Pricing  &  Packaging  Flexibility  Drives  Subscrip8on  Growth  

Guy  Marion  Senior  Director,    

Online  &  Customer  Acquisi9on  

Jake  Randall  Director  of  Business  Opera9ons  

The Nine Keys to Subscription Success

$

PRICE   ACQUIRE   BILL   COLLECT  

NURTURE   ACCOUNT   MEASURE   ITERATE   SCALE  

Pricing & Packaging: Your New Strategic Weapon

Guy Marion Senior Director,

Online & Customer Acquisition

Agenda

•  About Zendesk •  How Zendesk Uses Zuora •  Our Pricing Journey •  Secret Pricing Weapons •  Summary

Company Highlights 5

CUSTOMERS

30K+

INVESTORS

400+ EMPLOYEES FOUNDED

2007 ORIGIN

Denmark HQ

San Francisco

SAN FRANCISCO

LONDON

COPENHAGEN

MELBOURNE

DUBLIN

TOKYO MADISON

MANILA

BUENOS AIRES

OFFICES

USERS

200M+

How Zendesk Uses Zuora

Background

P L A T F O R M O V E R V I E W

Business Model

The Challenge

Zendesk: Cloud-based Customer Service and Engagement platform

B2B SaaS (multi-tenant) Direct: Self-serve and sales assisted Channels: Marketplace, Service Partners

Easily add new products/services Self-service payments, flexible billing terms Enable easy upsell/cross of the base Support for multi currency Native Salesforce integration

Zendesk Pricing Journey Plan Consolidation

Zendesk Launch (2008) Free Trial + Bundles

August 2009

Price Change May 2010

Enterprise Plan

Aug 2011

“Causeware” Feb 2012

Re-launch of Advanced Plans

September 2013

Five Pricing & Packaging Secrets

Secret #1: Start simple with a low friction offering

Causeware Freemium

Secret #2: De-risk your pricing launch by testing the waters first

Five Pricing & Packaging Secrets

Secret #3: Evolve multiple editions to drive revenue while keeping competitive

Customer Support App Development

Five Pricing & Packaging Secrets

Priced per user per month

Priced per 5 users per month

Secret #4: Build a repeatable low touch sales model to reduce CAC and focus your upstream sales efforts

Five Pricing & Packaging Secrets

Secret #5: In SaaS, 90%+ of your MRR comes from existing customers, so price and package to upsell

Five Pricing & Packaging Secrets

Summary

•  Start simple with a low friction offering •  Test the waters before releasing new pricing

•  Multiple editions drives revenue while keeping you competitive

•  Build a repeatable low-touch sales model to scale

•  Price and package to upsell your customer base

Thank you

@guy_marion gmarion@zendesk.com

Pricing and Packaging A finance and operations perspective

Jake Randall Director of Business Operations

Agenda

1. Okta Overview

2.  Evolution of Okta’s Product and Packaging

3.  Lessons Learned

4. QA

OKTA M a r k e t l e a d e r i n I d e n t i t y a s a S e r v i c e ( I D a a S )

Okta Pricing & Packaging Journey

Okta initially used “standard” per user per month pricing

Multi-Edition: Per User per

Month

Customers needed a scalable UoM licensing model

Experiment with term lengths / billing Maximize ARR

while ensuring customers’ success

Okta Editions M u l t i - E d i t i o n s , O n e U o M

Use UoM to Expand Market

Scale

Predictability

ROI

Create a license model/UoM that expands your market and increases value to existing Customers

Term Length and Billing Frequency

Volu

me

Bas

ed P

ricin

g

Term Length / Billing Based Discounts

1.  Created negotiation/pricing that tied to improved LTV of Customer

2.  Focus on how you position each “package” to Customer

3.  Understand your churn, WACC, etc. to know how much discount makes sense for your business

Bundled Services M a x i m i z e A R R – M a x i m i z e C u s t o m e r S u c c e s s

Non-­‐Recurring  Fees   Subscrip9ons  

Per  User  

Per  Login  

Professional  Services  

Problem: −  Customer has a limited budget for project −  Okta wanted to maximize recurring revenue

Non-­‐Recurring  Fees   Subscrip9ons  

Per  User  

Per  Login  

“Bundled”  PS  

Result: −  Increased avg. ARR per deal (10% - 20%) −  Ensured customer received appropriate on-

boarding

Lessons Learned

Flexibility

Bundle

Listen to your customers −  Create units of measurement that tie to

your customers business model Experiment with term length/pricing −  Understand your churn and consider

appropriate discounts for multi-year Maximize value of every dollar −  Consider packaging your one-time fees as “included” to

maximize ARR/MRR.

Extend

Lessons Learned

Flexibility

Bundle

Native ability to manage UoMs

Automate renewals, billings, etc. for different term lengths and billing cycles

Control packaging of products with “Charges” and “Rate Plans”

Extend

Q&A

Thank You!