new plan can indicate that customers do not understand why the packages exist, how they relate to their needs or where the additional value comes from.

Before changing the numbers again, leadership teams should ask:

• Does the packaging reflect how customers understand and use the product?

• Does the pricing metric encourage the behaviour that helps customers experience value?

• Do the plans support the company’s product and market strategy?

• Was pricing considered while the product and its customer experience were being designed, or only once it was ready to go to market?

• Can Product, Marketing and Sales explain the value of each package in the same way?

Pricing cannot resolve unclear positioning. But it is very good at exposing it.

When the product story, packaging and pricing tell customers different things, the market does not respond by working harder to understand the offer. It responds with hesitation, price resistance and demands for discounts.

The real question may not be, “Why isn’t our new pricing working?”

It may be, “What is our pricing revealing about how clearly we understand and communicate our value?”

If your pricing is exposing uncertainty about what customers value, the next place to look is your positioning. In Positioning is not a messaging exercise, I explore why positioning cannot be created by Marketing alone and what happens when the teams shaping the product and selling it are working from different assumptions.