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Learn how the good better best pricing model works, with practical tips to structure your tiers, increase revenue, and help customers choose with confidence.
Setting the right price for your product can feel like a shot in the dark. Go too high, and you risk scaring customers away. Go too low, and you leave money on the table. This is where a structured approach can make all the difference. The good better best pricing model offers a clear framework that removes the guesswork by presenting customers with three distinct choices. This strategy isn't just about offering different price points; it's about guiding the customer's decision-making process. By creating an accessible entry-level option, a compelling middle tier, and a premium package, you cater to a wider audience and simplify their path to purchase.
The Good-Better-Best pricing model is exactly what it sounds like: a strategy where you offer three distinct versions of your product or service at different price points. Think of it as the small, medium, and large options at a coffee shop. This approach is popular for a reason—it simplifies the buying process for your customers while giving you a clear path to guide them toward the most valuable option for them (and for you). Instead of presenting a single price or an overwhelming list of choices, you create a structured menu that makes the decision-making process feel less daunting.
The "Good" tier serves as an accessible entry-level option, the "Better" tier offers a balanced mix of features and value, and the "Best" tier provides a premium, all-inclusive experience. This tiered structure isn't just about price; it's about aligning value with specific customer needs. By understanding how to frame these choices, you can effectively manage customer expectations and create a more predictable revenue stream. It’s a powerful way to cater to a wider audience, from the budget-conscious shopper to the power user who wants it all, without complicating your offerings. This clarity helps customers self-select the right plan, which often leads to higher satisfaction and better long-term retention.
At its core, the Good-Better-Best model is about creating clear choices. The "Good" tier is your basic, no-frills offering. It’s designed to be accessible and solve a core problem for the most price-sensitive customers. The "Better" tier is the middle ground, adding more features and value for a moderate price increase. This is often the option you want most customers to choose. Finally, the "Best" tier is your premium package. It includes all the bells and whistles, targeting customers who want the most comprehensive solution and are willing to pay for it. Each level is carefully designed to appeal to a different customer segment, ensuring you have an attractive offer for everyone.
This model works so well because it taps into some fundamental aspects of human psychology. Many customers are guided by the "Goldilocks Principle," where they instinctively avoid extremes and gravitate toward the middle option because it feels "just right." The "Better" tier often becomes the most popular choice for this reason. Furthermore, the "Best" option acts as a price anchor, making the "Better" tier seem like a fantastic deal in comparison. This phenomenon, known as the decoy effect, can gently nudge customers to spend more than they might have initially planned. By giving customers a sense of control and a clear framework for their decision, you reduce choice paralysis and can even increase satisfaction with their purchase.
The magic of the Good-Better-Best model lies in its blend of clear product differentiation and smart customer psychology. It’s not just about offering three different prices; it’s about creating a structured path that helps customers choose the best option for them while also guiding them toward higher-value purchases. By understanding how these elements work together, you can build a pricing structure that feels fair to your customers and is profitable for your business. Let's break down the mechanics behind this effective strategy.
At its core, this strategy works because it presents clear, distinct options. Each tier is carefully designed to meet different customer needs and budgets. The "Good" tier serves as the entry point, offering basic functionality for price-sensitive customers. The "Better" tier adds more valuable features, appealing to the majority of your market who want a balance of price and performance. Finally, the "Best" tier is your premium offering, packed with all the bells and whistles for customers who want the ultimate solution and are willing to pay for it. The key is to make the jump in value between tiers obvious and compelling.
This model simplifies the buying process by preventing decision paralysis. Instead of facing a dozen confusing options, customers see three clear choices. The strategy uses what experts call "fence attributes"—specific features that are only available in higher tiers—to draw a clear line between each level. Psychologically, the "Best" tier acts as a price anchor, making the "Better" option seem like a fantastic deal in comparison. This phenomenon, known as the compromise effect, often makes the middle tier the most popular choice, as customers feel they're getting great value without overspending.
