Optimizing SaaS Pricing for Long-Term Customer Lifetime Value

Instruction: Propose a SaaS pricing model that focuses on maximizing customer lifetime value rather than short-term revenue.

Context: This question tests the candidate's ability to design a pricing strategy for SaaS products that prioritizes long-term customer engagement and value over immediate financial gains.

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I would optimize expected long-term customer contribution, with customer success and a viable payback period as constraints. For this decision, define lifetime value as expected future receipts less service, support, refund and other attributable costs, adjusted for timing and the probability of continued purchasing. State whether acquisition cost is included; I would show it separately to avoid counting it twice.

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