stg-designing-pricing

name	stg-designing-pricing
description	Develops pricing hypothesis using value-based methodology, tier architecture, and mode-specific constraints. Use when constructing unit economics during BUILD phase 2.
serves	strategist
domain	pricing-strategy
affects	unit-economics-hypothesis
depends-on	none
produces	pricing inputs for unit economics hypothesis

Pricing Design

Develop pricing hypothesis using value-based methodology. All WTP estimates are T3 (always). Prices are ranges, not points. Channel economics integrated.

Procedure

Step 1: Calculate Value Anchor [S]

Read: problem hypothesis (quantified cost of the problem).

Value = problem cost x percentage resolved by solution. Price ceiling = value x capture rate (10-25% for SaaS).

Present as range. Label T2 (derived from problem cost estimate which may itself be T2).

Produce: value anchor range [T2].

Gate: value_anchor_calculated: bool -- derived from quantified problem cost, not asserted.

• Pass: Step 2.
• Fail: If problem cost is not quantified, estimate from severity score and segment characteristics. Note increased uncertainty (T2-T3).

Step 2: Analyze Competitive Pricing [S]

Read: competitor profiles from stg-analyzing-competition.

Map competitor pricing:

• Tiers and price points (from pricing pages)
• Packaging model (per-seat, usage, flat)
• Free tier availability and limits

Identify price gaps (underserved price ranges).

Produce: competitive pricing map [T1] + gap analysis [T2].

Gate: competitive_pricing_mapped: bool -- at least 2 competitors' pricing documented with source URLs.

• Pass: Step 3.
• Fail: If competitor pricing is hidden (enterprise "contact us"), note as data gap. Use available benchmarks for the category.

Step 3: Select Revenue Model [R]

Match revenue model to growth architecture:

Growth Architecture	Revenue Model	Rationale
PLG	Freemium or usage-based with paid conversion	Users must experience value before paying
Network	Free tier with network-gated premium	Network value increases with users; premium unlocks at density
Traditional	Subscription (monthly/annual)	Sales-assisted, predictable revenue
Hybrid	Base subscription + usage overage	Predictable base with upside from usage

Mode overlay:

• BOOTSTRAP: biases toward immediate revenue (no extended free tiers)
• VENTURE: can sustain longer free periods if growth loop is strong

Produce: revenue model selection with rationale.

Gate: model_selected: bool -- revenue model matches growth architecture with documented rationale.

• Pass: Step 4.
• Fail: If growth architecture not yet selected, flag dependency. Use segment ACV range to infer likely model.

Step 4: Design Tier Architecture [K-grounded]

Grounded in: revenue model, value anchor, competitive pricing, segment characteristics.

Apply Good-Better-Best framework:

• Good = entry point (free or low friction)
• Better = main revenue driver (2-3x Good price). 60-70% of customers should land here.
• Best = price anchor (3-5x Better price). Anchors perception; captures high-value users.

For PLG: define free tier value + natural upgrade pressure points. Free must deliver value but not full value.

Channel constraint check:

ACV Range	Viable Channels	Implication
< $1K	Near-zero-touch only (self-serve, content, SEO)	Cannot afford sales; product must sell itself
$1K-$10K	Light-touch (inside sales, webinars, trials)	Limited sales capacity; product-led assists
> $10K	Sales-assisted viable (demos, pilots, account executives)	Can invest in sales process

Produce: tier structure with price ranges [T2 for tiers, T3 for conversion rates].

Gate: tiers_designed: bool -- tiers follow Good-Better-Best with rationale, channel constraint check completed.

• Pass: Step 5.
• Fail: If tiers do not follow framework, justify the deviation. If channel constraint check reveals ACV-channel mismatch, flag for resolution.

Step 5: Define Upgrade Triggers [K-grounded]

Grounded in: tier structure, growth architecture.

For each tier boundary, define what triggers upgrade:

• Usage limits (API calls, storage, users)
• Feature gates (advanced features, integrations)
• Team expansion (per-seat triggers)
• Time limits (trial expiry)

Each trigger is a hypothesis -- conversion rate estimates are T3.

Produce: upgrade trigger list [T3 for effectiveness].

Gate: triggers_defined: bool -- at least 1 trigger per tier boundary, each labeled T3 for conversion predictions.

• Pass: Step 6.
• Fail: Triggers that are purely time-based without value connection are weak. Add at least one usage-based trigger.

Step 6: Validate Pricing-Economics Coherence [R]

Check: does the price range support required LTV:CAC?

Mode	LTV:CAC Required	Payback Required
VENTURE	> 3x	< 18 months
BOOTSTRAP	> 5x	< 6 months

If pricing cannot meet thresholds, flag conflict: "At [price range], achieving [required LTV:CAC] requires CAC below [$X]. This constrains channel strategy to [channels]."

Produce: coherence check result.

Gate: coherence_validated: bool -- threshold check completed with explicit pass/fail.

• Pass: Done. Pricing inputs ready for unit economics.
• Fail: If coherence fails, report as finding. Do not adjust pricing to make numbers work without justification.

Quality Criteria

• Value anchor derived from quantified problem cost (not asserted)
• Competitive pricing cites specific competitor price points with sources
• Revenue model aligned with growth architecture (not arbitrary)
• All WTP estimates labeled T3 with explicit note: "requires customer validation"
• Price ranges, not point prices
• Channel viability check performed (ACV vs channel type)
• Mode-specific thresholds checked

Failure Modes

Mode	Signal	Recovery
Pricing by competitor mimicry	Price set at competitor average without value-based justification	Calculate value anchor first. Competitor pricing is context, not methodology
WTP presented as known	Price stated without T3 label or "customers will pay" language	All WTP is T3 until sales data exists. Reframe as hypothesis
Free tier too generous	Free tier delivers full core value with no natural upgrade pressure	Identify the specific usage limit or feature gate that creates upgrade motivation. Free must deliver value but not full value

Boundaries

In scope: Value-based pricing methodology, tier architecture (Good-Better-Best), revenue model selection, upgrade trigger definition, channel-ACV constraint check, mode-specific threshold validation, competitive pricing analysis.

Out of scope: LTV/CAC calculation (stg-calculating-economics), market sizing (stg-sizing-markets), solution design (stg-designing-solutions), customer willingness-to-pay validation.