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Over-complicated pricing could kill a sales process.

Y Combinator
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  • Pricing Strategy Recommendation
    • Simple pricing structures are prioritized to avoid stifling the sales process.
    • Complex pricing models are identified as detrimental to sales performance.
    • Committed recurring revenue (monthly or annual) is preferred over usage-based pricing.
    • Rationale for Committed Revenue
      • Revenue is protected during economic downturns or slowdowns until contract renewal.
      • Renewal negotiations can be contested with customers regarding value if market conditions shift.
      • Pure usage-based models face a high risk of immediate revenue collapse during poor performance months.
      • Investors view pure usage-based revenue with significant wariness.
    • Target Metric
      • Organizations should aim for Monthly Recurring Revenue (MRR) or Annual Recurring Revenue (ARR).