GTM Unleashed: The Double-Edged Sword of User-Based Pricing: Simple Allure Meets Growth Peril

Ah, user-based pricing – the enticing enigma that beckons the go-to-market realm. A tantalizing dance, where every step promises both reward and peril. Shall we delve into this mysterious tango and uncover the secrets it has to offer?

On one hand, we have the intoxicating allure of simplicity. User-based pricing is straightforward, easy to understand, and captures the essence of scalability. Your customers know precisely what they’re paying for and can easily see the value of adding more users. It allows your sales team to focus on demonstrating the merits of your product, rather than getting entangled in the labyrinth of complex pricing structures. As the economist Theodore Levitt once said, “People don’t want to buy a quarter-inch drill. They want a quarter-inch hole!”[1]  

Yet, lurking beneath the surface, we find the menacing shadow of the double-edged sword. The simplicity that makes user-based pricing so attractive can also be its downfall. As customers grow, a user-based pricing model may inadvertently punish them for their expansion. Instead of celebrating their growth and loyalty, they are met with the cold sting of escalating costs. Over time, this could breed resentment and send your customers scurrying to seek refuge in the arms of your competitors. According to a recent survey, “nearly 50% of customers feel they’re paying too much for a subscription as their business grows.”[2]   

So, how do we navigate this precarious path of user-based pricing? The answer lies in the art of balance. We must create a pricing structure that is simple enough to entice, yet flexible enough to accommodate the unique needs and growth patterns of our customers.

And so, I leave you at the threshold of your own mind, a place where you must decide whether to embrace the seductive powers of user-based pricing or to resist its siren call. Will you wield the double-edged sword and risk the consequences, or will you pursue a different path to pricing mastery? The choice is yours, my fellow trailblazers.  

[1] Levitt, Theodore. “Marketing Myopia.” Harvard Business Review, 1960.  

[2] “Subscription Pricing Survey,” Recurly, 2022.

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