Ultimately, the Good-Better-Best model is designed to increase your bottom line. By offering a premium "Best" option, you can effectively raise your average revenue per customer and improve profit margins. Even if only a small percentage of customers choose the top tier, its presence encourages others to move up from "Good" to "Better," lifting your overall revenue. This strategy helps you capture more value from your entire customer base—from the budget-conscious buyer to the power user who needs it all. It’s a structured way to upsell that feels natural and helpful to the customer.
Adopting a tiered pricing strategy isn't just about offering different price points; it's a strategic move that can fundamentally change how customers perceive your value and how your business grows. By presenting options, you empower customers to choose the best fit for their needs and budget, which often leads to higher revenue and greater satisfaction. This model works because it taps into key aspects of consumer psychology, guiding customers toward a decision that feels right for them while also aligning with your business goals. Let's look at the specific advantages this approach brings to the table.
One of the most immediate benefits of this model is its ability to raise your average order value (AOV). The "Best" tier acts as a price anchor, making the mid-range "Better" option seem like a fantastic deal in comparison. Most customers won't choose the most expensive package, but its presence makes them more willing to spend more than they would have on the basic "Good" option. This psychological framing gently encourages customers to upgrade, which can directly increase the average revenue per customer and improve profit margins without aggressive sales tactics.
A single price point can be limiting, potentially alienating customers at both ends of the budget spectrum. The Good-Better-Best model solves this by creating entry points for different types of buyers. The "Good" tier can attract price-sensitive customers who might otherwise not purchase, while the "Best" tier caters to those who want premium features and are willing to pay for them. This strategy allows you to cater to a broad customer base with varied needs and financial constraints. By segmenting your offerings, you ensure that you have a compelling solution for a wider slice of the market, from startups on a tight budget to established enterprises seeking a comprehensive solution.
When customers feel they have a choice, they feel more in control of their purchasing decision. This sense of autonomy is a powerful driver of satisfaction. Instead of being presented with a take-it-or-leave-it price, customers can evaluate the options and select the one that best aligns with their specific needs and what they can afford. This process makes them feel like they’ve made a smart, informed choice, which reduces buyer's remorse and builds trust in your brand. Customers appreciate this model because it gives them clear choices based on their unique requirements, leading to a more positive overall experience.
Have you ever been overwhelmed by too many options? This "analysis paralysis" can cause potential customers to abandon a purchase altogether. The Good-Better-Best model provides structure and clarity, presenting just three distinct choices. This framework makes it easy for customers to compare features and understand the value they get at each level. It effectively simplifies the customer's decision-making process by removing the pressure of a single price point and offering clear value propositions. By guiding them through a straightforward comparison, you make the path to purchase smoother and faster, which can significantly improve your conversion rates.
Setting up your pricing tiers is more of an art than a science, but there are clear principles that can guide you. The goal is to create distinct options that cater to different customer needs and budgets, making it easy for them to see the value at each level. A well-structured set of tiers doesn't just present prices; it tells a story about the value you provide and gently guides customers to the solution that’s right for them. Let's walk through how to build each tier effectively.
Think of your "Good" tier as your welcome mat. This is your most basic, entry-level option designed to have the lowest barrier to entry. It should include the core features necessary to solve a customer's primary problem but not much else. The price point should be accessible, attracting a wide audience that might be hesitant to commit to a higher-priced plan. By keeping it simple, you create a clear starting point and a natural reason for customers to upgrade as their needs grow. This tier is your foot in the door, establishing a relationship and setting the stage for future value.
This is the tier you expect most of your customers to choose. The "Better" option should feel like the sweet spot—a significant upgrade from the "Good" tier without the premium price tag of the "Best" one. To make it compelling, add features that solve common pain points or offer a more complete solution. This could include things like enhanced customer support, more automations, or higher usage limits. The key is to demonstrate a clear increase in value that justifies the higher price. This tier should represent the ideal balance of features and cost, making it the most logical and popular choice for your target customer.
