Marketers focus almost exclusively on acquisition as the main lever for growth. While intuitive, Patrick Campbell - CEO of Price Intelligently - walks through why your acquisition strategy is actually the least effective tool for spurring growth in your subscription business. Patrick also provides a specific framework for quantifying your buyer personas in an effort to properly build out your SaaS pricing strategy.

1. Monetization Matters for Growth
SaaSFest 2015
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2. You’re focused too much on “acquisition” as
a driver of growth.
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3. You’re focused too much on getting
someone to your landing page and not
enough on what you’re putting on that
page.
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4. Bold claim.
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5. We’ve seen inside the financial data of
thousands of subscription companies.
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6. Qualitatively, two main camps of emerged.
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7. Lifetime Value (LTV) Beasts.
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8. 1. Small to no sales team
2. Typically low amounts of funding relative
to their size
3. Focus on unit economics and buyer
personas above all else
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9. Customer Acquisition Cost (CAC) Fiends.
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10. 1. Large sales teams
2. Raised more money than God
3. Unit economics not top of mind and
vague buyer personas
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11. Is this real? Is this driven by our growth
culture?
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12. Looked at 10,432 blog posts.
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13. We love our acquisition
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0%
25%
50%
75%
100%
Acquisition Monetization Retention
%oftotalarticles
Category of growth articles written in 2014 and 2015
N = 10,432 blog posts written in 2014 and 2015

14. Acquisition isn’t the most effective channel
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15. If we improve each lever by the same
amount, which lever causes the most growth?
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16. Impact of improving each
growth lever
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3.32%
0%
5%
10%
15%
Acquisition Monetization Retention
%impactonthebottomline
Impact of improvingeach lever by 1%
N = Data from 512 companies

17. Impact of improving each
growth lever
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3.32%
6.71%
0%
5%
10%
15%
Acquisition Monetization Retention
%impactonthebottomline
Impact of improvingeach lever by 1%
N = Data from 512 companies

18. Impact of improving each
growth lever
@PriceIntel
3.32%
12.70%
6.71%
0%
5%
10%
15%
Acquisition Monetization Retention
%impactonthebottomline
Impact of improvingeach lever by 1%
N = Data from 512 companies

19. Improving retention and monetization has 2-
4x the impact of focusing on acquisition.
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20. 1.68
3.23
11.09
0
5
10
15
No pricingfunction Yearly pricingreview Continual price
optimization
LTV/CAC vs. Pricing Commitment
Impact on efficiency
2015 survey of 96 SaaS companies with ARR greater than $5M

21. We want customers, but don’t know what to
do when we get them.
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22. We focus on growth as a sledgehammer.
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23. How do we improve monetization?
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24. 3 ways to better monetization
• Quantify your buyer personas
• Implement a pricing process
• Utilize a multi-price mindset

25. Quantify your buyer personas
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26. Persona-Pricing Fit
Table Stakes Tony
• Valued features:
• SFDC Integration
• Chrome extension
• Least valued features
• Analytics
• API access
• WTP = ~$10/month
• CAC = ~$22
• LTV: $160
Advanced Arnie
• Valued features:
• Analytics
• API Access
• Least valued features
• Chrome extension
• Premium support
• WTP = ~$25/month
• CAC = ~$56
• LTV: $325
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27. If you don’t know who you’re driving to your
pricing page, how do you know what to put
on your pricing page?
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28. Let’s walk through an example…
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29. My mom’s quilting business has better unit
economics than your “real” business…
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30. @PriceIntel

31. Persona-Pricing Fit
Hipster Henrietta
• Valued features:
•
•
• Least valued features
•
•
• WTP = ~$/month
• CAC = ~$
• LTV: $
Middle-Aged Mary
• Valued features:
•
•
• Least valued features
•
•
• WTP = ~$/month
• CAC = ~$
• LTV: $
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32. Go to the customer!
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33. For the love of God. Talk to your customer.
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34. How to Set Prices the
Wrong Way
These are simple ways to set your price,but if
used alone, will be ineffective
Ex: price = closest competitor price
Cost-plus
pricing
Competitor-based
pricing
Ex: price = cost + 30% margin

