What is Pricing Strategy Score?
A pricing strategy grader evaluates how well a business has designed and implemented its pricing approach. It checks for a defined pricing model, value metric alignment, competitive positioning, tier differentiation, willingness-to-pay research, and regular review cycles.
The Formula
Score = Sum of (Rule Weight) for each passed criterion, out of 100
Each of 10 rules is weighted by impact on revenue growth. Weights sum to 100.
Worked Example
A B2B SaaS startup with $500K ARR grades their pricing strategy.
- Pricing model: Subscription with monthly and annual options (12/12)
- Value metric: Per-user pricing (12/12)
- Competitive positioning: Positioned as mid-market (10/10)
- Tier differentiation: Starter and Pro, but feature gap is unclear (5/10)
- Free trial: 14-day trial available (8/8)
- Annual discount: 20% annual discount offered (8/8)
- Pricing page: Public pricing page exists (8/8)
- Segmentation: Same pricing for all segments (0/10)
- WTP research: Never surveyed customers on pricing (0/12)
- Review cycle: Not reviewed since launch 2 years ago (0/10)
📌 Total score: 63/100, solid foundation but underoptimized. Conducting willingness-to-pay research and adding enterprise pricing would likely increase ARPU by 20-40%. Most SaaS companies are underpriced because they never test.
Why This Matters
Revenue impact
A 1% improvement in pricing has a larger profit impact than a 1% improvement in volume, costs, or churn. Pricing is the single highest-leverage growth lever for most businesses.
Customer acquisition
The right pricing model and packaging removes friction from the buying process. Tiered pricing captures different willingness-to-pay segments that a single price misses entirely.
Competitive positioning
Price signals value. Underpricing can signal low quality. Overpricing can price you out. Knowing where you sit versus alternatives lets you price deliberately rather than guessing.
Common Mistakes
❌ Cost-plus pricing
Pricing based on cost plus a margin ignores customer value. Charge what the product is worth to the customer, not what it costs you to deliver.
❌ Never testing pricing
Most companies set a price at launch and never change it. Surveying just 20 customers about price sensitivity often reveals you are underpriced by 20-40%.
❌ One price for all segments
A startup and an enterprise have wildly different willingness to pay. Segment-specific packaging captures more revenue without discounting for smaller customers.
Industry Benchmarks
| Category | Good | Average | Poor |
|---|---|---|---|
| SaaS ARPU Growth (after pricing optimization) | 20-40% increase | 10-20% | No change |
| Annual vs Monthly Split | 50%+ annual | 25-50% annual | Below 25% annual |
| Free Trial Conversion | 15-25% | 8-15% | Below 5% |
Source: ProfitWell (Paddle) 2024 SaaS Pricing Strategy Report
Benchmark data sourced from ProfitWell (Paddle) 2024 SaaS Pricing Strategy Report.