How to Make the Most Profitable Pricing Plan for YourSubscription Business Lars Lofgren Marketing Analyst - September 2012...
@larslofgren #KISSwebinar
We’ll cover...1   How to get your SaaS pricing right2   Q&A3   Demo time!
HOW DID YOU PICK YOUR     Price?
Most people just guess.
What should we charge each month?     If we charge $10/month and get      100,000 customers, that’s like          $1,000,0...
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
Why is subscription so profitable? 1   Only need to acquire a customer once 2   Higher customer lifetime value 3   Lower p...
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
How do we encourage the right comparison?1   Pick the right product category2   Offer a more expensive product
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 YOUR   Plans
Let’s recap1   Subscription = win2   Anchor our prices with the right category and    include more expensive plans
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 t...
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         ...
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      ...
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 PRICE Changes
A/B testing tools only measure the next step   Great for testing copy, photos, and   layouts. Terrible for bigger tests li...
Measuring impact of new prices takes months
Use an A/B testing tool                          OR
Hook it up to KISSmetrics for long term tracking
Q&A Time!    Lars Lofgren llofgren@kissmetrics.com        @larslofgren
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How to Make the Most Profitable Pricing Plan for Your Subscription Business

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3. We’ll cover...1 How to get your SaaS pricing right2 Q&A3 Demo time!
4. HOW DID YOU PICK YOUR Price?
5. Most people just guess.
6. What should we charge each month? If we charge $10/month and get 100,000 customers, that’s like $1,000,000 each year!
7. Picking the wrong price can shut you down
8. IT’S ALL ABOUT THESubscriptions
9. Single-purchase software is DEAD
10. Even Microsoft and Adobe are jumping in
11. Why is subscription so profitable? 1 Only need to acquire a customer once 2 Higher customer lifetime value 3 Lower price points 4 Stable cash flow
12. What about the actual prices?
13. ALWAYSAnchor
14. People are not calculators We do not perceive ABSOLUTE value, only RELATIVE value.
15. To judge a price, we make a comparison
16. How do we encourage the right comparison?1 Pick the right product category2 Offer a more expensive product
17. 1. Pick the right product category We compare products by putting them into similar categories.
18. If you’re an ecommerce platform...
19. If you say you’re a project management app...
20. If your category sucks, build a new one
21. Learn how to POSITION your product
22. 2. Offer a more expensive product
23. The Williams-Sonoma bread machine = no sales $279
24. 2 bread machines = mucho sales $279 $429
25. Offer at least two prices
26. STRUCTURING YOUR Plans
27. Let’s recap1 Subscription = win2 Anchor our prices with the right category and include more expensive plans
28. But what do we include in our plans?
29. SHOULD WE DOFreemium?
30. Freemium needs scale
31. 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.
32. Freemium is much easier with mass market
33. Freemium users take forever to upgrade You’ll need customer analytics to figure out which marketing leads to sales.
34. Don’t be too generous with your freemium plan
35. HOW TO BREAK UPFeatures
36. Target features for different customer types Basic users don’t need advanced features. Advanced users do and they’re willing to pay for them.
37. Find the features that separate your customers
38. Reach out and talk to your customers.
39. Name your plans correctly Make it easy for different customer types to find their ideal plan.
40. Start with 3 plans (most pick the middle one)
41. Even if you have more, hide them
42. Only show the differences in your plans
43. HOW TO TRACK PRICE Changes
44. A/B testing tools only measure the next step Great for testing copy, photos, and layouts. Terrible for bigger tests like pricing.
45. Measuring impact of new prices takes months
46. Use an A/B testing tool OR
47. Hook it up to KISSmetrics for long term tracking

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How to Make the Most Profitable Pricing Plan for Your Subscription Business

  1. 1. How to Make the Most Profitable Pricing Plan for YourSubscription Business Lars Lofgren Marketing Analyst - September 2012 info@kissmetrics.com - Confidential - Do not distribute
  2. 2. @larslofgren #KISSwebinar
  3. 3. We’ll cover...1 How to get your SaaS pricing right2 Q&A3 Demo time!
  4. 4. HOW DID YOU PICK YOUR Price?
  5. 5. Most people just guess.
  6. 6. What should we charge each month? If we charge $10/month and get 100,000 customers, that’s like $1,000,000 each year!
  7. 7. Picking the wrong price can shut you down
  8. 8. IT’S ALL ABOUT THESubscriptions
  9. 9. Single-purchase software is DEAD
  10. 10. Even Microsoft and Adobe are jumping in
  11. 11. Why is subscription so profitable? 1 Only need to acquire a customer once 2 Higher customer lifetime value 3 Lower price points 4 Stable cash flow
  12. 12. What about the actual prices?
  13. 13. ALWAYSAnchor
  14. 14. People are not calculators We do not perceive ABSOLUTE value, only RELATIVE value.
  15. 15. To judge a price, we make a comparison
  16. 16. How do we encourage the right comparison?1 Pick the right product category2 Offer a more expensive product
  17. 17. 1. Pick the right product category We compare products by putting them into similar categories.
  18. 18. If you’re an ecommerce platform...
  19. 19. If you say you’re a project management app...
  20. 20. If your category sucks, build a new one
  21. 21. Learn how to POSITION your product
  22. 22. 2. Offer a more expensive product
  23. 23. The Williams-Sonoma bread machine = no sales $279
  24. 24. 2 bread machines = mucho sales $279 $429
  25. 25. Offer at least two prices
  26. 26. STRUCTURING YOUR Plans
  27. 27. Let’s recap1 Subscription = win2 Anchor our prices with the right category and include more expensive plans
  28. 28. But what do we include in our plans?
  29. 29. SHOULD WE DOFreemium?
  30. 30. Freemium needs scale
  31. 31. 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.
  32. 32. Freemium is much easier with mass market
  33. 33. Freemium users take forever to upgrade You’ll need customer analytics to figure out which marketing leads to sales.
  34. 34. Don’t be too generous with your freemium plan
  35. 35. HOW TO BREAK UPFeatures
  36. 36. Target features for different customer types Basic users don’t need advanced features. Advanced users do and they’re willing to pay for them.
  37. 37. Find the features that separate your customers
  38. 38. Reach out and talk to your customers.
  39. 39. Name your plans correctly Make it easy for different customer types to find their ideal plan.
  40. 40. Start with 3 plans (most pick the middle one)
  41. 41. Even if you have more, hide them
  42. 42. Only show the differences in your plans
  43. 43. HOW TO TRACK PRICE Changes
  44. 44. A/B testing tools only measure the next step Great for testing copy, photos, and layouts. Terrible for bigger tests like pricing.
  45. 45. Measuring impact of new prices takes months
  46. 46. Use an A/B testing tool OR
  47. 47. Hook it up to KISSmetrics for long term tracking
  48. 48. Q&A Time! Lars Lofgren llofgren@kissmetrics.com @larslofgren
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