35. Costs
Competitors
Optimal Price
How much your
customers are willing to
pay for your
product/service
Setting Prices the
Right Way
Value
$
$
$
$ $
$
$
$
$
$
$
$

36. Great. How do we do that?
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37. 1
2
3
Your Process at a High Level
Buyer Personas
and Design
1
Data Collection
And Segmentation
2
1
2
3
4
Data Consolidation
And Analysis
3

38. Basic Plus Premium
$49 $149 $299
I
only
have
one
cool
feature.
The
same cool
feature. Yup,
same
one.
Oh!
You
can
only
get
this here.
Well…and
here.
Huzzah!
I’m
the
plan
with
absolutely
everything.
@PriceIntel

39. Persona-Pricing Fit
Hipster Henrietta
• Valued features:
•
•
• Least valued features
•
•
• WTP = ~$/month
• CAC = ~$
• LTV: $
Middle-Aged Mary
• Valued features:
•
•
• Least valued features
•
•
• WTP = ~$/month
• CAC = ~$
• LTV: $
@PriceIntel

40. Experimental Design
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41. What type of info do we want?
• Demographic Information
– How often they quilt? Age? Income?...
• Feature/Packaging Information
– Modern quilter? Traditional quilter? Mechanical items? Patterns?...
• Pricing Information
– How much are they willing to pay? What frequency do they want to
pay?...

42. Relative Preference Analysis
Statistical methodology to measure
preferences for features, intention,
and value propositions
Your Pricing Toolkit
Price Sensitivity Analysis
Proven model for gauging customer’s
willingness to pay and price sensitivity
Experimental Design
Properly segmenting and breaking down the data.
How do we ask the questions?

43. What do people value?
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44. Basic Plus Premium
$49 $149 $299
I
only
have
one
cool
feature.
The
same cool
feature. Yup,
same
one.
Oh!
You
can
only
get
this here.
Well…and
here.
Huzzah!
I’m
the
plan
with
absolutely
everything.
@PriceIntel

45. “Please rank the following
features on a scale of 1 to 10…”
0 2 4 6 8 10
Basic Quilting Supplies
Unique Quilting Items
Pattern and Design Ideas
Other Crafting Hobby Supplies
Quilting Meetups, Events, and
Communities

47. What do your customers
value the most?
More on: Relative Preference Analysis

48. What do your customers
value the most?
More on: Relative Preference Analysis

49. What do your customers
value the most?
More on: Relative Preference Analysis

50. Your Experimental Design
More on: Relative Preference Analysis
Main Category
Basic Quilting
• Thread
• Fabric
• Needles
• …

51. Your Experimental Design
More on: Relative Preference Analysis
Main Category
Basic Quilting
• Thread
• Fabric
• Needles
• …
Unique Supplies
Patterns/Design
Other Hobbies
Events/Meetup

52. Your Experimental Design
More on: Relative Preference Analysis
Main Category
Basic Quilting
• Thread
• Fabric
• Needles
• …
Unique Supplies
Patterns/Design
Other Hobbies
Events/Meetup
All Demographics and Personas

53. Persona-Pricing Fit
Hipster Henrietta
• Valued features:
• Unique quilting supplies
• Meetups
• Least valued features
• Discounted basic supplies
• Other hobby supplies
• WTP = ~$/month
• CAC = ~$
• LTV: $
Middle-Aged Mary
• Valued features:
• Discounted basic supplies
• Pattern/Design ideas
• Least valued features
• Discounted basic supplies
• Other hobby supplies
• WTP = ~$/month
• CAC = ~$
• LTV: $
@PriceIntel

54. Relative Preference Analysis
Statistical methodology to measure
preferences for features, intention,
and value propositions
Your Pricing Toolkit
Price Sensitivity Analysis
Proven model for gauging customer’s
willingness to pay and price sensitivity
Experimental Design
Properly segmenting and breaking down the data.
How do we ask the questions?

