This is the story SaaStr’s Jason Lemkin told about trying to move his own podcast operation from Zoom to Riverside: two linked seats needed the Business plan at $500 a month, with nothing priced in between the $24 individual plan and that jump. He passed — not because Riverside was too expensive in principle, but because there was no rung on the ladder between "cheap and easy" and "expensive and formal." That gap, he argues, is common enough in SaaS that it deserves a name: the pricing gap. And it’s worth treating as a signal, not a footnote.
A gap is not the same as a "no"
The instinct when a deal stalls is to ask what’s wrong with the product, the pitch, or the market. Sometimes that’s the right question. But a pricing gap is a narrower, more mechanical problem: it’s the space between what a buyer is willing to pay right now and the next package they’re actually allowed to buy. If that gap is wide enough, some fraction of otherwise willing buyers will simply not cross it — not because they doubt the value, but because the available options don’t match how much of it they need.
This distinction matters because the two problems call for opposite responses. If the market doesn’t want what you built, no amount of repricing fixes it. If the market wants it but can’t buy it in the increment offered, repricing or repackaging might unlock real, already-qualified demand. Confusing the two leads founders either to over-discount a product that genuinely isn’t resonating, or to abandon a product that was actually fine — just badly metered.
Here’s a rough way to separate the two kinds of "no" before reacting to either:
| Signal you observe | Likely a pricing gap | Likely a fit or trust problem |
|---|---|---|
| Buyer upgrades happily through entry tiers, then stalls at "Contact Sales" | Yes — they were converting until the jump | Unlikely; fit issues usually show up earlier |
| Buyer asks "is there anything between these two plans?" | Strong signal | Rare phrasing for fit doubts |
| Buyer disengages right after seeing the pricing page, before any conversation | Possible, especially with opaque pricing | Also possible if messaging didn’t establish value first |
| Buyer takes a demo, seems engaged, then goes quiet after a quote | Could be a gap, could be procurement friction | Could be budget, timing, or unresolved use-case doubt |
| Buyer churns after onboarding despite paying full price | Not a pricing-gap pattern | More consistent with a fit or value-delivery problem |
None of these signals is conclusive on its own — a buyer might vanish after a quote for a dozen reasons that have nothing to do with your tier structure. But repeated, specific stalling at the same seam in the ladder is a pattern worth investigating rather than writing off as generic churn.
Where the gap actually opens up
The mechanics are almost always the same, and they sit exactly where self-serve meets sales. Most sales teams have a floor — commonly cited around $5,000 a year — below which a deal isn’t worth their time to manage. That floor is rational for the sales org, but it means the "Business" or "Enterprise" tier often gets priced and packaged around what a rep can sell profitably, not around what the next-smallest qualified buyer can afford. The self-serve tiers, meanwhile, get priced low to remove friction for individuals. The result is a ladder with two solid ends and a missing middle — invisible to the team, because a buyer who never becomes a lead never shows up in the sales pipeline. Lemkin’s point about Riverside is blunt: the sales team likely never knew that account was lost, because it never became "theirs" to lose.
This is also common in developer-facing tools, where the free or metered tier is nearly free, usage climbs cheaply for a while, and then a step-change in cost or a "Contact Sales" wall appears once usage crosses a certain volume. Lemkin points to Algolia, the search API company, as an example where a pricing gap existed for years between the basic usage tiers and the enterprise edition; when the company introduced a tier in between, revenue reportedly rose by around 15% — for a period, in that specific case. That number is a data point about one company at one moment, not a formula. It doesn’t tell you what a middle tier would do for a project-management tool, a podcasting app, or an education platform, and it says nothing about whether the same move would work again today. What it does suggest is that the gap can be worth quantifying before assuming it’s negligible.
The visual below sketches where in the buying journey this specific failure point tends to appear, distinct from earlier drop-off caused by unclear value or a confusing pricing page.
flowchart TD
A[Buyer discovers product] --> B[Tries entry-level or free plan]
B --> C[Upgrades within self-serve tiers]
C --> D{Needs more than self-serve offers}
D -->|Next option is Contact Sales| E[Pricing gap: buyer stalls]
D -->|Clear intermediate tier exists| F[Buyer converts to paid mid-tier]
What to test before touching your price list
A gap doesn’t automatically mean "add a middle tier." Sometimes the real fix is a clearer value metric — the unit a customer is actually billed against, whether that’s seats, usage volume, or events — so buyers can see which side of the gap they’ll land on before they ever talk to a rep. Sometimes it’s better packaging of existing tiers rather than a new price point altogether. And sometimes the honest answer is that a slightly opaque "Contact Sales" wall is doing its job: filtering out deals too small to service well, even if it costs you some smaller accounts at the margin. Competitive research on pricing pages notes that a "Contact Sales" requirement is often read by buyers as a transparency signal in itself, one they weigh alongside your competitors’ pages when deciding whether to engage at all.
There’s also a real tension between disclosure and sales flexibility. Full transparency helps buyers build an internal case for procurement, but it also removes room to price complex, high-touch deals individually — and it only builds trust if your sales team can consistently honor whatever the pricing page implies. Selective transparency — giving buyers enough context (a starting price, a rough range, an example configuration) without publishing a full enterprise price list — is often the more sustainable middle ground, but which level suits your buyers depends on deal complexity and how disciplined your sales process already is.
Treat the drop-off as a lead, not a loss
None of this proves that closing a pricing gap will lift revenue, or that the buyer who stalled was signaling the same thing as the last one. What it does establish is that a repeated, specific stall between your cheapest paid option and your sales-only tier is evidence worth collecting — talk to the accounts that hesitated there, check whether your value metric maps cleanly to what they actually need, and see if an intermediate step, a clearer price signal, or better sales qualification would have kept them moving. The alternative is letting the gap sit there indefinitely, invisible to the sales team, quietly filtering out buyers who wanted to say yes but never found a price they were allowed to pay.
