Pricing & Packaging Flexibility Drives Subscription Growth (Subscribed13)

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Zendesk - Guy Marion, Sr. Director, Customer Acquisition
Okta - Jake Randall, Director of Business Operations

There are many pricing levers available for subscription models and the challenge is
knowing where to start and how to iterate over time. Come learn lessons from pricing experts at Zendesk and Okta, where we’ll discuss the pros and cons of different models and how to use different promotional strategies and test plans to achieve your business strategies.

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Pricing & Packaging Flexibility Drives Subscription Growth (Subscribed13)

  1. 1. Pricing  &  Packaging  Flexibility  Drives   Subscrip8on  Growth   Guy  Marion   Senior  Director,     Online  &  Customer  Acquisi9on   Jake  Randall   Director  of  Business  Opera9ons  
  2. 2. The Nine Keys to Subscription Success $ PRICE   ACQUIRE   BILL   COLLECT   NURTURE   ACCOUNT   MEASURE   ITERATE   SCALE  
  3. 3. Pricing & Packaging: 
 Your New Strategic Weapon Guy Marion Senior Director, Online & Customer Acquisition
  4. 4. Agenda •  About Zendesk •  How Zendesk Uses Zuora •  Our Pricing Journey •  Secret Pricing Weapons •  Summary
  5. 5. Company Highlights 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+
  6. 6. 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
  7. 7. 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
  8. 8. Five Pricing & Packaging Secrets Secret #1: Start simple with a low friction offering Causeware Freemium
  9. 9. Secret #2: De-risk your pricing launch by testing the waters first Five Pricing & Packaging Secrets
  10. 10. 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
  11. 11. Secret #4: Build a repeatable low touch sales model to reduce CAC and focus your upstream sales efforts Five Pricing & Packaging Secrets
  12. 12. Secret #5: In SaaS, 90%+ of your MRR comes from existing customers, so price and package to upsell Five Pricing & Packaging Secrets
  13. 13. 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
  14. 14. Thank you @guy_marion gmarion@zendesk.com
  15. 15. Pricing and PackagingA finance and operations perspective Jake Randall Director of Business Operations
  16. 16. Agenda 1.  Okta Overview 2.  Evolution of Okta’s Product and Packaging 3.  Lessons Learned 4.  QA
  17. 17. 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 )
  18. 18. 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 modelExperiment with term lengths / billing Maximize ARR while ensuring customers’ success
  19. 19. Okta Editions M u l t i - E d i t i o n s , O n e U o M
  20. 20. Use UoM to Expand Market Scale Predictability ROI Create a license model/UoM that expands your market and increases value to existing Customers
  21. 21. Term Length and Billing Frequency VolumeBasedPricing 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
  22. 22. 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
  23. 23. 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
  24. 24. 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
  25. 25. Q&A Thank You!

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