NOTQIN — OT Track

Pricing Strategy for Tech Products

8 min read

Pricing Strategy for Tech Products

Pricing is one of the highest-leverage decisions in a startup. A 1% improvement in price yields an average 11% profit improvement (McKinsey). Most founders underprice. This note covers the science and art of tech product pricing.

The 3 Pricing Approaches

1. Cost-Plus Pricing (avoid for SaaS)

Price = Cost × (1 + Markup %)

  • Used in manufacturing and commodity goods
  • Ignores customer value and competition
  • For SaaS: your marginal cost is near zero → this approach breaks down
  • Use case: hardware components of NOTQIN (sensors, cables)

2. Competitive Pricing (use cautiously)

Price based on what competitors charge.

  • Risk: commoditizes your product, leads to race to bottom
  • Useful as a sanity check, not as a primary pricing methodology
  • For Morocco: limited direct comparables for most of your products → you define the category

Price based on the value delivered to the customer, not your cost.

  • Most profitable approach for differentiated software
  • Requires deep understanding of customer economics
  • Formula: Your Price ≤ Economic Value – Differentiation Premium

The value equation:

Customer's Next-Best Alternative (cost or value)
        +
Differentiation Value (what you do better)
        =
Economic Value to Customer (EVC)

Your Price should be EVC × (30–60%)
(leave enough value for the customer to justify switching)

The Pricing Ladder — From Free to Enterprise

Every product portfolio should have a clear pricing ladder that guides customers from entry to expansion:

FREE / FREEMIUM
    ↓ (conversion trigger: hit a limit, need a feature)
SELF-SERVE STARTER
    ↓ (conversion trigger: team growth, more data, advanced features)
PRO / GROWTH
    ↓ (conversion trigger: multi-user, compliance, integrations, support SLA)
ENTERPRISE / CUSTOM
    ↓ (expansion: more seats, more usage, adjacent modules)

Applied to SijilPharma:

FREE TRIAL (30 days, full features)
    → Starter: MAD 199/mo (1 user, basic inventory + prescriptions)
    → Pro: MAD 399/mo (3 users, + AI demand forecast + BI reports)
    → Enterprise: Custom (multi-branch, API access, dedicated support, SLA)

The anchor price: always show the highest plan first on your pricing page. The Enterprise price makes the Pro price feel reasonable. The Pro price makes Starter feel like a deal.

Value Metric — The Core of Usage-Based Pricing

The value metric is the unit by which customers pay. It should:

  1. Scale naturally with the value they receive
  2. Be easy to understand and measure
  3. Grow as the customer’s business grows

Choosing the right value metric:

ProductBad Value MetricGood Value Metric
SijilPharmaNumber of users (small pharmacies = 1–2 users)Prescriptions processed/month OR monthly active patients
SijiLabNumber of usersLab tests processed/month
NOTQIN IEIANumber of usersMachines monitored
DigiTPME DiagnosticNumber of usersDiagnostics completed

Why this matters: if your value metric scales with customer success, your revenue scales with their success. Customers who get more value pay more automatically — this is the engine of NRR > 100%.

Willingness to Pay (WTP) Research

Never guess WTP. Measure it.

Van Westendorp Price Sensitivity Meter (PSM)

Four survey questions:

  1. At what price would this product be so cheap you’d question its quality? (Too cheap)
  2. At what price would this product be a bargain? (Cheap / good value)
  3. At what price would this product be getting expensive but still acceptable? (Expensive)
  4. At what price would this product be too expensive to consider? (Too expensive)

Plot responses → find the Acceptable Price Range (between “too cheap” and “too expensive”) and the Optimal Price Point (where fewest people say too cheap OR too expensive).

Jobs-To-Be-Done Pricing Research

Interview existing or potential users:

  • “What would happen to your business if you couldn’t use this product anymore?”
  • “What’s the cost to your business of the problem this solves?”
  • “What are you currently spending to solve this problem?”
  • “What would you expect to pay for a solution like this?”

Willingness to Pay for Your Products (estimated from market context)

ProductSegmentWTP RangeRationale
SijilPharmaIndependent pharmacy, CasablancaMAD 150–500/moSaves ~3 hours/day of manual work × MAD 30/hr × 22 days = MAD 2,000 value → 25% of value
SijiLabMedical lab, 10–50 tests/dayMAD 500–2,000/moAccreditation requirement + billing automation value
NOTQIN IEIATextile factory, 100+ loomsMAD 5,000–20,000/mo3–10% energy savings on MAD 500,000/mo bill = MAD 15–50k value
DigiTPME DiagnosticSME owner, 10–50 employeesFree → MAD 2,000 one-timeGovernment program may subsidize → lower price sensitivity

Packaging — What Goes in Each Tier

The good/better/best framework:

  • Good (Starter): core value prop only. Must solve the primary job to be done.
  • Better (Pro): core + productivity multipliers. Saves time, adds intelligence.
  • Best (Enterprise): Pro + compliance, security, integrations, SLA, multi-user governance.

