A/B testing for pricing: How to experiment with pricing in 2025

Image courtesy ConvertKit

Popular payment processing apps Paddle and Stripe lead the curve on pricing intelligence. Paddle works on a rare Pay-as-You-Go pricing tier which was typically only seen in the Telecommunications space before. 

Image courtesy Paddle

Stripe takes a similar approach. They offer a standard pricing plan based on a slight transaction fee while also offering plans based on ideal customers, volume discounts, country-specific rates, and more.

Image courtesy Stripe

The true masters of price testing, though, seem to be broadband providers. They offer discounts when you join and bundle deals between internet and TV, and there never fails to be a sales rep in your neighborhood talking up a flashy new offer that you need to get before it’s too late.

The downside here? Those bundles are timed offers, and once they’re up, you’re stuck with a tab bigger than your grocery bill—a recent survey from the US News & World Report found that the US monthly broadband bill rose from an average of $77 to $89, and that consumers can expect to continue rising over time.

This is why price matters.

Every pricing decision affects customer loyalty.

And that’s why competitors in the telecommunications industry are always running pricing experiments. 

Pricing is hard.

Doing it right requires an acute understanding of your target customer and the industry you’re playing in. But prices also must bow down to the unavoidable forces of supply and demand.

This might seem obvious if you kept even one eye open during an economics class back in high school. The most important thing to know about supply and demand is that they change—often.

Is price testing legal?

Before we can really dig into the details of A/B testing for pricing, we need to cover a few important things, chief among them the legal and ethical status of price testing.

A/B testing prices is legal—provided you follow local laws and regulations.

Understanding these laws and regulations is key to effective testing. Getting something wrong can expose your business to serious legal consequences. Most of these laws and regulations focus on negative price discrimination—that is, changing the price of a product or service based on location, nationality, gender, or other factors. This is illegal in nearly every market, including the European Union and United States. On the other hand, you’ve also seen and experienced positive price discrimination—think discounts for students, flash sales, and the like. Even personalized pricing, like offering a visitor a discount on a product they’ve got sitting in their cart, falls under this.

That said, while price testing may be legal, it’s also ethically fraught. 

That’s because price testing introduces an element of unfairness to buyers. Even if you’re just testing things, why should customer A get a different price than customer B? And say you finish price testing and have customers paying one monthly fee while others are paying a different one—that’s a minefield in and of itself (not to mention headache-inducing for your customer management team).

Beyond all this, generating enough useful data by A/B price testing can be tricky. If you’re trying to achieve statistical significance with these tests, you could be at it for a while—or you could be stuck with inconclusive data.

For these reasons, it’s better to approach price testing as a way to help you best present the value of your products.

You’re not trying to test your overall pricing strategy, but rather, how you showcase your pricing. 

To TL;DR it—while price testing is legal, it’s ethically tricky. As such, you’re better off testing how you highlight product value…

…and landing pages are the perfect tool to accomplish exactly that.

How does price testing work?

So how, then, does price testing work? How can you A/B test your pricing without having to worry about legal or ethical implications? 

Price testing is about research, deliberation, performance, and evaluation, just like any other A/B test. And just like a scientific experiment, it begins with a thesis and multiple variables that you need to test to find a definitive answer.

But remember: You’re not putting up different prices to see what sticks, you’re testing how you present your product’s value for its relative price.

If that sounds familiar, good! This sort of experimentation is perfectly suited to A/B testing, just like you would with any landing page offer. 

The variables you’ll test for pricing are no different than some of the common elements and features on your A and B variant landing pages. It could be the hero section, the messaging, the CTA, the format, the color scheme, or a host of other creative elements.

There’s a 3-step process to prioritize what you’ll test before you start tinkering with anything. But once you do decide, here are seven effective price testing methods to boost your pricing strategy.

1. Value-based pricing

One of the more popular price testing methods is value-based pricing. In this strategy, you price your product based on what customers think it should be worth.