55. How much are they willing to pay?
@PriceIntel

56. Basic Plus Premium
$49 $149 $299
I
only
have
one
cool
feature.
The
same cool
feature. Yup,
same
one.
Oh!
You
can
only
get
this here.
Well…and
here.
Huzzah!
I’m
the
plan
with
absolutely
everything.
@PriceIntel

57. • At what (monthly) price point does [PRODUCT] become too
expensive that you’d never consider purchasing it?
• At what (monthly) price point does [PRODUCT] start to become
expensive, but you’d still consider purchasing it?
• At what (monthly) price point does [PRODUCT] a really good
deal?
• At what (monthly) price point does [PRODUCT] too cheap that
you question the quality of it?
More on: Relative Price Sensitivity Meter
How much are your
customers willing to pay?

58. How much are your
customers willing to pay?
More on: Relative Price Sensitivity Meter

59. Persona-Pricing Fit
Hipster Henrietta
• Valued features:
• Unique quilting supplies
• Meetups
• Least valued features
• Discounted basic supplies
• Other hobby supplies
• WTP = ~$50 and $100/month
• CAC = ~$
• LTV: $
• Channels:
Middle-Aged Mary
• Valued features:
• Discounted basic supplies
• Pattern/Design ideas
• Least valued features
• Discounted basic supplies
• Other hobby supplies
• WTP = ~$30, $50, and
$100/month
• CAC = ~$
• LTV: $
• Channels:
@PriceIntel

60. Persona-Pricing Fit
Hipster Henrietta
• Valued features:
• Unique quilting supplies
• Meetups
• Least valued features
• Discounted basic supplies
• Other hobby supplies
• WTP = ~$50 and $100/month
• CAC = ~$50
• LTV: $675
• Channels: WoM, Facebook,
Quilt shops, Meetup.com,
design websites, instagram
Middle-Aged Mary
• Valued features:
• Discounted basic supplies
• Pattern/Design ideas
• Least valued features
• Discounted basic supplies
• Other hobby supplies
• WTP = ~$30, $50, and
$100/month
• CAC = ~$25
• LTV: $850
• Channels: WoM, Facebook,
Quilt shops, Quilt mailing lists
@PriceIntel

61. My mom’s pricing page
Free $50/month $100/month
• Block of the
month pattern
• Access to deals
newsletter
• Curated box of
basic quilting
supplies (1 quilt
pattern)
• Curated box of
unique quilting
supplies (1 non-
quilt pattern)
• Community

62. 8 hours total.
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63. 8 hours total. $1264.
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64. Implement a pricing process
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65. What’s the average amount of time spent on
pricing amongst companies?
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66. ~6 Hours. Total.
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67. Companies lack
Companies spend
an average of 8
hours total on
pricing, but spend
hundreds of
hours on
acquisition.*
Commitment Expertise Process
No one is hired or
trained to
manage the
pricing process,
getting handed
off to “whomever
wants to take the
project.”
Pricing is treated
as “argue, guess,
and check”, rather
than a validation
process
engrained in
customer
development.
*2015 survey of 312 companies
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68. Pricing Isn’t Hard.
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69. It’s a process.
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70. Need to evaluate every 3 months and make
changes every 6 months.
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71. Changing Your Pricing
Customer/Market
Research
Communication
Plan
Week:
1 2 3 4 5 6 7 8 9
Impact
Analysis
Customer
Advisory
Panel
Implement
Changes
Step:

72. Your Pricing Committee
Main Decision Maker
(could be a member of the committee, as well)
Main Coordinator Typically in Product or Marketing
Product Leadership Corp Dev/Finance
Sales Leadership Marketing Leadership

73. Utilize a multi-price mindset
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74. @PriceIntel

75. Basic Plus Premium
$49 $149 $299
I
only
have
one
cool
feature.
The
same cool
feature.
Yup,
same
one.
Oh!
You
can
only
get
this here.
Well…and
here.
Huzzah!
I’m
the
plan
with
absolutely
everything.
Differentiate Features
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76. Wistia – Value Metric
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77. A value metric is what you charge for, and
should:
1. Align to your customer’s needs.
2. Grow with your customer.
3. Be easy to understand.
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78. Monetization matters. It’s the reason you’re in
business.
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