Your "Best" tier is the all-inclusive, top-of-the-line package. It’s designed for your most demanding customers—those who want every feature and the highest level of service you offer. This premium option should include exclusive benefits, such as dedicated support, one-on-one consulting, or advanced capabilities not available in other tiers. While it will be your most expensive plan, it serves a dual purpose. It caters to the top segment of your market and also acts as a value anchor, making your "Better" tier seem even more reasonably priced in comparison. Don't worry if only a small percentage of customers choose it; its presence is a critical part of the overall strategy.
How you price each tier is just as important as the features within them. The price gaps between "Good," "Better," and "Best" should feel logical and intentional. You want the step up to the next tier to feel like a small, justifiable investment for the added value, not a massive leap. When customers can clearly see why one tier costs more than another, the decision becomes simpler. You can find more financial strategies and insights on the HubiFi Blog. Clearly name your packages and present the features in a way that makes comparison easy, guiding customers to confidently select the plan that best fits their needs.
Once you’ve structured your pricing, the next critical step is showing customers why it makes sense. How you present your tiers can be the difference between a confident purchase and a confused exit. Your goal is to make the choice feel easy and intuitive. It’s not just about listing features; it’s about telling a clear story about the value each tier provides. When customers understand what they’re getting and why it’s worth the price, they’re more likely to choose the plan that’s truly right for them—and for your bottom line.
The most important part of communicating value is clarity. Customers need to see the differences between your tiers at a glance. If the benefits of upgrading are vague, they’ll likely stick with the cheapest option or walk away entirely, feeling like you’re asking them to pay more for nothing.
Create a straightforward list of features for each tier, highlighting what’s added as they move up. Use simple, benefit-focused language. For example, instead of just listing "ASC 606 Compliance," you could say "Automated ASC 606 compliance to pass audits with ease." This helps customers connect the feature to a tangible outcome. Check out HubiFi's pricing information to see how features can be laid out to make sense for different business needs.
People process visual information much faster than text. A well-designed pricing page uses visuals to guide customers through their options without overwhelming them. The most effective tool for this is a side-by-side comparison chart. This format allows customers to easily scan the features and see the distinctions between your Good, Better, and Best offerings.
Use checkmarks or icons to indicate which features are included in each plan. To gently guide their decision, you can visually emphasize your target tier—usually the "Better" option—with a subtle border, a different color, or a "Most Popular" banner. This social proof reassures customers that they’re making a solid choice. For more ideas on presenting data and information clearly, you can find great examples in our HubiFi blog.
The names you give your tiers matter more than you might think. Generic labels like "Basic," "Pro," and "Premium" work, but you can do better. Your tier names are a chance to reinforce your brand and help customers see themselves in your offerings. Think about who each tier is for. Names like "Starter," "Growth," and "Scale" tell a story about the customer's journey.
Creative and descriptive names can make your packages more appealing and memorable. The goal is to create names that are both functional and engaging, helping customers quickly identify the best fit. If you want to see how a tailored solution works, you can always schedule a demo to walk through the options and find the right level of service for your business.
The Good-Better-Best model looks straightforward on the surface, but a few common missteps can prevent it from working effectively. When you’re setting up your tiers, you’re not just picking prices; you’re designing a customer journey. A poorly structured model can confuse buyers, hurt your profits, and fail to capture the revenue you deserve. The goal is to make the choice clear and compelling for your customers while ensuring the strategy is profitable for your business.
Fortunately, these mistakes are easy to sidestep once you know what to look for. By paying close attention to how you structure your entry-level offer, price your upgrades, and communicate value, you can build a pricing page that works for you and your customers. Let’s walk through the four most common pitfalls and how you can steer clear of them.
