"Pricing: Freemium to Premium to Upfront payment" at SaaS North 2016
Post on 13-Apr-2017
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Happy customers big and small
ProfitWellSaaS pricing
software and tech enabled services
Free financial metrics for subscription
businesses
@PriceIntel
“Differentiation” isn’t what is used to be…
N = Varies by line, but minimum of 10,000 customer respondents per line
Willingness to pay over time relative to WTP 4 years ago
WTP
as
% of
WTP
4 Y
ears
Ago
0%
30%
60%
90%
120%
4 Years Ago 3 Years Ago 2 Years Ago 1 Year Ago Today
Core Features Single Sign On Integrations Analytics
@PriceIntel
Acquiring a customer is getting pricier
N = Varies by line, but minimum of 453 companies per data point
Blended CAC relative to four years ago
CAC
as %
of
CAC
4 Ye
ars
Ago
-15%
0%
15%
30%
45%
60%
4 Years Ago 3 Years Ago 2 Years Ago 1 Year Ago Today
B2B B2C
@PriceIntel
B2B Consumers Increasingly Moving to Subscriptions
N = 2012 contained 635 B2B software buyers; 2016 contained 753 B2B software buyers
@PriceIntel
Preference for software delivery mechanism over time
SaaS Solution
Perpetual License (ongoing support/maintenance)
Perpetual License (No support/maintenance)
On-Premise SaaS
-0.5 -0.375 -0.25 -0.125 0 0.125 0.25 0.375 0.52012 2016
What we find importantC-Level/Founder Growth Preferences
% o
f tot
al c
ompa
nies
0%
25%
50%
75%
100%
More logos Making more money per customer Keeping customers around longer
N = 1,432 software companies
@PriceIntel
Death correlates to acquisition focused teamsOf those companies who died, what was the makeup of their growth
% o
f Com
pani
es
0%
25%
50%
75%
100%
Less than $10M ARR $10.01M to $25M ARR $25.01M+ ARR
Primarily Acquisition Growth Balanced Growth
N = Minimum of 26 companies per category who died over the past 4 years
@PriceIntel
Balanced growth velocity is much largerHow do growth rates compare to our two growth groups?
YoY
Gro
wth
%
0%
30%
60%
2012 2013 2014 2015
Primarily Acquisition Growth Balanced Growth
N = Minimum of 512 companies per segment pulled from the middle 2/3 of companies in terms of growth rate. This, along with a dampening model was used to control for outlier spikes in growth rate.
@PriceIntel
Subscription growth is outpacing perpetualHow do growth rates compare to our two growth groups?
YoY
Gro
wth
%
0%
30%
60%
2012 2013 2014 2015
Perpetual Subscription
N = Minimum of 306 companies with $10M in annual revenue or more per segment pulled from the middle 2/3 of companies in terms of growth rate. This, along with a dampening model was used to control for outlier spikes in growth rate.
@PriceIntel
Buyer Personas
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: $325
@PriceIntel
We don’t know our buyers that wellWhich single category best describes your buyer personas?
% o
f Res
pond
ents
0%
25%
50%
75%
100%
Thought about them Central document Quantified buyer personasN = 1,647 SaaS companies
@PriceIntel
We don’t do a lot of cust dev conversationsHow many cust dev conversations are you having per month?
% o
f Res
pond
ents
0%
25%
50%
75%
100%
# of cust dev conversations
Less than 10 11 to 25 26 to 50 51+
N = 1,647 SaaS companies
@PriceIntel
We aren’t truly testing that muchHow many tests or experiments are you running each month?
% o
f Res
pond
ents
0%
25%
50%
75%
100%
# of tests/experiments
0 1 to 3 4 to 10 11+
N = 1,647 SaaS companies
@PriceIntel
Everything aligns to the customer
Point of Conversion
Drive Customer #1
Offer Product #1
Offer Product #2
Drive Customer #2Drive Customer #3
Offer Product #3Justify price #1
Justify price #2
Justify price #3
@PriceIntel
1
2
3
Your Process at a High Level
Buyer Personasand Design
1
Data CollectionAnd Segmentation
2
Data ConsolidationAnd Analysis
3
@PriceIntel
Persona-Product Fit
Startup Steve
• Valued features: • •
• Least valued features• •
• WTP = ~$/month• CAC = ~$• LTV: $
Miderprise Marty
• Valued features: • •
• Least valued features• •
• WTP = ~$/month• CAC = ~$• LTV: $
@PriceIntel
What type of info do we want?
• Demographic Information – How often do you look at your metrics? Team size? Revenue?...
• Feature/Packaging Information – Which metrics? What features? Value props?...
• Pricing Information – How much are they willing to pay? What frequency do they want to pay?...
@PriceIntel
Relative Preference AnalysisStatistical methodology to measure preferences for features, intention, and value propositions
Your Customer Development 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?
@PriceIntel
“Please rank the following features on a scale of 1 to 10…”
Depth of your metrics
Beautiful Design
Actionability from your metrics
Accuracy of your metrics
0 0.25 0.5 0.75 1
@PriceIntel
Persona-Product Fit
Startup Steve
• Valued features: • Price • Design
• Least valued features• Actionabiltiy • Depth
• WTP = ~$/month• CAC = ~$• LTV: $
Miderprise Marty
• Valued features: • Accuracy • Uptime
• Least valued features• Price • Design
• WTP = ~$/month• CAC = ~$• LTV: $
@PriceIntel
Relative Preference AnalysisStatistical methodology to measure preferences for features, intention, and value propositions
Your Customer Development 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?
@PriceIntel
• 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?
@PriceIntel
WTP for SaaS MetricsWTP for a SaaS Metrics Solution
WTP
$0
$75
$150
$225
$300
Size of Company (MRR)
$0 - $50k $51k - $100k $101k - $250k $251k - $500k $501k+
N = 234 companies
@PriceIntel
Persona-Product Fit
Startup Steve
• Valued features: • Price • Design
• Least valued features• Actionabiltiy • Depth
• WTP = ~$50/month• CAC = ~$• LTV: $
Miderprise Marty
• Valued features: • Accuracy • Uptime
• Least valued features• Price • Design
• WTP = ~$150-250/month• CAC = ~$• LTV: $
@PriceIntel
Persona-Product Fit
Startup Steve
• Valued features: • Price • Design
• Least valued features• Actionabiltiy • Depth
• WTP = ~$50/month• CAC = ~$500-600• LTV: $600
Miderprise Marty
• Valued features: • Accuracy • Uptime
• Least valued features• Price • Design
• WTP = ~$150-250/month• CAC = ~$3000• LTV: $1500
@PriceIntel
WTP for Churn RecoveryWTP for a Recovering Churn
WTP
$0
$1,125
$2,250
$3,375
$4,500
Size of Company (MRR)
$0 - $50k $51k - $100k $101k - $250k $251k - $500k $501k+
N = 234 companies
@PriceIntel
WTP for Rev RecWTP for a Revenue Recognition
WTP
$0
$875
$1,750
$2,625
$3,500
Size of Company (MRR)
$0 - $50k $51k - $100k $101k - $250k $251k - $500k $501k+
N = 234 companies
@PriceIntel
A good entry point
Low CAC with constant value
Creates the Requirement
Path to Share of Wallet
ProfitWellFinancial metrics for the subscription economy
100% accurate SaaS metrics for free integrating 1-
click with your billing system
Central fulcrum to cust success, sales, finance, marketing e-
team, and rest of stakeholders
Allows interface to clearly point to problems and
reinforce value of paid add-ons
@PriceIntel
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