Tiered pricing
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Offering multiple pricing plans at different price points, each with more features or higher limits. The classic Good/Better/Best model.
Tiered pricing packages your product into distinct plans, typically three: a starter plan, a professional plan, and an enterprise plan. Each tier costs more and includes more features, higher usage limits, or better support. The pricing page shows them side by side so buyers can self-select.
Three tiers works because of the anchoring effect. The expensive tier makes the middle tier look reasonable. The cheap tier validates that the middle tier offers real additional value. Most buyers choose the middle tier, which is exactly what you want. This is the "Goldilocks" pricing strategy.
The hard part is deciding what goes in each tier. Put too much in the free or starter tier and nobody upgrades. Put too little and nobody starts. The best approach: give the starter tier enough to be genuinely useful, gate team and collaboration features in the professional tier, and reserve security, compliance, and admin controls for enterprise.
Examples
A developer platform with three tiers.
Vercel offers Hobby (free), Pro ($20/user/month), and Enterprise (custom pricing). Hobby works for personal projects. Pro adds team features and higher limits. Enterprise adds SSO, SLAs, and dedicated support. Most startups start on Hobby and upgrade to Pro within months.
Tier design drives expansion.
GitHub offers Free, Team ($4/user/month), and Enterprise ($21/user/month). The Free tier includes unlimited public repos. Team adds code owners and protected branches. Enterprise adds SAML SSO and audit logs. Security requirements push companies to Enterprise.
A startup prices its first three tiers.
A monitoring tool launches with Starter ($29/month), Growth ($99/month), and Scale ($299/month). Starter: 5 monitors, 1-minute checks. Growth: 50 monitors, 30-second checks, Slack alerts. Scale: unlimited monitors, 10-second checks, PagerDuty integration, SLA.
In practice
Read more on the blog
Frequently asked questions
How many pricing tiers should I have?
Three is the standard. Fewer than three and buyers have no reference point. More than four and decision fatigue sets in. Some companies add a fourth "Enterprise" tier with custom pricing, but the self-serve page should show no more than three with visible prices.
How do I decide what features go in each tier?
Map features to buyer segments. Individual developers get the starter tier. Small teams get the professional tier. Large organizations get enterprise. Features that only matter at scale (SSO, audit logs, SLAs, advanced permissions) belong in higher tiers. Features every user needs should be in every tier.
Related terms
How you bundle features into plans and tiers. Which features go in which plan at which price. The architecture of your pricing page.
Restricting specific features to paid plans. The mechanism that turns free users into paying customers.
Custom pricing for large organizations, typically requiring a sales conversation. The "Contact us" plan on your pricing page.
A buying experience where customers sign up, configure, and pay without talking to a salesperson. Credit card in, product out.
A pricing model where the base product is free and revenue comes from paid upgrades. The dominant model in developer tools.
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