It’s tempting to pack your lowest-priced tier with features to attract as many customers as possible. The problem? When the "Good" option is too appealing, it can cannibalize sales from your more profitable "Better" and "Best" tiers. If customers get almost everything they need from the cheapest plan, they have little incentive to upgrade. This undermines the entire strategy, leaving you with a high volume of low-margin sales. Your entry-level tier should solve a core problem and offer a taste of what’s possible, but it must leave customers with a clear reason to consider a higher-tier investment.
The price difference between your tiers needs to be significant enough to signal a real increase in value. If you price your "Better" option just slightly higher than your "Good" option, customers may question if the extra features are worth the cost. Small price gaps can make the upgrade feel insignificant, pushing customers to stick with the lower tier. The key is to align each price jump with a tangible and desirable leap in benefits. This reinforces the idea that they are getting a lot more for their money, making the decision to upgrade feel like a smart and logical choice.
Pricing your products in a vacuum is a recipe for failure. Without understanding the competitive landscape and your customers' willingness to pay, you’re essentially guessing. Thorough market research helps you benchmark your offerings against competitors and understand what your target audience truly values. This insight is critical for setting price points that are both competitive and profitable. Neglecting this step can lead to tiers that are misaligned with market expectations, resulting in poor sales performance and leaving money on the table. Your data should guide your pricing decisions.
You might have the perfect set of features for each tier, but if customers can't easily see the difference, they won't see the value in upgrading. Your pricing page should clearly and concisely explain what customers get with each option. Use simple language, checklists, or visual comparisons to highlight the additional benefits of the "Better" and "Best" tiers. If the value proposition isn't immediately obvious, customers may feel you’re asking them to pay more for minimal gain. Make it effortless for them to understand why a higher tier is the right choice for their needs.
Once you’ve structured your Good-Better-Best model, the work isn’t over. Think of your launch as the starting line, not the finish. To make sure your pricing strategy is actually working for your business, you need to keep a close eye on the numbers. Tracking the right financial metrics will tell you what’s resonating with customers, which tiers are most profitable, and when it’s time to make adjustments. Without this data, you’re essentially flying blind, making decisions based on gut feelings rather than concrete evidence. This is especially true for high-volume businesses where small miscalculations can have a big impact on the bottom line.
Monitoring performance helps you answer critical questions: Is the "Good" tier converting well but cannibalizing sales from the more profitable "Better" tier? Is the "Best" tier priced too high, or is its value not being communicated effectively? The right data provides the clarity you need. By focusing on a few key performance indicators (KPIs), you can get a clear picture of your pricing model's health and find opportunities for optimization. Let's walk through the four most important metrics you should be tracking to ensure your pricing strategy supports sustainable growth.
First up are sales and conversion rates, broken down by each pricing tier. It’s not enough to know your total sales; you need to see which packages are driving that revenue. Tracking conversions for each tier shows you which option is most compelling to new customers. For example, you might find that 70% of new customers choose your "Good" tier. This could mean it’s perfectly priced, or it could be a sign that it’s too good, preventing upsells. As one guide on financial metrics points out, sales growth is a key measure of profitability. Analyzing this data by tier gives you a granular view of what customers value most and helps you fine-tune your offerings.
Customer Lifetime Value (CLV) tells you the total amount of revenue you can expect from a single customer over the course of your business relationship. This is one of the most important financial key performance indicators because it shifts your focus from short-term sales to long-term profitability. When you calculate CLV for each pricing tier, you can see which customer segments are the most valuable over time. You might discover that customers who start on your "Better" tier have a significantly higher CLV than those on the "Good" tier, making them a more valuable audience to target in your marketing efforts. This insight is crucial for making strategic decisions about where to invest your resources.
Revenue is great, but profit is what keeps the lights on. That’s why you need to analyze the profit margin for each of your tiers. The "Best" tier will likely have the highest price, but does it also have the highest profit margin after accounting for its costs? Sometimes, the features or services included in a premium tier can be expensive to deliver, cutting into its profitability. Understanding the financial health of each tier helps you ensure your pricing model is sustainable. This data allows you to see which tiers are your true cash cows and which might need a price adjustment or a change in features to improve their contribution to your bottom line.
