Know Your Pinch Points

No two customers perceive the value of your product the same way. Some might think that it's a pretty good deal given the price, while others might be willing to pay 10 times what you're asking.

Understanding these different groups can help you identify "pinch points" where customers feel emotionally compelled to pay so that they can access key features. There's some guesswork involved here, but it's also a function of knowing how your customers use your product.

For instance, when LinkedIn in 2005 decided to charge for some of its services, the company started by identifying the features that about 90% of customers didn't use regularly.

LinkedIn concluded that its service was worth more to the heavy users than it was to casual ones and so the company hived off the 10% features. Power search and the ability to contact other members became the basis of premium accounts.

Sure enough, the heavy users were willing to pay more. Premium accounts produced $248 million in revenue for LinkedIn over the last four quarters.

Coming up with packages that appeal to different customers will be more profitable for you and allow customers to feel better about their relationship with your company. But beware: you'll need to support the different options going forward or explain to customers why they need to switch to a different plan.