The Biggest Pricing Table Mistake

The pricing table is arguably the most important element of your pricing page — but many businesses are making a key mistake when it comes to theirs.

What is it and how can you address it?

The value isn’t clear

Your pricing table needs to do two things at once:

  1. Convey the price (and subscription schedule) of your product
  2. Communicate the value of your product

If your pricing table isn’t clearly communicating the value to your customer, you’re not going to sell as many subscriptions. Customers might even wind up signing up for the wrong product or plan, because they’re confused about what features are offered in each. In turn, that customer confusion can lead to buyer’s remorse (which can, in turn, lead to chargebacks).

How to fix it: 

Talk to your existing customers. Make sure to record the conversations, too. That way, you can see what language they use to describe their problems (and how they’d like to solve those problems). Try different versions of pricing plans and features to make sure your prices are optimized and that you’re converting as many customers as possible.

Helping customers along their journey

A pricing table is close to the start of the customer’s buyer journey. They’re aware of their problem and found your product as a potential solution.

The job of your pricing table is to help them make the right purchase decision, without overwhelming them with complexity or unnecessary details. Some enterprise companies go so far as to hide their prices on the page, because their formula for calculating it is too complicated or they’re worried about causing sticker shock.

So what are the ways you might calculate your pricing?

Different pricing formulas for different products and needs

The most simple way to charge for a subscription product is a flat rate — for example, $9 per month. That said, there are other ways that a business might charge for subscriptions, including per user or with breaks for volume. Here are a few pricing formulas with examples of each model:

Flat rate:

  • $9 per user
  • The most common rate type – easy for customers to understand. It might not be a great fit for cases where people will need to be using the product together as a team, though.

Volume:

  • 1-10 users: $9 per user
  • 11-25 users: $8 per user
  • 26+ users: $7 per user
  • In this scenario, you pay a single price per user, based on how many users you have. For example, if you have 12 users, you pay $8 x 12 = $96 per month. This is ideal for products that teams will be using together.

Tiered:

  • 1-10 users: $9 per user
  • 11-25 users: $8 per user
  • 26+ users: $7 per user
  • This is similar to volume pricing, but with a key difference — you’re charged for all users in each tier. For example, with 12 users, you would pay ($9 x 10) + ($8 x 2) = $106.

Step (aka stairstep):

  • 1-10 users: $50/month
  • 11-25 users: $99/month
  • 26+ users: $199/month
  • In this scenario, if you have 12 users, you pay $99/month. If you have 13, it’s still the same price, because they are in the same “step.”

For more examples of pricing formulas and how they can work for your business, head here.

(If you’re looking for a subscription tool that can handle all of these formulas, check out Rebilly’s Order features.)

These examples are using “users” as the base unit, but you could also have pricing formulas based off of another unit — API calls or support requests per month, etc.

It’s the job of your pricing table to showcase your pricing formula and plans, along with the features that go with each of those.

Photo by Bundo Kim via Unsplash

Displaying your features

In addition to your pricing formula, you might have different plans (and features to match). This can get complex very quickly. For example, if you have three different tiers and then three different feature plans, your customers now have nine options to look at. Your pricing table needs to show:

  • Features that are enabled or disabled with each pricing option
  • Any metered items or features that go with each pricing option (like bandwidth or minutes used)

Metered pricing is similar to the per-seat pricing we looked at above. In fact, they’re both categories of usage-based pricing. The main distinction is that one is billed in advance and one is billed in arrears. However, when you bill something in advance, you have to decide how are you going to handle over and under usage, which can add more complexity.

For example, let’s say you bought 500 minutes for the month of January, and had used them all by January 25th. The business could do nothing and stop providing service. Or charge in the interim if you want to continue service. There’s also the option to add an overage charge at the next invoice.

But what happens if you go under your limit, and only used 300 minutes in January? The business could do nothing, and have a no-rollover policy. They could also refund or credit the unused amount. Or roll them forward month-to-month, and allow them to use the unused 200 minutes in the future.

Your pricing table itself shouldn’t necessarily go into all of these details, as potential customers can get bogged down quickly. But this information should be covered on the pricing page somewhere.

Finding pricing table perfection

This is barely scratching the surface of what can go into creating a pricing page. What it all boils down to is that you should be presenting both the pricing and the value of your product in the clearest way possible. Your subscription software can help you set up a pricing table (or Rebilly can, at least), but only you can make sure it’s clearly communicating your value proposition.

Want more tips on optimizing your pricing?

Our price optimization guide has a list of experiments you can do right now, categorized by funnel stage and difficulty. You can download it now and get started today:

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