Without asking them directly, you can discover what that price point is by curating the following data:

• What your target customers pay for similar products.
• Studying demand levels and price sensitivities in your market.
• Identifying your competitive differentiators.
• Communicating the value of those differentiators. 
• Evaluating the value of those differentiators based on market research and client testimonials.

Research, deliberation, performance, evaluation.

When executed correctly, value-based pricing can be incredibly effective for sustaining customer loyalty. While others might look at your pricing and think, “No way! That’s a rip-off,” for the right customer, that price point is secondary to what they’ll experience from their purchase.

• For Mac users, it’s speed, ease of use, better flow, and frontier innovation.
• For Tesla users, it’s sustainable energy, advanced technology, and a luxurious driving experience.
• And for premium coffee brand users, it’s superior taste, ethical sourcing, and a refined lifestyle.

The profit depends on your ability to communicate the value.

Here’s a good example of a travel company A/B testing their call to action to encourage more conversions. 

Going noticed they had a major challenge in converting website visitors to premium plan subscribers. They used our A/B testing feature to improve their call to action (CTA) from “Sign up for free” to “Trial for free.” 

Variant A

Variant B

The result from winning variant (B) was a 104% increase in trial starts! Three words significantly boosted their conversion rates and reached record-breaking organic traffic numbers.

Price testing isn’t just about changing the number. Sometimes, it’s also about changing how price is presented.

2. Competitive pricing

You know that saying, “keep your eyes on your own lane”?

You can forget about that here.

A competitive pricing strategy is when you look left, look right, and set a price that competes on the upper, lower, or middle ground compared to your competitors.

This strategy is most commonly used in highly saturated markets such as fast food, fashion, and retail, where the price can be the difference between a recurring customer over 10+ years or a slew of intermittent shoppers who only visit on special occasions. 

In fact, a study by the e-tailing group concluded that 51% of consumers visit four or more sites before finalizing a purchase and that consumers are highly invested in finding the best deal, especially among commodity products.

Extremely competitive pricing arises when companies care more about gaining market share than they do target profit.

Need a prime example of competitive pricing in action?

Walmart.

Image source

Walmart has mastered the art of competitive pricing by consistently offering lower prices than many of its competitors. Their slogan is “Save Money. Live Better” and walking through stores, you’ll see “everyday low price” signs everywhere.  

It’s a strategy that has been pivotal in establishing their dominance in the retail industry. 

The impact of Walmart’s competitive pricing strategy often forces competitors to lower their prices. This can lead to an overall reduction in prices across the sector, which is great for consumers!  But it becomes a vicious cycle for smaller retailers who struggle to compete with Walmart’s low prices.

Competitive pricing is a strategic approach that can significantly influence market dynamics. However, you need a strong operational foundation. 

Walmart can keep its prices so low thanks to their approach to supply chain management—they’ve refined their systems and processes over 60 years so they work like a well-oiled machine.

You don’t want to compete on price if it’s going to cost you more than it gains. 

3. Price skimming 

If your brand has a prestigious image with innovative product features that are hard to compete with, you may benefit from price skimming.

This is when you set your prices as high as the market has seen. Top dollar in your space. Then, you lower them over time to reach a wider audience that couldn’t buy before. The goal is to skim the top off a market targeting buyers willing to pay more.

The selling point here is exclusivity. Think about the loyal iPhone users who stand in line for hours to be one of the first to get the newest edition. To work effectively, price skimming relies on early adopters like these.

Advantages of price skimming

There are a few obvious advantages here.

Increased revenue.

This is where your GTM strategy can make a huge impact on the profit you’re able to gain from launching a new product. Selling a highly coveted product at the highest price the market will tolerate can increase your profit margins and allow you to recover any costs that went into product development.

Ability to target different customer segments.

