Definition
Why value should define your price
SaaS buyers pay to solve problems and not for ‘features’. That’s the fundamental shift behind value-based pricing: instead of charging based on what your product does or how much it costs to build, you charge based on the value it creates for the customer.
In B2B, that value often looks like:
- Hours saved
- Revenue unlocked
- Risk reduced
- Compliance ensured
- Teams empowered to do more with less
When pricing is based on these outcomes, your conversations shift from pricing to value generation.
What value-based pricing looks like in practice
- A data platform that charges based on rows queried or insights generated, not user seats
- Proposal automation software that ties price to the number of RFPs handled or response time improved
- API-based tools that scale pricing based on volume or transaction throughput
- Security platforms priced by risk tier, not just number of endpoints
- Internal tools that price by cost savings or productivity improvements delivered
Value-based pricing is especially effective when the buyer has a clear economic incentive. If your product helps a company close deals faster, avoid penalties, or reduce headcount bloat, they’re often willing to pay in proportion.
What’s wrong with feature-based or competitor-based pricing
- Commoditization: You force yourself into a price war, even if your product is objectively better
- Misalignment: High-value customers are undercharged, while low-value customers might churn early
- Feature bloat: Teams build add-ons just to justify price tiers, even if users don’t need them
- No pricing elasticity: You're not capturing the full value from large customers who can afford, and benefit from more.
- Short-term wins, long-term churn: Customers buy because it's cheap, not because it drives outcomes
In short, when pricing doesn’t reflect value, you create friction, both before and after the deal.
How to build a strong value-based pricing model
1. Start with customer conversations
Ask:
- How do you measure success?
- What happens if this problem isn’t solved?
- What would this save or earn your team per year?
2. Identify value metrics
Pick metrics that:
- Align with how customers perceive value
- Scale predictably with usage or outcomes
- Are easy to track and explain
Examples:
- % of contracts processed
- $ of revenue influenced
- of hours saved
- % reduction in error rates
- of users onboarded or trained
3. Map pricing to segments and willingness to pay
Not all customers experience value the same way. Startups may want predictability, while enterprises care more about compliance and integration. Your pricing should reflect this.
4. Test and refine constantly
Pricing isn’t one-and-done. Use A/B tests, win-loss data, and CS feedback to adjust levers, thresholds, and packaging over time.
Questions to ask if your pricing model isn’t landing
- Are we charging based on inputs (features, usage) or outcomes (value delivered)?
- Do our largest customers see pricing as proportional to the impact we deliver?
- Are reps confident in justifying pricing during late-stage conversations?
- Are we losing deals because pricing doesn't scale down or renewals because it doesn't scale up?
