Department
Value-based pricing, discount engineering, subscription tier design, dynamic-pricing fairness, and the empirical methods that separate price experimentation from guesswork.
10 essays
4 defined terms
The thesis
Pricing decisions move more enterprise value per hour of executive attention than any other lever in a commercial company.
Pricing decisions move more enterprise value per hour of executive attention than any other lever in a commercial company. The literature has known this since at least McKinsey's 1992 1 percent margin paper.
What has changed in the past decade is the operating discipline available: ML-driven dynamic pricing, willingness-to-pay measurement via conjoint and price-sensitivity meters, A/B-test infrastructure that lets pricing changes ship in days rather than quarters. This series covers the methods, the failure modes, and the under-discussed fairness and legal dimensions that often determine whether a pricing change makes it past launch.
Core concepts in this department
Price discrimination is the practice of charging different customers different prices for the same or near-equivalent good, based on willingness to pay. The Pigou taxonomy (first, second, third degree) distinguishes individual customization, self-selection via menu, and segment-level pricing. Legal and reputational constraints govern what is allowable.
SaaS pricing models span seat-based (price per user), usage-based (price per API call, GB, event), tiered feature-gated (Basic/Pro/Enterprise), and hybrid models. Usage-based has dominated new SaaS launches since 2020 because it aligns cost with realized value and reduces seat-counting friction in expansion sales.
Cost-plus pricing sets price as fully-loaded unit cost plus a target margin. It is the dominant approach in regulated utilities, defense contracting, and commodity-adjacent industrials. In margin-compressed environments it produces a death-spiral risk: cost increases trigger price hikes, which reduce volume, which raise allocated unit cost further.
Pricing page information architecture is the discipline of arranging tier count, feature matrix, anchoring devices, and decision aids on the highest-leverage UX surface in a commercial product. The 2-tier vs 3-tier vs 4-tier choice typically swings conversion by 10% to 25% in either direction depending on segment mix.
Essays in this department
Dynamic pricing systems can drift into discrimination without anyone in the team intending it. The audit method is borrowed from credit modeling, adapted for pricing CI/CD, and made boring enough to run every release.
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Murat OvaPrice A/B tests are not, by themselves, illegal. Most of the legal risk lies in how the cohorts are formed, what data is used, and what the team can show a regulator a year later. This is the framework that survives the question.
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Murat OvaLocal-currency presentation moves willingness to pay by 5 to 15% in tested field experiments. The math behind PPP adjustment, the operational complexity, and where the easy framing breaks down for B2B and tax.
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Murat OvaMost teams talk about value-based pricing without operationalizing it. The conjoint and Van Westendorp workflow, the stated-versus-revealed gap, and the cases where it breaks down in practice.
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Murat OvaEach tier is a contract about value, price, and friction. Bad ladders produce churn at the bottom, friction at the top, and trapped value in the middle. The right design takes more rigor than the three-tier default.
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Murat OvaDiscounts can acquire incremental customers or destroy lifetime value, and the difference between the two outcomes is more about who the discount reaches than how deep it goes. A framework for telling them apart.
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Murat OvaAnchoring is the most reliably misapplied finding in behavioral pricing. The effect is real, the magnitude depends on the conditions, and the saturation curve flattens faster than most pricing teams assume.
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Murat OvaBundle pricing is a combinatorial-optimization problem before it is a marketing one. Adams-Yellen gives the formal conditions, and the computational complexity is non-trivial.
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Murat OvaCost-plus pricing survives in industrials and commodities for reasons unrelated to optimality. The honest question is when it is correct, when it triggers a death spiral, and how hybrid models reset the floor.
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Murat OvaThe pricing page is the highest-leverage UX surface in most SaaS products. Treat it as information architecture, and the conversion math reorganizes around plan structure, comparison cognition, and CTA placement.
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Murat Ova