This is the fun part. Price skimming gives you the opportunity to discover new clientele. By beginning with a higher price, you communicate product excellence to buyers seeking premium solutions that have industry clout, relevancy, and reliability.

You see this a lot with new coaching programs lately. Creators will have one signature program that they launch first, $7,000 minimum, and that will attract buyers with the income the creator needs to make a profit. But there will still be hundreds, if not thousands, of buyers within a lower income bracket waiting for the price to potentially drop so that they too can improve a desired skill set. Price skimming allows you to play the exclusive game and also the volume game. 

Attractive to early adopters.

Most SaaS product launches will use Product Hunt for the big day when the product is available to the public. Millions of PH users are tech-obsessed and have this incessant need to try out new SaaS products. This group is perfect to convert as early adopters. But your website isn’t for everyone. For this to work, you need to make sure your landing page is custom-built for each GTM campaign.

Reviewing products on YouTube or a blog can earn people six figures a year. Sharing their expert opinions on the latest technological advancements can also attract thousands of subscribers.

Price skimming relies heavily on early adopters to purchase and create a buzz for your brand.

Disadvantages of price skimming

On the flip side, price skimming comes with risks.

Alienates customers.

As mentioned before, sometimes a high price from the outset is the wrong message to send. If you’re a newer company, you haven’t proven anything yet. And even for those companies that release a new product after years of building their reputation and their industry—if a high price isn’t your typical strategy, you could push away loyal customers who have been with you for years. 

For your customers, price skimming will always go one of two ways:

• Customers love it, they feel like they’re part of the VIP club, it plays on their identity and increases satisfaction with their purchase.
• Or, customers get turned off. They feel cheated, and they feel the need to do deeper research and ask deeper questions to figure out what justifies the price point.

Attracts competition.

If your customers aren’t hesitant to adopt your product early at a high price, competitive pricing becomes a winning strategy for your adversaries. 

Competitors with competing solutions can swoop in and offer their product at a cheaper price, to essentially steal and convert your customers from your service to theirs. 

A price skimming example from Playstation

Sony launched the PlayStation 3 (PS3) at $499 for the 20GB console, expecting high sales. They had experienced astronomical success with the PlayStation 2 (PS2), initially priced at $299 in the U.S. market. It sold over 155 million units worldwide, making it the best-selling game console of all time.

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But the PS3 didn’t have the same success.

It was criticized for its high price tag and poorly developed architecture for multi-platform games. Eventually, the PS3 would overcome the criticism. However, price skimming hindered its initial profit potential and brand reputation.

You need to build a significant amount of buzz for your product to be successful in price skimming. To do that, you need a loyal community and people of influence on your team to keep the demand high.

4. Cost-plus pricing 

Cost-plus pricing is the most straightforward pricing strategy because it’s intuitive. It brings us back to good ol’ napkin math. 

With cost-plus pricing, you start with the production cost. Then, you’d add a markup percentage to determine your final market price.

You calculate your markup by deciding on a profit margin you want to achieve.

For example, say your product costs 50 dollars to make and you wanna receive $10 profit on every sale. You would add a 20% markup, resulting in a final market price of $60.

Cost-plus pricing is the easiest way to begin price testing. It brings us back to good ol’ napkin math. You gotta remember though—you’re testing how your price is presented. Not the number itself.

You can make your price the first thing a visitor sees on your landing page. Or, you can display the price after the product details. By that time, they will have had a chance to soak in all the life-changing benefits and success stories.

Cost-plus pricing is a simple strategy to begin with, but it doesn’t transfer well to all products.

Software products, for instance, need to factor in ongoing development costs, customer support, server maintenance, and other recurring expenses that aren’t as straightforward or tangible as the production costs of physical goods. Companies with products like this much prefer our next pricing strategy.

5. Penetration pricing

Penetration is similar to price skimming. Both strategies are used for new products entering the market. Where price skimming goes high, penetration pricing goes low.

The goal of penetration pricing is to capture market share.

