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Lessons Learned When Monetizing Subscription
Services
Monika Saha : VP Product Marketing,
Zuora
Topic
 Lessons, Observations & Suggestions - 30 mins
○ Designing growth journeys
○ Selecting pricing variables
○ Maintain...
Lessons, observations, suggestions
when designing pricing and packaging
01Designing “growth
journeys”
02Single vs. multipl...
Healthy upsell revenue is critical to growth
% of bookings from upsells
Source: 2016 Pacific Crest SAAS survey
Cost of new...
Challenge : Balancing acquisition vs. lifetime value
B2B
Pressure to
meet quotas
Higher bookings
numbers
Lower net dollar
...
Suggestion: Design for 2 factors to drive
upsells/expansion
Current
ARR/M
RR
Capability
driven
growth
levers
Consumptio
n ...
Suggested packaging framework
EDGE NEEDS
Identify new capabilities customers
may want as their needs begin to
extend beyon...
Challenge : maintaining compelling “tipping points”
Benefit A $10
Benefit B $5
Add-On
Creep
Weak
Tipping
Point
Benefit A
B...
Suggestion: carefully consider the “value-optics” of
add-ons
Benefit A
Benefit B
Benefit C
GOLD
PLAN
$150/user/yr
BRONZE
P...
Lessons, observations, suggestions
when designing pricing and packaging
01Designing “growth
journeys”
02Single vs. multipl...
We are seeing an increasing number of
value metrics
Source: 2016 Pacific Crest SAAS survey
Challenge : selecting a value metric for complex,
mature, cross-departmental products
You might be leaving money on the ta...
Value Metric : # Of Sales Users
100M 10M
1M
CFO Value : Transactions
automated
VP Sales Value : Quotes streamlined for
use...
Lessons, observations, suggestions
when designing pricing and packaging
01Designing “growth
journeys”
02Single vs. multipl...
Challenge : keeping up with a continuous innovation
cycle
Over-loaded add-ons
Eroded price-value differentiation
✕
✕
Prici...
Suggestion: create an innovation alignment
framework
PRIMARY PRICING GOAL
Product
Innovation
Benefits
Competitive
play
Red...
Check out Zuora for more great presentations, guides, podcasts,
and our award-winning magazine Subscribed.
All the info yo...
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Lessons Learned When Monetizing Subscription Services

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Monika Saha, VP of Product Marketing for Zuora, the world’s leading provider of subscription billing, commerce, and finance solutions, outlines how to design your subscription pricing growth journey, select pricing variables, and maintain a healthy pace of pricing and packaging innovation.

Published in: Business
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Lessons Learned When Monetizing Subscription Services

  1. 1. Lessons Learned When Monetizing Subscription Services Monika Saha : VP Product Marketing, Zuora
  2. 2. Topic  Lessons, Observations & Suggestions - 30 mins ○ Designing growth journeys ○ Selecting pricing variables ○ Maintaining a healthy pace of innovation  Audience Q/A - 15 mins Agenda
  3. 3. Lessons, observations, suggestions when designing pricing and packaging 01Designing “growth journeys” 02Single vs. multiple value metrics 03Maintaining a healthy pace of innovation
  4. 4. Healthy upsell revenue is critical to growth % of bookings from upsells Source: 2016 Pacific Crest SAAS survey Cost of new business vs. upsell, expansion, renewals
  5. 5. Challenge : Balancing acquisition vs. lifetime value B2B Pressure to meet quotas Higher bookings numbers Lower net dollar retention B2C “Blind” discounts/pro motions acquire a high volume of subscribers Higher subscriber growth rates Lower post- promotion retention
  6. 6. Suggestion: Design for 2 factors to drive upsells/expansion Current ARR/M RR Capability driven growth levers Consumptio n driven growth levers New ARR/M RR a.Capability-driven: The need for an expanded set of product capabilities (cross/upsell) a.Consumption Driven: Higher use and adoption of a base set of capabilities that a customer has bought (add-on)
  7. 7. Suggested packaging framework EDGE NEEDS Identify new capabilities customers may want as their needs begin to extend beyond baseline needs of their profile Map this to baseline packages Map this to capability driven growth (tipping points, cross/up sells) Map this to consumption driven growth (add-ons) COMMON NEEDS Define the most common pricing profiles and the “baseline needs” of those profiles ADOPTION SIGNALS Identify signals that indicate higher adoption of the same set of capabilities over time ⇊ optimal packaging
  8. 8. Challenge : maintaining compelling “tipping points” Benefit A $10 Benefit B $5 Add-On Creep Weak Tipping Point Benefit A Benefit B Benefit C GOLD PLAN $150/user/yr BRONZE PLAN $100/user/y r Compelling Tipping Point BRONZE PLAN $100/user/y r GOLD PLAN $150/user/yr Benefit A Benefit B Benefit C You might start here …. But over time you could end up here ….
  9. 9. Suggestion: carefully consider the “value-optics” of add-ons Benefit A Benefit B Benefit C GOLD PLAN $150/user/yr BRONZE PLAN $100/user/yr (A + B) $50Tipping point advantage This solves for a need to offer add-ons A & B with the bronze plan, without eroding the price-value tipping point of the Gold Plan
  10. 10. Lessons, observations, suggestions when designing pricing and packaging 01Designing “growth journeys” 02Single vs. multiple value metrics 03Maintaining a healthy pace of innovation
  11. 11. We are seeing an increasing number of value metrics Source: 2016 Pacific Crest SAAS survey
  12. 12. Challenge : selecting a value metric for complex, mature, cross-departmental products You might be leaving money on the table Buyers will have a hard time aligning price to value delivered ✕ ✕ A single value metric is ideal, but sometimes not every product innovation will map to this value metric Without the right value metric:
  13. 13. Value Metric : # Of Sales Users 100M 10M 1M CFO Value : Transactions automated VP Sales Value : Quotes streamlined for users Suggestion: map one value metric per persona Value metric : transaction volume
  14. 14. Lessons, observations, suggestions when designing pricing and packaging 01Designing “growth journeys” 02Single vs. multiple value metrics 03Maintaining a healthy pace of innovation
  15. 15. Challenge : keeping up with a continuous innovation cycle Over-loaded add-ons Eroded price-value differentiation ✕ ✕ Pricing/Packaging decisions have to be made at a faster, more frequent pace The pitfalls of not aligning the pace of pricing/packaging innovation with product innovation:
  16. 16. Suggestion: create an innovation alignment framework PRIMARY PRICING GOAL Product Innovation Benefits Competitive play Reduce sales/acquisiti on friction Generate new business revenue Generate upsell/expansi on revenue Increase package differentiation Benefit name 1 + Benefit name 2 + Benefit name 3 + Benefit name 4 + Benefit name 5 + Force yourself and your primary stakeholders to attach ONE primary pricing goal to each benefit
  17. 17. Check out Zuora for more great presentations, guides, podcasts, and our award-winning magazine Subscribed. All the info you need to build and run an amazing subscription business. www.zuora.com/academy

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