Pricing Metric

A pricing metric is the unit in which prices are charged to the customer. It can aggregate several value metrics important to the buyer.

Example

Shown below is a breakdown of Zapier’s pricing plan. Its charges are based on both per account pricing as well as usage (i.e., tasks). There are a number of value metrics for the persona here:

​Value Metric	Impact on Pricing Decision
Access to differentiating product	Part of core pricing metric, i.e. per month license fee
Text formatting	Incentivizes plan upgrades

Pricing Metric Criteria

For a pricing metric to provide leverage in growing revenues, it must:

1. Be easily understandable to the buyer; and

2. Align closely with their value metrics; and

3. Grow with their usage

FIVE Pricing Metric Categories

Pricing metrics generally fall in one of the following categories:

1. Account based pricing metric: A flat license fee is charged per customer (account). We saw this in Zapier’s example above.

2. User based pricing metric: A seat-based license fee is charged separately for each user in the customer’s company. Example: Zoom.

3. Feature based pricing metric: Pricing is based on a tiered pricing plan where a cluster of features is grouped under a single tier. Customers upgrade to a higher priced tier to get access to more features or they pay extra for an add-on. Example: Zapier

4. Usage based pricing metric: The value metric is aligned with the customer’s usage of the product. A good example is Zapier’s model above that used Tasks/month as part of their pricing metric.

5. End customer based pricing metric: The value metric is aligned with the usage of the customer's product by their end customers. The preceding category is about usage of your company’s product whereas this is about usage of the customer’s product.

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