1# Tier Structure and Packaging
2 
3## Contents
4- How Many Tiers?
5- Good-Better-Best Framework
6- Tier Differentiation Strategies
7- Example Tier Structure
8- Packaging for Personas (Identifying Pricing Personas, Persona-Based Packaging)
9- Freemium vs. Free Trial (When to Use Freemium, When to Use Free Trial, Hybrid Approaches)
10- Enterprise Pricing (When to Add Custom Pricing, Enterprise Tier Elements, Enterprise Pricing Strategies)
11 
12## How Many Tiers?
13 
14**2 tiers:** Simple, clear choice
15- Works for: Clear SMB vs. Enterprise split
16- Risk: May leave money on table
17 
18**3 tiers:** Industry standard
19- Good tier = Entry point
20- Better tier = Recommended (anchor to best)
21- Best tier = High-value customers
22 
23**4+ tiers:** More granularity
24- Works for: Wide range of customer sizes
25- Risk: Decision paralysis, complexity
26 
27---
28 
29## Good-Better-Best Framework
30 
31**Good tier (Entry):**
32- Purpose: Remove barriers to entry
33- Includes: Core features, limited usage
34- Price: Low, accessible
35- Target: Small teams, try before you buy
36 
37**Better tier (Recommended):**
38- Purpose: Where most customers land
39- Includes: Full features, reasonable limits
40- Price: Your "anchor" price
41- Target: Growing teams, serious users
42 
43**Best tier (Premium):**
44- Purpose: Capture high-value customers
45- Includes: Everything, advanced features, higher limits
46- Price: Premium (often 2-3x "Better")
47- Target: Larger teams, power users, enterprises
48 
49---
50 
51## Tier Differentiation Strategies
52 
53**Feature gating:**
54- Basic features in all tiers
55- Advanced features in higher tiers
56- Works when features have clear value differences
57 
58**Usage limits:**
59- Same features, different limits
60- More users, storage, API calls at higher tiers
61- Works when value scales with usage
62 
63**Support level:**
64- Email support → Priority support → Dedicated success
65- Works for products with implementation complexity
66 
67**Access and customization:**
68- API access, SSO, custom branding
69- Works for enterprise differentiation
70 
71---
72 
73## Example Tier Structure
74 
75```
76┌────────────────┬─────────────────┬─────────────────┬─────────────────┐
77│                │ Starter         │ Pro             │ Business        │
78│                │ $29/mo          │ $79/mo          │ $199/mo         │
79├────────────────┼─────────────────┼─────────────────┼─────────────────┤
80│ Users          │ Up to 5         │ Up to 20        │ Unlimited       │
81│ Projects       │ 10              │ Unlimited       │ Unlimited       │
82│ Storage        │ 5 GB            │ 50 GB           │ 500 GB          │
83│ Integrations   │ 3               │ 10              │ Unlimited       │
84│ Analytics      │ Basic           │ Advanced        │ Custom          │
85│ Support        │ Email           │ Priority        │ Dedicated       │
86│ API Access     │ ✗               │ ✓               │ ✓               │
87│ SSO            │ ✗               │ ✗               │ ✓               │
88│ Audit logs     │ ✗               │ ✗               │ ✓               │
89└────────────────┴─────────────────┴─────────────────┴─────────────────┘
90```
91 
92---
93 
94## Packaging for Personas
95 
96### Identifying Pricing Personas
97 
98Different customers have different:
99- Willingness to pay
100- Feature needs
101- Buying processes
102- Value perception
103 
104**Segment by:**
105- Company size (solopreneur → SMB → enterprise)
106- Use case (marketing vs. sales vs. support)
107- Sophistication (beginner → power user)
108- Industry (different budget norms)
109 
110### Persona-Based Packaging
111 
112**Step 1: Define personas**
113 
114| Persona | Size | Needs | WTP | Example |
115|---------|------|-------|-----|---------|
116| Freelancer | 1 person | Basic features | Low | $19/mo |
117| Small Team | 2-10 | Collaboration | Medium | $49/mo |
118| Growing Co | 10-50 | Scale, integrations | Higher | $149/mo |
119| Enterprise | 50+ | Security, support | High | Custom |
120 
121**Step 2: Map features to personas**
122 
123| Feature | Freelancer | Small Team | Growing | Enterprise |
124|---------|------------|------------|---------|------------|
125| Core features | ✓ | ✓ | ✓ | ✓ |
126| Collaboration | — | ✓ | ✓ | ✓ |
127| Integrations | — | Limited | Full | Full |
128| API access | — | — | ✓ | ✓ |
129| SSO/SAML | — | — | — | ✓ |
130| Audit logs | — | — | — | ✓ |
131| Custom contract | — | — | — | ✓ |
132 
133**Step 3: Price to value for each persona**
134- Research willingness to pay per segment
135- Set prices that capture value without blocking adoption
136- Consider segment-specific landing pages
137 
138---
139 
140## Freemium vs. Free Trial
141 
142### When to Use Freemium
143 
144**Freemium works when:**
145- Product has viral/network effects
146- Free users provide value (content, data, referrals)
147- Large market where % conversion drives volume
148- Low marginal cost to serve free users
149- Clear feature/usage limits for upgrade trigger
150 
151**Freemium risks:**
152- Free users may never convert
153- Devalues product perception
154- Support costs for non-paying users
155- Harder to raise prices later
156 
157### When to Use Free Trial
158 
159**Free trial works when:**
160- Product needs time to demonstrate value
161- Onboarding/setup investment required
162- B2B with buying committees
163- Higher price points
164- Product is "sticky" once configured
165 
166**Trial best practices:**
167- 7-14 days for simple products
168- 14-30 days for complex products
169- Full access (not feature-limited)
170- Clear countdown and reminders
171- Credit card optional vs. required trade-off
172 
173**Credit card upfront:**
174- Higher trial-to-paid conversion (40-50% vs. 15-25%)
175- Lower trial volume
176- Better qualified leads
177 
178### Hybrid Approaches
179 
180**Freemium + Trial:**
181- Free tier with limited features
182- Trial of premium features
183- Example: Zoom (free 40-min, trial of Pro)
184 
185**Reverse trial:**
186- Start with full access
187- After trial, downgrade to free tier
188- Example: See premium value, live with limitations until ready
189 
190---
191 
192## Enterprise Pricing
193 
194### When to Add Custom Pricing
195 
196Add "Contact Sales" when:
197- Deal sizes exceed $10k+ ARR
198- Customers need custom contracts
199- Implementation/onboarding required
200- Security/compliance requirements
201- Procurement processes involved
202 
203### Enterprise Tier Elements
204 
205**Table stakes:**
206- SSO/SAML
207- Audit logs
208- Admin controls
209- Uptime SLA
210- Security certifications
211 
212**Value-adds:**
213- Dedicated support/success
214- Custom onboarding
215- Training sessions
216- Custom integrations
217- Priority roadmap input
218 
219### Enterprise Pricing Strategies
220 
221**Per-seat at scale:**
222- Volume discounts for large teams
223- Example: $15/user (standard) → $10/user (100+)
224 
225**Platform fee + usage:**
226- Base fee for access
227- Usage-based above thresholds
228- Example: $500/mo base + $0.01 per API call
229 
230**Value-based contracts:**
231- Price tied to customer's revenue/outcomes
232- Example: % of transactions, revenue share
233