Amazon and Walmart are prime examples of this. With multiple millions of customers monthly, these giants prove that shoppers are searching for the best deal.

And the best way to give them that? Undercut competitors with below-average prices. In their industry, at least. When you do this, your company penetrates conversations of comparison and attracts as many early customers as possible. Competitors probably hate it.

Remember when a basic Netflix subscription cost $8? Over 12 years they’ve gradually increased the pricing of all plans by at least 10% each. The highest increase was nearly 20%. To this day, there are over 270 million people all over the world refusing to cancel their subscriptions and instead paying $15 minimum. Wow.

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But, like the other strategies, you need to be able to offer these prices and still stay in business.

Getting customers is only step one. Treating them well to keep them around is the next necessary for penetration pricing to work. Otherwise, you’re just living in a bubble that’s bound to pop.

6. Dynamic pricing 

Amazon is famously known for its dynamic pricing strategy. In 2013, they changed prices on nearly 80 million products. During popular holidays, like Black Friday, they dominate competitors with the ability to change quickly to accommodate timely market changes. 

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That’s what dynamic pricing is: basing your product price on external factors like demand, season, supply changes, and price bounding. 

Within Amazon’s almost unbeatable pricing strategy is a series of A/B pricing tests constantly assessing how different price points impact consumer behavior. Two main factors being tested in these cases are different prices for different groups and prices based on how much time has passed.

Different prices for different groups

Discounts for seniors or government workers are used to target people with varying price sensitivities. This strategy helps businesses attract a diverse customer base by making products more accessible to those with tighter budgets.

Pricing based on how much time has passed

This strategy is mainly used in businesses where product demand fluctuates daily. For example, there’s a reason you try to book flights as early as possible. The closer it gets to the departure date, the more demand increases, and so do ticket prices. This approach is all around us and can be seen in various sectors:

• Ride-sharing services: Companies like Uber adjust fares based on real-time demand. During peak hours, holidays, or inclement weather, prices can surge significantly to balance the number of available drivers with the demand from riders. This incentivizes more drivers to get on the road and helps manage the number of ride requests, ensuring customers can get rides when they need them most.
• Hotel and BnB Pricing: The hospitality industry frequently sees dramatic price changes based on seasonality and local events. Hotel rates can spike during major holidays or festivals, while off-peak periods may offer substantial discounts.
• Ecommerce flash sales: Retailers often implement time-limited offers, lowering prices to create urgency. For example, “flash sales” are commonly used to drop prices significantly for just a few hours so that you can drive higher sales volumes. This strategy relies on humans searching for the best bargain. It’s science. 

Dynamic pricing requires understanding buyer habits during critical periods. You also need to be flexible and willing to optimize your pricing in real time.

It’s a strategy that makes your customers happy, having found the best deal to brag about. It also helps you maximize your revenue potential. Pricing experiments such as these allow many brick-and-mortar businesses to survive rapidly evolving market preferences.

So, to recap:

• Value-based pricing requires great branding to communicate the value of your features.
• Competitive pricing moves fast. It’s a game of checkers instead of chess. It’s focused on stealing customers, acquiring customers, and always offering the best deal.
• Price skimming relies on a community of early adopters who look at a high price tag as a status symbol.
• Cost-plus pricing is like DIY for early entrepreneurs. It gets you going, it keeps you in business, makes sure you profit, but might become too simple when more sophisticated inputs and variables become part of the production.
• Penetration pricing wants to steal the conversation. It wants to become the go-to product overnight. And it competes by going so low that other competitors can’t offer that price while still sustaining their business and company goals. 
• Dynamic pricing bases your pricing around external factors like demand and seasonality.

You have to ask yourself: What’s special about our product? How much do our customers believe in what we’re building/what we’ve built? And do we want a quick win or a win that starts slow and explodes to astronomical heights later on?

How to A/B test your pricing the right way

So now that we’ve covered those six common price testing methods, you’re probably wondering, “Great, but how do I A/B test for that?”

