Ah, pricing—the core of your business. Your pricing page is where the magic happens. It’s where you show your potential customers that your service is worth their dollars. Your pricing page is where you convert leads into revenue. So, your pricing structure needs to be laid out in a digestible format for customers—you do this with a pricing matrix.
Throughout this article, I’ll unpack what a pricing matrix is, how to set one up, and some stellar pricing matrix examples.
What is a pricing matrix?
A pricing matrix is where you define your costs, features, and what differentiates your product tiers from others. A pricing matrix is shown on the pricing page of your website. When done correctly, it can motivate a new customer to purchase.
This is ProfitWell’s pricing matrix. The free version is front and center, then users can scroll down to learn about more options.
Pricing as a growth lever
We say this all the time but it’s worth repeating: your pricing structure is extremely influential over how your company is perceived from the outside and how fast it’s likely to grow. Pricing is a process of incremental gains. In fact, data proves companies updating their pricing at least once every six months see nearly double the ARPU gain than those who upgrade once per year or more. Pricing is the exchange rate on the value you provide. You want customers to perceive your product as high value.
How to build your pricing matrix
You know the importance of a pricing matrix, but how do you build one? When it comes to laying out your pricing, it should be simple yet informative. Don’t make the customer dizzy with too much information.
1. Lay out your tiers: Keep tiers minimal. Regular, Premium tends to work better than terminology like Lite, Lite Pro, Lite Pro+, Classic, Classic+ etc.
2. Create a short description of each tier: Don’t include too many check boxes here. Concisely describe the features offered within each tier.
3. List prices: List your prices. If you don’t have a set price, then simply list a CTA along the lines of “Contact our team for a free quote.”
4. A/B test a few designs: Test pricing matrix designs to see which ones work best, maybe adding a fourth tier will work better? You won’t know until you try.
5. Measure as time goes on: Measure your pricing matrix even after you’ve A/B tested and set it live. There’s always room for improvement.
Factors of a great pricing matrix
Anyone can build a pricing matrix, but you want yours to stand out. Your pricing matrix is where you seal the deal with a potential user. So, what does that entail?
Your pricing matrix should clearly show which features are part of which tier, and how they differentiate from other tiers. Further in this article, I’ll show you which companies nailed this section.
Pricing should demonstrate the value that your product offers. ProfitWell can help optimize your pricing strategy. Our experts combined with our software will ensure the prices on your matrix align with customer willingness to pay and product value.
Pricing matrices should not be long and complicated. They’re intended to display information about your products in clear formats. This can be done in a list format or a short paragraph. Whatever you do, don’t overload on checkboxes.
Targeted user descriptions
Each tier in your pricing matrix should have a small description of who this product is for. Explain if a certain pricing package is better for an individual or a smaller business. Don’t make a customer guess which plan is best for them.
CTAs shouldn’t be hidden, you want customers to click on them, so make them centered and direct.
On our pricing page, our CTA includes a demonstration of the product as well as more information.
4 great pricing matrix examples
Now, let’s take a look at some companies who have exemplary pricing pages.
Slack is killing it in the SaaS space. It’s grown to a $5.1 billion valuation in four years and has six million daily active users. It’s pricing page deserves some props for this success.
Slack’s pricing page has three clear tiers with very clear descriptions that align with willingness to pay. We debunked this page on Pricing Page Teardown, where I said:
“I think what’s brilliant about this, we see this in the data, the willingness to pay aligns perfectly.”
New buyers can assess three tiers before purchasing:
- Free plan: Zero cost, restricted to 10k of your team’s most recent messages and 10 third-party custom integrations
- Standard plan: Pay a maximum of $8/mo, but message searches and integrations are unlimited.
- Plus plan: $15 per month with unlimited searches and integrations in addition to enterprise level services like single sign-on, compliance reporting, and guaranteed uptime.
Slack’s model exemplifies how to use pricing tiers, value metrics, and monetization for all levels of growth:
- The free tier increases acquisition
- The middle tier increases retention
- The top tier increases expansion
As I said on Pricing Page Teardown:
“Why is Slack successful? The pricing model. Acquisition is just a start; you have to monetize; you have to retain. The monetization—I don’t know if I could have done it better myself.”
Let’s talk about Squarespace and Wix—two different companies that offer essentially the same product. Squarespace has a monochromatic and modern pricing page, appealing to the B2C customer. Then there’s Wix, with a pricing page not as pristine, but will make any B2B or traditional SaaS business feel right at home.
Squarespace’s average willingness to pay is $16.09, while Wix is $12.09. So, Squarespace is in the lead here. Lower willingness to pay isn’t necessarily bad, it means Wiz may have the option to capture the lower end of the market, draw customers in, and then upsell to increase ARPU.
Squarespace and Wix are examples of how design plays a role in closing a deal and tailoring your pricing page to match your customer persona.
Next up—Mailchimp. Mailchimp has $0 in outside investment, 700 employees, 12 million subscribers, and $400 million in revenue. With a steady growth over the last 17 years, clearly, Mailchimp is doing something right.
Mailchimp’s pricing page is proof that you can get a little creative. It uses imagery to clearly mirror the target audience for each of its three pricing packages.
Mailchimp’s pricing matrix structure lists the package’s key features. Most of the tiers guarantee unlimited emails for a fixed monthly cost. Smaller companies get simple, lightweight pricing while bigger companies get a clear, customized quote.
Last but certainly not least: Shopify, a product that helps entrepreneurs set up shop and sell products online and in stores. It was founded in 2004 and has $580 million in revenue. Focusing on the “aspiring entrepreneur” demographic has given the company a certain sense of momentum in its growth.
Its pricing matrix is structured as straightforward monthly recurring revenue, or MRR. Packages starting at $29 for the basic plan, $79 for their standard plan, and a big jump to $299 for the advanced plan. This structure hones in on the buyer persona.
As we said in a previous Pricing Page Teardown:
“Shopify is really, really good at not fighting for the inch and going for the mile. I think that their pricing definitely shows that. They were, I believe, one of the first to do unlimited storage and unlimited number of products. They include most of the features in particular plans, and not really differentiating except on credit card terms.” - Patrick Campbell
Your company’s pricing page needs to be clear, but don’t be afraid to get creative. Your pricing page is crucial. It’s where your customers or potential customers decide on your value.