How to Improve Your Pricing with A/B Testing (+ Best Practices)

Quick Summary

A/B testing helps SaaS businesses find the optimal price for maximizing revenue while keeping customers satisfied. Boathouse streamlines pricing management with tools like embeddable pricing tables and global support. By comparing different price points, businesses can make data-driven decisions, improve customer retention, and stay competitive. Learn how to improve your pricing with our step-by-step guide to A/B testing, and find out how Boathouse simplifies price testing for SaaS companies.

Want To Know How A/B Testing Can Help Elevate Your Pricing Decisions?

Pricing can be tricky—set it too high, and you risk losing customers. Set it too low, and you leave revenue on the table. A/B testing takes the guesswork out of pricing by providing real-world data that gives insight into what works best.

The concept is simple—test two different prices, compare the results and see which performs better. Think of it as a way to take the guesswork out of your pricing decisions.

For businesses, this means maximizing revenue while keeping your customers happy. Instead of relying on trial and error, you make informed decisions based on actual data.

So, join Boathouse as we guide you through how A/B testing (sometimes called “split testing”) can transform your pricing strategy.

What is A/B Testing Your Pricing?

A/B testing compares two price points (Price A and Price B) with different audience segments to determine the best price for your product, such as a SaaS subscription management tool.

By analyzing your customer data—conversions, revenue, and retention—you gain insights into which price performs better.

Why is A/B Testing Your Pricing Important?

A/B pricing tests find the sweet spot between maximizing revenue and customer satisfaction. Here are some key benefits to consider:

• Increased Revenue: A/B testing allows you to identify the price point that generates the most revenue and make the most of each sale.
• Better Customer Insights: Understand customer behavior and preferences to create more effective pricing strategies.
• Reduced Risk: Experiment on a smaller scale, reducing the risk of major impacts on sales.

Step-by-Step Guide to A/B Testing Your Pricing

Now, let’s explore how to implement effective pricing A/B tests, step-by-step.

Step 1: Set Clear Objectives

Start by clearly defining your goals. Are you aiming to increase revenue, improve conversion rates, or boost customer lifetime value (CLV)? A clear objective helps you measure success effectively.

Step 2: Develop Your Hypothesis

Create a focused hypothesis. For example: “Raising the price of Plan A by 10% will maintain sales while increasing revenue per customer.” Focus on one element at a time to isolate its impact.

Step 3: Create Your Variants

Develop two price points for testing—Price A (control) and Price B (variation). Price A is your current rate, while Price B is your modification (e.g., a slight increase). Make the price difference noticeable, but not extreme.

Step 4: Define Audience Segments and Testing Methodology

Instead of testing two different prices on the same product, (which can alienate customers if they notice price discrepancies), consider testing different plans within the same category.

For example, if you offer multiple subscription pricing plans, compare your Basic plan with a Professional plan. This helps determine the perceived value for each tier and whether customers are willing to pay extra for additional features.

Track key metrics like conversion rates for each plan and consider using tools such as Optimizely or Hotjar for testing.

Step 5: Run the Test

Run your A/B test for an appropriate duration to gather sufficient data. Track user behavior through metrics such as bounce rate, time on page, conversion rate, and revenue per visitor. Monitor key events like checkout completions and compare these against baseline metrics.

Step 6: Analyze Your Results

After running the test, evaluate your results using relevant data points such as average order value and churn rate.

Tools like R, Python or data analytics dashboards can help you to understand customer lifetime value (CLV) and average revenue per user (ARPU), giving you insight into long-term profitability of each variant.

Step 7: Implement the Winning Price

Once you’ve identified the best performing price, roll it out to your entire audience. Remember that pricing is not static— A/B test regularly to adapt to changing market trends and customer behavior.

Best Practices for A/B Testing Your Pricing

• Test One Variable at a Time: Change only one pricing element per test (e.g., price increase or bundling) to clearly see its impact.
• Run Tests Long Enough: Ensure your tests reach statistical significance and account for typical buying cycles and seasonal biases.
• Segment Your Audience: Randomly segment audiences to avoid bias and get accurate, representative results.
• Avoid Testing During Unstable Periods: Don’t run tests during promotions, holidays or major product updates to prevent skewed data.
• Monitor Multiple Metrics: Look beyond conversion rates—consider metrics like customer lifetime value (CLV) and churn rate for a full picture of customer behavior.
• Document Results and Iterate: Record your findings to guide future pricing experiments and adapt to changing market conditions.

Wrapping Up

A/B testing is an effective way to make evidence-based decisions. By following these steps and best practices, you can optimize your pricing strategy with confidence.

Boathouse is here to help. Our platform offers tools to simplify pricing and billing management. Selling to multiple markets? Check out our best-practice clean pricing tool for A/B testing with different geo-locations, ensuring both consistency and competitiveness.

Ready to improve your pricing strategy? Arrange a demo with Boathouse today to see how we can support your A/B testing and billing management needs.