We’re so glad you asked. 

Remember: A/B testing your pricing is important, but you’ve got to do it right. 

Throwing a price tag on your product or service without feedback from the market is asking for trouble. You need to gather data, confirm price points, and pay attention to market changes. 

1. Define your objectives

Before you can dig into any A/B testing of your pricing, you first need to understand what success will look like for your business—in other words, you’ve got to define and set a clear objective.

Are you looking to boost your sales? Increase customer lifetime value? Fine-tune your conversion rate? No matter what your goals may be, defining your objectives isn’t just a formality, it’s the compass that guides every decision you make during your experiments. 

That’s because your objective shapes how you’ll design your test and how you’ll interpret your results. 

Let’s use a hypothetical to illustrate the point.

Imagine you’re running an ecommerce business and conversions are good, but not great. You want to increase your conversion rate by 20% through strategic price adjustments. 

With this goal in mind, you could tailor your page variations specifically to meet this goal instead of taking a shot in the dark and hoping for the best. 

Example: If a SaaS company wants to increase the number of annual subscriptions, they might set a goal to evaluate whether offering a 15% discount on annual plans versus monthly plans significantly boosts their annual sign-ups.

2. Choose the right pricing metrics

Choosing the right metrics to measure is a bit like picking the right tools for a job: Each metric gives you a different way to evaluate the impact of your price testing efforts. 

As an example, conversion rates offer a great snapshot of how immediately appealing a price is, but they don’t necessarily give you any additional insight into how you can capture a customer’s long-term value. 

In this case, you could focus on measuring customer lifetime value (CLV) or average revenue per user (ARPU)—maybe even average order value (AOV). 

So how would these work in your testing process, then?

If you ran a variation of a page with three pricing tiers and saw a spike in your conversions but a drop in ARPU, then it might indicate that your visitors are picking your lower price tiers. There’s nothing wrong with that, but if people are only buying the lower tiers… well, your higher tiers aren’t really serving any purpose. 

This just illustrates the need for appropriate pricing metrics. You need to be able to take a more holistic perspective on the information you’re gathering to draw the right conclusions. 

Example: For an online retailer, the AOV may indicate whether a pricing change prompts customers to purchase more items per transaction. If the AOV rises with a small price reduction, it might suggest that customers are buying in bulk due to perceived value.

3. Segment your audience

Not all customers are created equal—well, they are, but they’re not all necessarily all your ideal customers. 

That’s where audience segmentation comes into play. 

Audience segmentation is the process of identifying different groups within your customer base and showcasing messages and offers targeted to each one. 

Segmenting your audience lets you understand how different groups react to how you communicate your product’s value through its price. For instance, a discount that boosts sales among younger shoppers is great, but it might not move the needle for older demographics.

Tailoring your tests to these different audiences (think new customers compared to returning customers) can help you craft strategies around your pricing to reach each group better than before.

Example: A fitness app might segment its audience based on activity level: beginners vs. advanced users. Beginners might respond well to introductory offers, while advanced users could be more interested in premium features. Testing pricing changes across these segments provides insight into how each group perceives value.

4. Create your hypothesis

If your A/B testing objective is a compass, then your hypothesis is your map, your north star for guiding and focusing your efforts. Your hypothesis creates a framework for what you’re trying to prove or disprove.

Instead of randomly testing out pricing elements and tactics, take the time to develop a clear, specific, and actionable hypothesis. 

DON’T: “Reducing our monthly subscription fee will increase our sign-ups.” 

This sort of hypothesis is almost, but not quite, hitting the mark. The core idea is a good one, but it remains vague because there’s nothing to measure and no specifics about how much the subscription will be reduced by, nor what results it’ll achieve.

DO: “Reducing our monthly subscription fee by 10% will lead to a 20% increase in our sign-ups this month.”

