The document discusses strategies for monetizing subscription services, focusing on designing growth journeys, selecting pricing metrics, and maintaining innovation. It emphasizes the importance of data-driven approaches to optimize pricing profiles and the need for flexible systems to accommodate continuous product and pricing innovation. Additionally, it suggests forming a pricing council to improve alignment between pricing, operations, and product development.

2. Monetizing Subscription
Services
Monika Saha
GM Finance Product Line, Zuora
Patrick Campbell
Founder & CEO, Price Intelligently

3. Agenda
Topic
Lessons, Observations & Suggestions
○Designing growth journeys
○Selecting pricing metrics
○Maintaining a healthy pace of innovation

4. john doe
sales director @ smart team
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5. john doe
sales director @ smart team
“Aenean nec lorem. In porttitor. Donec
laoreet nonummy augue. Suspendisse
dui purus, scelerisque at, vulputate
vitae, pretium mattis, nunc. Mauris eget
neque at sem venenatis eleifend. Ut
nonummy. Fusce aliquet”
Full scale image background
(please change the image)

6. john doe
sales director @ smart team
“Aenean nec lorem. In porttitor. Donec
laoreet nonummy augue. Suspendisse
dui purus, scelerisque at, vulputate
vitae, pretium mattis, nunc. Mauris eget
neque at sem venenatis eleifend. Ut
nonummy. Fusce aliquet”
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(please change the image)

7. Lessons, observations, suggestions
when designing pricing and packaging
01Designing “growth
journeys”
02Single vs. multiple value
metrics
03Maintaining a healthy
pace of innovation

8. Healthy upsell revenue is critical
% of bookings from upsells
Source: 2016 Pacific Crest SAAS survey
Cost of new business vs. upsell, expansion,
renewals

9. Challenge : Balancing acquisition vs. lifetime value
B2B
Pressure to meet
quotas
Higher bookings
numbers
Lower net dollar
retention
B2C
Race to acquire a
high volume of
subscribers
Higher subscriber
growth rates
Lower post-
promotion retention

10. Use A Data Driven Approach To Inform Your Design

11. Identify The “Pricing Profiles” For Your Target
Market
Questions to consider:
Do you want/expect customers
to go through natural “growth
journeys”?
Are there natural “tipping points”
that will drive customers from
one profile to another?
If customers stay on within a
single profile, what avenues do
you have to grow ARPU?

12. A packaging framework often emerges for each pricing
profile
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

13. When possible, 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)

14. Suggestions for incentivizing the right outcome
● Identify the right attainment metric
○ ARR/MRR
○ TCV
○ Compensating on one-time components (services, physical goods)
○ Compensating for renewals
● Determine the appropriate sales model for your business
○ Hunter/farmer
○ Account owner
● Identifying the key stakeholders in the organization

15. 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/yr
Compelling
Tipping
Point
BRONZE
PLAN
$100/user/yr
GOLD
PLAN
$150/user/yr
Benefit A
Benefit B
Benefit C
You might start here …. But over time you could end up here
….

16. 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

17. Lessons, observations, suggestions
when designing pricing and packaging
01Designing “growth
journeys”
02Single vs. multiple value
metrics
03Maintaining a healthy
pace of innovation

18. presentation
agenda
page
018
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19. We are seeing an increasing number of
value metrics
Source: 2016 Pacific Crest SAAS survey

20. Challenge : selecting the right value metric
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 metrics
Without the right value metric:

21. # Of Sales Quote Users$100M $10M $1M
CFO : Transactions processed VP Sales : Users Creating Sales
Quotes
Suggestion: one value metric per persona

22. Impact on operations and deal desk
● Can you internally and externally measure progress towards capacity?
● Are your systems flexible enough to allow quick amendments to your
primary pricing metric?
● Does your pricing metric make the customer feel like they own the
relationship?

23. Impact on operations and deal desk
● What do you do when customers exceed capacity?
○ Prevent customer from extending use
○ Charge the customer an overage
○ Allow the customer continue use, and upgrade them upon renewal
● Upgrading the customer:
○ small sales (e.g. 1-2 seats or incremental volume)
○ material upgrades (new 12 month term with increased volume)

24. Lessons, observations, suggestions
when designing pricing and packaging
01Designing “growth
journeys”
02Single vs. multiple value
metrics
03Maintaining a healthy
pace of innovation

25. Pricing Innovation Is Not Keeping Up With Product Innovation

26. Pricing Innovation Is Not Keeping Up With Product Innovation

27. Pricing Innovation Is Not Keeping Up With Product Innovation

28. Pricing Innovation Is Not Keeping Up With Product Innovation

29. Challenge : keeping up with a continuous innovation
cycle
Lack of alignment on process and expected
outcomes
Systems Challenges
✕
✕
Pricing/Packaging decisions have to be made at a faster, more frequent pace
These are the common challenges that hold companies back:

30. Suggestion: A pricing council/committee that has a
well defined and regular operating cadence
Items to consider:
• Market research (incl. historical
analysis)
• Impact Analysis
• Revenue Recognition
Considerations
• CAB Input
• Communication/Training
• Systems Implementation
Sales
Leadersh
ip
CSM
Leadersh
ip
Finance
Leadersh
ip
IT
Product
Leadersh
ip
Sales
Strategy
Legend
Stakeholder
s
Core Team
Coordination/Alignment

31. Suggestion: 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

32. Suggestion: De-couple pricing offers from packaging
to give you the most flexibility to iterate on pricing
PRODUCT
Storage
OFFER A
$10 per month CAPABILITIES
 BENEFIT 1
 BENEFIT 2
 BENEFIT 3
 BENFEIT 4
 ….
 ....
 BENEFIT N
OFFER B
$100 per year
OFFER C
Pay-as-you-go
OFFER N
Custom pricing

33. thank you.