Price like a scientist using value, margin math, and smart freemium

Good pricing blends psychology and arithmetic. Start with value: what would a rational buyer pay given the next best alternative and your edge? If your tool replaces a $50/month service and saves two hours a week, the anchor is higher than $10. But anchors don’t pay the bills unless the math works. Contribution—the money left after variable costs—is the lever that makes or breaks you.

Once you know contribution, breakeven is simple. If fixed costs are $10,000 a month and contribution is $40, you need 250 units to not lose money. Change the price, and contribution changes, which changes the breakeven. A small table that lists a few prices, expected units, and the resulting profit can reveal a likely sweet spot to test. It’s not perfect, it’s a hypothesis generator.

Freemium is a distribution strategy, not charity. Free tiers should either attract users who convert at a healthy rate or attract usage that advertisers or partners will pay for. The test for a clean boundary is this: does the free plan let people succeed on small jobs while paid plans unlock the obvious next step? If free replaces paid indefinitely, you’ve misdrawn the line.

Run pricing as a series of tests with clear guardrails. Pick two prices to A/B, keep the rest of the funnel identical, and measure conversion, revenue, and churn. When you treat pricing like a scientist, you avoid two traps: guessing and copying competitors. You get closer to the right price because you learn fast and adjust.

List the alternatives your buyer would use and estimate a fair value anchor. Subtract variable costs from your target price to get contribution, then divide fixed costs by contribution to see breakeven units. Build a small price‑demand table and choose the most promising price to test first. Draw a freemium boundary that helps users win small and makes upgrading the obvious next step. Put the first test live this week.