TL;DR In this article I share why pricing isn’t a back-office finance function, how to structure a pricing redesign as a PMM, and what I learned from increasing ARPU by 15-20% through thoughtful packaging simplification.
Why PMMs own pricing more than anyone else
Here’s what most companies get wrong: they treat pricing as a finance problem.
The CFO signs off, the product team implements the tiers, and marketing mentions it in an email. That’s backwards.
Pricing is your most powerful product marketing lever. It determines which customer segments you attract, how easy it is for them to adopt your solution, and if they can scale with you as their needs grow.
I’ve run pricing strategy for multiple B2B SaaS companies, and the most successful redesigns happen when a product marketer owns the entire process. Not because PMMs are better at math (we’re not), but because pricing decisions live at the intersection of customer understanding, competitive positioning, and go-to-market strategy.
When you understand your buyer’s perception of value, where they struggle to say yes, and what competitor packaging looks like, you can design pricing that feels inevitable. That’s product marketing at its best.
The pricing signals most companies miss
Most PMMs obsess over messaging and positioning. Both matter. But here’s what I watch for when I’m evaluating a pricing strategy:
- Packaging confusion signals weak product positioning. If your tiers overlap or customers can’t quickly understand which plan is for them, your messaging isn’t landing. This is especially true in B2B SaaS, where buyers are already skeptical.
- Tier cannibalization means your middle tier is underperforming. When the majority of customers cluster at your cheapest or most expensive plan, there’s usually a gap between what you’re offering and what the market actually wants.
- High upgrade friction tells me the product isn’t designed to accommodate growth. If moving from one tier to the next requires a sales call, you’re leaving expansion revenue on the table.
- Competitive packaging that looks identical means you haven’t done enough positioning work to justify different pricing. If every vendor in your space charges $99 to $500/mo for basically the same thing, pricing becomes a race to the bottom.
These signals pointed to a broader problem at an enterprise digital workplace platform I worked with: seven products with overlapping functionality, inconsistent pricing logic, and no clear upgrade path for customers.
Framework: the pricing redesign process
Here’s the framework I use when approaching a pricing overhaul:
- Step 1: Audit your current state. Document every product, every pricing tier, every add-on, and exactly which customers sit in which tier. I built a matrix that showed usage patterns, willingness to upgrade, and expansion opportunities.
- Step 2: Conduct competitive research. I’m not looking to copy competitors. I’m looking to understand positioning gaps. How do they organize their tiers? What are they emphasizing? Where are they vulnerable?
- Step 3: Interview customers at every tier. Ask which features drove their purchase decision, which tier they considered, and what would make them upgrade. This is where the real insight lives.
- Step 4: Define your pricing logic. Are you pricing by user count? Features? Usage volume? Company size? This decision should align with how customers perceive value. Don’t overthink it. Most B2B SaaS pricing is based on one or two clear variables.
- Step 5: Model the impact. What does ARPU look like under the new structure? How many customers will need to migrate? Where are the risks? Run the numbers with your finance team, but stay focused on which packaging strategy maximizes revenue while improving the customer experience.
- Step 6: Build in upgrade mechanics. Don’t just design tiers. Design the experience of moving between them. This is where product and marketing merge.
Product-led growth pricing: when packaging becomes part of your motion
One of the biggest shifts I’ve seen in SaaS pricing is the move away from “you must talk to sales” and toward product-led motions where customers can see value and upgrade themselves.
This doesn’t mean you eliminate sales. It means you make pricing and packaging decisions with the product experience in mind.
For the digital workplace platform, this meant:
In-product prompts that showed customers they’d hit usage limits on their current tier, with a direct upgrade button. No “contact sales” required.
Feature gates that made it clear which capabilities lived behind higher-tier pricing. When a customer tried to use a premium feature, they saw the value immediately.
Self-service upgrade flows that took 30 seconds. The customer changed their tier, the system provisioned immediately, and they moved on.
These mechanics aren’t gimmicks. They compress the time between “I need this” and “I have access to it.” In B2B SaaS, speed matters. And shorter friction loops mean higher expansion revenue.
The case study: 7 products become 3 tiers, ARPU rises 15-20%
When I took on the pricing strategy for the digital workplace platform, the situation was messy. Seven different products, each with its own pricing logic, positioned as standalone solutions but frequently purchased together.
Customers were confused. Sales reps couldn’t articulate why you’d buy Product A over Product B. The market had no idea what this company actually sold. And expansion revenue was flat because there was no obvious upgrade path once you bought a single product.
The competitive analysis revealed that the market had moved toward simplified, feature-based tiers. Customers wanted clarity, not choice.
We spent three months consolidating the portfolio into three tiers: Essentials, Professional, and Enterprise. Each tier had a clear use case, feature set, and price point. Essentials was for teams testing the platform. Professional was for departments rolling out company-wide. Enterprise was for large organizations with custom requirements.
We mapped every existing customer into the new structure and built a migration strategy. Some customers landed at higher tiers, which meant immediate revenue lifts. Others stayed at their equivalent tier, which meant no churn risk.
The real win came from the upgrade paths we built in. Customers who grew their team headcount could see their utilization metrics in the product and easily upgrade to the next tier. No handoff to sales. No procurement delays. Just expansion revenue flowing in.
After the first 12 months, ARPU increased by 15-20%. We migrated over 40 customer accounts. And we didn’t lose a single customer to the transition. Better, the market finally understood what we sold. Category inclusion in analyst reports followed within two quarters, which is usually driven by positioning clarity.
Common pricing mistakes I see repeatedly
- Too many tiers. More than four tiers and customers start to optimize for price instead of value. You end up discounting the top tier to close deals.
- Pricing that doesn’t align with how customers measure value. If you price by users but customers think about projects or departments, the disconnect will cost you money.
- No upgrade path. If a customer can only expand through a sales conversation, you’re manually blocking expansion revenue.
- Ignoring competitive positioning in your pricing presentation. Your pricing page needs to articulate why you’re worth more, beyond how much you cost.
- Launching new packaging without product changes. If your tiers aren’t backed by real feature differentiation or usage limits, they’ll feel arbitrary to customers.
- Forgetting to train sales. Even with self-service upgrades, your sales team needs to understand the new strategy, why it exists, and how to sell into it.
FAQ
How do I know if my pricing needs a redesign?
If you’re seeing churn because customers feel forced into the wrong tier, if your tiers overlap so much that customers can’t differentiate, or if your ARPU has plateaued while revenue per account should be growing, it’s time to revisit packaging.
Should I include usage-based pricing in my model?
Usage-based pricing works beautifully for companies where value correlates directly to usage (API calls, number of records processed, etc.). For most B2B SaaS, a hybrid model where you have seat-based pricing with usage overages is cleaner than pure usage-based pricing.
How do I make sure customers don’t churn during a pricing transition?
Document your migration plan early. Be transparent about which customers move to which tier under the new model. Grandfather customers at their current price if they’d be significantly impacted. Most importantly, tie the pricing redesign to a product story that shows what they gain, instead of focusing on what they pay.
Questions about your pricing and packaging strategy? Let’s connect, always happy to talk through what’s working.
