The “G/B/B” pricing framework

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How many pricing plans do you have for your product?

More?

From what I’ve seen, the 3 tiered pricing is the most common, and probably the most effective as well.

I’m reading a book these days called “Monetizing Innovation” and it’s all about how you set the pricing for your products.

It talks about the G/B/B pricing framework, where your 3 tiers are essentially framed as - Good, Better, Best.

You’ve seen this on most pricing pages, both for software products as well as for information products. They have a basic plan, a mid level plan and a high end plan.

I use it for most of my products myself. You can check it out here, here and here.

And this works because you steer customers to a choice based on whether they are price conscious, quality conscious, or somewhere in between.

Most people don’t like to be on the extremes 😊

Loved this quote from the book -

It’s all about the Choice Architecture

“Choice architecture” is a concept from behaviour science where the way the choices are presented to decision makers, can (and does) influence the choices that they end up making. (Wiki link for choice architecture)

So in this context -

If you have just 1 price for your product, the only choice a potential customer has is either to buy or skip your product.

But once you have a 3 tiered pricing structure, you change the choice architecture.

Now the customer has 4 choices -

Buy the “good” version

Buy the “better” version

Buy the “best” version

Not buy and skip altogether

In their brain, now they have more choices to buy, and theoretically a higher probability that they will buy something.

So by giving more choices, you increase your chances of making a sale.

But don’t overdo it

It’s easy to overwhelm the user if you offer too many choices.

That’s why I think 2-3 pricing options is optimal, more than 3 is too much. Anything more than that can confuse the audience.

And a confused mind, never buys!

How to setup your own G/B/B ?

There are people in your audience who can only afford a certain price point.

But there are also people in your audience, who can afford to pay a lot more, who want to pay you a lot more in exchange for a premium experience.

This is what the “Best” or the most expensive plan should be used for.

You can give a more premium experience by offering more personalisation or customisations.

While the “good” or base plans usually offer more cookie cutter or “Do it Yourself” experience.

And the “better” or middle plans are mix of offerings from the 2 extreme plans.

You can even bundle products and services to add more value to the higher plans.

The idea is that your customers is looking for an outcome, there are many ways you can deliver their outcome.

The more involvement from your end, the higher fee you can charge.

Examples

Let’s look at a couple of examples of G/B/B in the wild.

This is the pricing page of the email marketing platform ConvertKit -

On the higher plans, CK offers priority support.

And they even help you migrate your data from another tool.

So if you get the middle or higher plans, a representative from CK will copy and paste all your data from Mailchimp or ActiveCampaign or any other email marketing tool.

And set everything up in ConvertKit.

That’s a premium experience, worth paying more for.

Especially if you have hundreds of thousands of subscribers and complex automations and sequences.

While on the base plan, you have to do all of that yourself.

This framework can also be applied to info products and service businesses, not just SaaS tools.

Here’s an example from Arvid Kahl’s Twitter course - Find Your Following.

You can either get the “essentials” or the “deep dive”.

Again, solving the same problem, but charging more from customers who need a more premium experience.

Arvid could have easily added a “best” tier with 1:1 coaching from him and charged a lot more money.

Of course, that’s his preference, he doesn’t have to do it!

Don’t give too much away

1 important thing to be careful of is to not give too much away in your entry level price.

The ideal break up of your 3 tiers should be something like this -

30% customers at the entry level

70% in the “better” and “best” plans

At least 10% customers in the “best” plan

This is the optimum balance to aim for.

Quick Recap -

3 Tiered pricing is also called the G/B/B framework - Good, Better, Best

It works because you change the choice architecture that you present in front of your audience.

You can charge people more for personalisation, customisation and premium features.

Works for Software products, knowledge products as well as agency offerings.

1 Warning - Don’t give too much away in your basic plan.

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Thanks

Ayush 🙏