How to Price a New Feature Using Value-Based Pricing
A 3-step framework to go from “what should we charge?” to a confident, data-backed price.
When Whitney, a PMM School student, messaged me, she asked a question every marketer eventually faces:
“I’m working on pricing a net-new software feature. Do you have an end-to-end process for value-based pricing — one that goes from research to an actual price?”
A+ question.
Pricing is one of those things that sounds simple until you actually have to do it.
So in this post, let’s walk through the 3-step process I shared with Whitney — the same one I use when helping startups price new features.
Step 1: Understand Customer Perception of Value
Value-based pricing starts with one thing: your customer’s brain.
Before you talk margins or competitors, you need to know how customers perceive value.
That means talking to 5–10 people who already understand and use your product.
Ask them questions like:
“At what price does this feel like a steal?”
“At what price does this feel too cheap to be high quality?”
“At what price does this feel too expensive?”
You’re not trying to get an exact number. You’re bracketing a range of perceived value.
Somewhere between “too cheap” and “too expensive” is where willingness to pay peaks.
Pro tip: Customers who already love your product give the best input. They know its worth, so their instincts anchor your starting range better than cold prospects ever could.
Step 2: Map to Alternatives and Competitors
Once you understand perception, zoom out.
How do similar tools or features price themselves?
You’re not copying. You’re calibrating.
Pricing too low undercuts credibility.
Pricing too high without clear differentiation breaks trust.
Evaluate:
What the market expects
What users are already paying for similar outcomes
How your unique value shifts that comparison
Your goal: find a pricing zone where perceived value and market reality meet.
Step 3: Decide, Test, Iterate
At this point, you’ll have a data-informed range.
Now comes the art: pick a number.
Start slightly higher than your gut tells you.
That gives you room to:
Offer discounts without devaluing
Anchor higher perceived quality
Incentivize annual commitments
Then test it.
Best practices:
Anchor around annual plans. Present the monthly equivalent (“$30/mo”), but clarify it’s billed annually ($360/year). Offer a monthly plan too, but at a premium (e.g. $40/mo).
Use trials strategically. A 7–14 day free trial or credit-based trial helps users experience value before paying.
Adjust regularly. Treat every new feature price as a test. Learn, refine, re-test.
The Big Picture
Value-based pricing is about understanding value through the customer’s eyes, validating against market context, and iterating with confidence.
So next time you’re staring at a pricing slide wondering what to charge, remember:
Talk to users. Compare context. Pick a starting point. Then test, learn, and evolve.
TL;DR
1️⃣ Talk to 5–10 users to gauge perceived value
2️⃣ Map against market and competitor pricing
3️⃣ Pick a starting point, launch high, test, iterate
Enjoyed this read?
Share it with a friend figuring out pricing.
Until next time,
— Henry Wang ✌️