Feature placement principles:

  1. Never gatekeep features that make the product work (put in all tiers)
  2. Gatekeep features that drive expansion (team features, advanced analytics)
  3. Enterprise = compliance + security + support, NOT just “more features”

Common mistakes:

  • ❌ Putting core features behind enterprise wall (drives churn, not expansion)
  • ❌ Too many tiers (cognitive overload, analysis paralysis)
  • ❌ Pricing tiers that don’t correspond to actual customer segments
  • ❌ No clear upgrade trigger (customer never feels the need to upgrade)

Annual vs Monthly Pricing

Monthly: lower commitment, easier to start, lower churn friction, lower ACV. Annual: better cash flow for you, lower CAC (reduces involuntary churn), discount justification.

Standard: offer ~2 months free on annual plan (17% discount).

  • Monthly: MAD 199/mo
  • Annual: MAD 199 × 10 = MAD 1,990/year (pay monthly equivalent = MAD 166/mo)

Recommendation for your products:

  • Self-serve SMB (SijilPharma, SijiLab small): offer both, push annual
  • Enterprise (NOTQIN, SijiLab hospital): annual only, quarterly invoicing

Pricing Psychology

The Decoy Effect

When you add a “decoy” option, it makes the target option look more attractive.

Starter: MAD 199/mo ─── (looks affordable)
Pro:     MAD 349/mo ─── (slightly better than starter for much more value)
Business: MAD 999/mo ─── (decoy: expensive, makes Pro look cheap)
Enterprise: Custom

Pro becomes the “obvious” choice. Business exists to anchor the relative value of Pro.

Anchoring

The first number seen sets the reference point for all subsequent evaluation.

  • Show highest plan first → makes lower plans feel affordable
  • Show annual pricing first (higher number) before monthly → monthly feels like a deal

Charm Pricing

MAD 199 feels significantly cheaper than MAD 200 (left-digit effect).

  • Use 9s or 7s: MAD 199, MAD 399, MAD 1,990

The Paradox of Choice

Too many options → paralysis. 3 tiers = optimal for most SaaS. Never more than 5.

Loss Aversion (Kahneman)

Framing a price in terms of what the customer loses by not buying is more powerful than gain framing.

  • “You’re losing MAD 3,000/month in inefficiencies” > “You’ll save MAD 3,000/month”

Enterprise Pricing — Different Game

Enterprise deals (> MAD 50,000/year) require a different approach:

  1. No public pricing: enterprise pricing is custom, negotiated
  2. ROI-based selling: your price is justified by quantified ROI (cost savings, revenue generated, risk avoided)
  3. Multi-year contracts: offer 15–20% discount for 2–3 year commitments
  4. Professional services add-on: implementation, training, customization billed separately
  5. Champion-based: find an internal champion who benefits from your product, help them build the business case for their procurement/IT committee

ROI Calculator for NOTQIN IEIA Enterprise:

Factory energy cost: MAD 500,000/month
Expected energy savings (5%): MAD 25,000/month
CBAM fine avoidance (estimated): MAD 15,000/year = MAD 1,250/month
Total monthly value: MAD 26,250/month
Annual value: MAD 315,000

NOTQIN IEIA price: MAD 15,000/month = MAD 180,000/year
ROI: (315,000 – 180,000) / 180,000 = 75% first-year ROI
Payback: 180,000 / 26,250 = 6.9 months

This is the document you put in front of the factory director. The price becomes a question of ROI, not cost.

Pricing for the Moroccan Market — Specific Considerations

Price sensitivity is high among Moroccan SMEs:

  • Government programs (DigiTPME, ADEREE subsidies) can fund a portion → price sensitivity drops
  • Emphasize MAD pricing (not EUR/USD) for local credibility
  • Installment/quarterly payment options reduce psychological barrier

Reference benchmarks:

  • ERP software (SAP Business One): MAD 50,000–200,000 implementation + MAD 5,000–15,000/mo
  • Basic accounting software (SAGE): MAD 2,000–5,000/mo
  • Generic CRM: MAD 500–2,000/mo
  • Industrial energy management: No established local benchmark → you set the price

Price signaling:

  • Too cheap in B2B = “low quality / not serious”
  • For industrial clients: MAD 5,000+/month signals you’re enterprise-grade
  • For SMEs: MAD 200–500/month is in the “I can justify this” range

When to Change Your Price

TriggerAction
Conversion rate > 30% on paid tierYou’re underpriced — test 20% increase
Churning customers citing “too expensive” > 5% of churnFeature/value mismatch (rarely price itself)
Enterprise clients negotiating < 10%Price is well-calibrated
Enterprise clients negotiating > 30%You’re anchoring too high
NPS < 30 on paid tierFix product before raising price
New competitor at lower priceDon’t race to bottom — differentiate

Price increase playbook:

  1. Grandfather existing customers (they keep old price) — builds loyalty
  2. New customers get new price immediately
  3. Offer 12-month lock-in at old price before increase — generates cash + goodwill
  4. Communicate the value you’ve added since last pricing

See Also

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