This is much better because it defines exactly what will be changed and by how much, along with a clear prediction of the expected outcome. Better still, there’s a specific measurement here that will help you better assess your findings. 

Crafting well-thought-out hypotheses ensures you’ve got a clear benchmark to measure against. This helps you ensure your tests are purposeful and that the insights gained are directly tied to your business objectives. 

Example: An online education platform might hypothesize: “If we offer a tiered pricing model with a ‘Pro’ version at a 30% higher price, 15% of our users will upgrade, leading to a 25% increase in overall revenue from existing subscribers.”

5. Design and run your test

Designing your A/B tests is where the magic really kicks off. 

Any well-structured A/B test on landing pages should ensure that you’re getting results that are valid and reliable. You can start designing your tests by establishing a clear control and variation page.

• Control pages represent the status quo—they won’t change at all during your A/B tests. 
• Variation pages adjust a single parameter at a time—these pages are where you get to dig into your hypothesis.

It’s important to remember that, in an A/B test, you only change one element or parameter at a time. You can run a C variant, a D variant, even an E variant, too, but each variation should only change one element—like your pricing or how you present it on the page. This is what’s known as an A/B/n test, where “n” is any number of additional variants. 

Alternatively, you could run a multivariate test, which would let you compare two versions of a page with changes to multiple elements at a time—say, a chart where you showcase your pricing, plus a hero image, plus supporting copy. That’s a topic for another article, though.

Other elements to consider in designing your test:

• Sample size: Too small a sample size, and you won’t have enough data to draw conclusions from. 
• Randomization: Randomization helps you eliminate biases from your test, ensuring each customer has an equal chance of seeing your pricing variations.
• Special considerations: If there are any other notes or considerations to keep in mind, write ‘em down and include them in your test design.

Once you’ve designed your test, it’s time to run it. If you’ve done the homework, then running your test will be a straightforward process. Even so, it’s important to remember you need to run the test for a minimum of two weeks, which is usually enough time to generate statistical significance for an A/B test.

Example: If an ecommerce store wants to test a 20% discount on select products, they should randomly assign users to see either the discounted or original price, ensuring that other factors like time of day or user location don’t skew results.

6. Analyze and refine

Once you’ve run your A/B test for your pricing, it’s time to analyze your results. 

And, spoiler alert, this probably means you’re going to be planning additional tests.

Take stock of your findings and see how they compare to your hypothesis. If you confirmed your hypothesis about how you present and promote your pricing, great! You can go ahead and make the changes to your control page and end the test in full. 

…and then you can start developing new hypotheses to see what other improvements you can make.

But if your hypothesis was wrong, it’s also back to the drawing board. Remember, even if you didn’t confirm your ideas, that doesn’t mean your price testing efforts are in vain—you’re still learning more about your audience and how they respond to your pricing.

In other words, there are no “failed” tests. You continue to learn and refine and iterate on your strategies with these findings.  

Example: A digital product company tests a price increase for its flagship product, resulting in higher short-term revenue but decreased customer satisfaction scores. Based on these insights, they iterate by offering additional value, such as exclusive content, to balance the price increase with perceived value enhancement.

Tips and best practices for A/B testing your pricing

As you dig into the world of A/B pricing testing, remember: Success is found in the details.

To make the most of your testing efforts, keep these tips and best practices in mind:

• Run your tests during stable business periods to minimize external influence, like major marketing pushes or sales.
• Transparency with your customers should be a top-of-mind concern—any changes to pricing will be passed on to them, so focus instead on how you communicate value and can pass that on to your customers for a fair price.
• Incorporate feedback loops with your customers and other stakeholders to make sure what you’re offering is hitting the mark—think surveys and feedback forms.
• Communicate your findings clearly with the people who need to know about them. Inform product marketers, sales staff, and other marketers to make sure everyone’s in the loop. 
• Use the right tools and technology to run your tests and track your performance—like Unbounce’s own landing page builder.