How to Make the Most Profitable Pricing Plan for Your Subscription Business
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. How to Make the Most Profitable Pricing Plan for Your Subscription Business Lars Lofgren Marketing Analyst - September 2012 info@kissmetrics.com - Confidential - Do not distribute
- 3. We’ll cover... 1 How to get your SaaS pricing right 2 Q&A 3 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 THE Subscriptions
- 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. ALWAYS Anchor
- 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 category 2 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 recap 1 Subscription = win 2 Anchor our prices with the right category and include more expensive plans
- 28. But what do we include in our plans?
- 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 UP Features
- 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
- 48. Q&A Time! Lars Lofgren llofgren@kissmetrics.com @larslofgren