Finally, you need to know how much it costs to acquire a new customer, or your Customer Acquisition Cost (CAC). If you can, try to segment this metric by the tier a customer first chooses. This helps you understand the efficiency of your marketing spend. For example, are you spending a lot on ads to attract "Best" tier customers, only for them to choose the "Good" tier? A high CAC paired with a low CLV is a recipe for trouble. Evaluating the relevance of your pricing strategy requires this kind of feedback. By comparing CAC to CLV for each tier, you can ensure you’re building a profitable and sustainable growth model.
Launching a Good-Better-Best pricing model is just the beginning. The real magic happens when you treat it as a living part of your business strategy. It’s not about setting your prices and walking away; it’s about continuously listening to your customers and your data to refine your approach. This cycle of testing, monitoring, and adjusting ensures your pricing stays relevant, competitive, and profitable.
Think of it as a conversation with your market. Your initial tiers are the opening line, but the customer's response—what they buy, what they ignore, and what they ask for—is what guides the discussion. Having a clear view of your financial data is crucial here. When you can easily see how each tier performs and impacts your bottom line, you can make smart, proactive changes instead of reactive guesses. This iterative process is what turns a good pricing strategy into a great one.
Once you’ve structured your tiers, the next step is to test them in the real world. A key part of this is figuring out your "fence" features. As the Harvard Business Review explains, these are the specific features that prevent existing customers from downgrading to a cheaper option. You need to create clear, compelling reasons for customers to choose the "Better" or "Best" plans. You can use A/B testing on your pricing page to experiment with different feature combinations, price points, and even the names of your tiers to see what resonates most with your audience. The goal is to find the sweet spot where each tier offers undeniable value for its price.
Your pricing strategy shouldn't operate in a vacuum. You need to keep a close eye on its performance by tracking key metrics and gathering feedback. Are most new customers flocking to the "Good" tier and staying there? Is the "Best" tier getting ignored? This is where your data becomes your most valuable asset. By monitoring sales distribution across tiers, conversion rates, and customer lifetime value, you can get a clear picture of what's working. As experts note, customer comments and market trends provide essential information for fine-tuning your strategy. Having access to real-time analytics helps you spot these trends as they happen.
Markets shift, competitors evolve, and customer needs change. Your pricing needs to be flexible enough to adapt. A successful strategy is never static; it evolves based on market signals and business goals. Set regular intervals—quarterly or semi-annually—to formally review your pricing structure. Look for signs that an adjustment is needed, such as slowing sales for a particular tier, consistent feedback about a missing feature, or changes in your operational costs. If you’re struggling to get the visibility needed to make these calls, you can always schedule a consultation to see how integrated data can clarify your financial picture and empower strategic decisions.
The Good-Better-Best model is incredibly versatile, but it truly shines in specific industries where customer needs and budgets vary widely. By offering tiered choices, businesses in these sectors can effectively capture a larger share of the market without alienating potential buyers. It’s a strategic way to meet customers exactly where they are.
For Software-as-a-Service (SaaS) companies, this pricing model is practically standard. It allows you to serve a diverse customer base, from solo entrepreneurs who need basic functionality to large enterprises requiring advanced features and support. The "Good" tier can act as an entry point for new users, while the "Better" and "Best" tiers provide clear upgrade paths as their needs grow. This structure not only makes your product accessible but also builds a natural ladder for increasing customer lifetime value. It’s an effective way to cater to everyone, from the budget-conscious to those seeking premium, all-inclusive solutions.
