Pricing & Packaging Flexibility Drives Subscription Growth (Subscribed13)
How to Make the Most Profitable Pricing Plan for Your Subscription Business
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How to Make the Most Profitable Pricing Plan for Your Subscription Business Lars Lofgren Marketing Analyst - September 2012 [email protected] - Confidential - Do not distribute
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Transcript of How to Make the Most Profitable Pricing Plan for Your Subscription Business
How to Make the Most Profitable Pricing Plan for Your Subscription Business
Lars LofgrenMarketing Analyst - September 2012 [email protected] - Confidential - Do not distribute
@larslofgren #KISSwebinar
We’ll cover...
How to get your SaaS pricing right1
Q&A2
Demo time!3
HOW DID YOU PICK YOURPrice?
Most people just guess.
What should we charge each month?
If we charge $10/month and get 100,000 customers, that’s like
$1,000,000 each year!
Picking the wrong price can shut you down
IT’S ALL ABOUT THESubscriptions
Single-purchase software is DEAD
Even Microsoft and Adobe are jumping in
Only need to acquire a customer once 1
Higher customer lifetime value2
Lower price points3
Stable cash flow4
Why is subscription so profitable?
What about the actual prices?
ALWAYSAnchor
People are not calculators
We do not perceive ABSOLUTE value, only RELATIVE value.
To judge a price, we make a comparison
Pick the right product category1
Offer a more expensive product2
How do we encourage the right comparison?
1. Pick the right product category
We compare products by putting them into similar categories.
If you’re an ecommerce platform...
If you say you’re a project management app...
If your category sucks, build a new one
Learn how to POSITION your product
2. Offer a more expensive product
The Williams-Sonoma bread machine = no sales
$279
2 bread machines = mucho sales
$279 $429
Offer at least two prices
STRUCTURING YOURPlans
Subscription = win1
Anchor our prices with the right category and include more expensive plans
2
Let’s recap
But what do we include in our plans?
SHOULD WE DOFreemium?
Freemium needs scale
If you’re B2B or niche, be careful with freemium
Very few people will upgrade, you’ll need MILLIONS of users to hit the
$100 million revenue mark.
Freemium is much easier with mass market
Freemium users take forever to upgrade
You’ll need customer analytics to figure out which marketing leads to
sales.
Don’t be too generous with your freemium plan
HOW TO BREAK UPFeatures
Target features for different customer types
Basic users don’t need advanced features. Advanced users do and
they’re willing to pay for them.
Find the features that separate your customers
Reach out and talk to your customers.
Name your plans correctly
Make it easy for different customer types to find their ideal plan.
Start with 3 plans (most pick the middle one)
Even if you have more, hide them
Only show the differences in your plans
HOW TO TRACK PRICEChanges
Great for testing copy, photos, and layouts. Terrible for bigger tests like
pricing.
A/B testing tools only measure the next step
Measuring impact of new prices takes months
Use an A/B testing tool
OR
Hook it up to KISSmetrics for long term tracking