Service-based businesses, from marketing agencies to home repair companies, can also see huge benefits. Think of an HVAC company offering different maintenance agreements: a "Good" plan for a basic annual check-up, a "Better" one with priority service and discounts, and a "Best" package that includes emergency calls and equipment replacement. This approach simplifies the sales process by presenting clear, value-packed options. It helps manage client expectations and gives them the power to choose the level of service that fits their comfort level and budget, making them feel more in control of their purchasing decision.
If you run a subscription box, a media site, or a membership platform, the Good-Better-Best model is a fantastic tool for understanding what your audience truly values. By analyzing which tiers are most popular, you gain direct insight into the features people are willing to pay for. This data is invaluable for refining your offerings and ensuring your business model remains profitable and aligned with customer demand. It also creates opportunities to upsell subscribers from the "Good" tier as you introduce new, compelling features to the "Better" and "Best" options, which is a core part of a successful revenue growth strategy.
This model isn't just for services or software; it works wonders for physical goods, too. Offering a premium "Best" version of a product can create a "halo effect," making the entire brand appear more high-end and desirable. A famous example is how Patrón's ultra-premium tequilas actually increased sales of their less expensive bottles. The high-end option acts as an anchor that elevates the perceived value of the "Good" and "Better" products. This strategy allows you to capture sales from budget shoppers while also appealing to consumers who want the absolute best option available.
What if most of my customers are choosing the "Good" tier? This is a common concern, and it's usually a sign that the value jump to the "Better" tier isn't clear or compelling enough. Instead of taking features away from your entry-level option, focus on strengthening your middle tier. Ask yourself if the additional features in the "Better" plan solve a significant pain point or offer a tangible return on investment. If customers don't see a strong reason to upgrade, they'll happily stay where they are. This is a great opportunity to talk to your customers and find out what would make the next level a no-brainer for them.
How do I figure out the right price difference between the tiers? There isn't a magic formula, but the goal is to make the price increase feel logical and justified by the added value. The jump from "Good" to "Better" should feel like a smart investment, not a huge leap. A good rule of thumb is to ensure the price of your "Better" tier is high enough to be profitable but low enough to seem like a great deal compared to the "Best" tier. The key is to anchor the price to the value you're providing, ensuring customers feel they are getting a fair deal for the problems you're solving at each level.
Is it okay to have more or fewer than three tiers? While three tiers is a psychological sweet spot that leverages the "compromise effect," it's not a rigid rule. The principle is what matters. For very simple products, a two-tier "Good-Better" model can work perfectly well. However, once you go beyond four tiers, you risk reintroducing the choice paralysis you were trying to avoid. The goal is to provide clear, distinct options, and for most businesses, three is the ideal number to do that without overwhelming the customer.
How do I decide which features belong in which tier? Start by mapping out your customers' needs. Your "Good" tier should solve the most fundamental problem your product addresses—it's the core solution. The "Better" tier should include features that make that solution more efficient, automated, or powerful, targeting the needs of a typical user. Reserve your "Best" tier for advanced features, premium support, or services that cater to your power users or largest customers. Think of it as a journey: the "Good" tier gets them started, and the higher tiers help them grow.
How often should I revisit my pricing strategy? Your pricing should not be a "set it and forget it" decision. The market, your competitors, and your customers' needs are always changing. It's a good practice to formally review your pricing structure at least once a year. However, you should always be listening for signals that an adjustment might be needed sooner. This could be consistent customer feedback, a shift in conversion rates for a specific tier, or a major change from a competitor. Staying agile allows you to ensure your pricing remains both competitive and profitable.
Former Root, EVP of Finance/Data at multiple FinTech startups
Jason Kyle Berwanger: An accomplished two-time entrepreneur, polyglot in finance, data & tech with 15 years of expertise. Builder, practitioner, leader—pioneering multiple ERP implementations and data solutions. Catalyst behind a 6% gross margin improvement with a sub-90-day IPO at Root insurance, powered by his vision & platform. Having held virtually every role from accountant to finance systems to finance exec, he brings a rare and noteworthy perspective in rethinking the finance tooling landscape.
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