Matthieu is CEO of Mention, where he moves all Trello cards to the right and closes deals. He splits his time between Paris and Brussels. Say hi @mvaxelaire.
As a B2B SaaS startup, pricing is a critical component to many of our key performance indicators (KPIs), including new signups, conversion rate, and churn rate. Naturally, we are obsessed with our pricing model and knew we were leaving money on the table with our old pricing structure and page layout.
After looking at our customers behaviours and running customers interviews, we released a new version of our pricing page.
Here is our previous pricing page:
By changing three things, we increased our Average Revenue Per Account (ARPA) by 296%. Here is what we changed:
1. Stopped advertising the free plan
We come from a prosumers model, where most of our customers used our free plan, and only power users would pay for premium plans. By advertising our free plan so aggressively, we were risking the perceived value of our software. On top of that, it made our enterprise plans more difficult to sell.
With our new pricing structure, we decided to keep the free plan, but stopped advertising it so aggressively. Because we very much so value all of our customers, we actually increased the quota of mentions you can get with the free plan
Take-away: Do not underestimate the consequence of a free plan sitting next to your paying plan. Especially, if you are also targeting companies.
2. From users to number of alerts
With our old pricing, the number of users was the key criteria to decide which plan you would select. Consequently, our penetration within marketing teams or companies was limited, as for any new user, the customers would have to pay more. Not good.
Additionally, we realised that the less people that used our tool in a company, the higher our churn would be.
With our new pricing model, we decided to put our key feature as first criteria (number of alerts). Depending on the number of alerts that you want, you will now get a fixed number of users, and we will encourage you to fill in those seats via automated marketing.
Take-away: Unless you are an “everyone or nobody” type of tool (e.i. support software or productivity tool that only have value if the whole team/company is using it such as Zendesk, Asana, Front App, etc), you should select your key feature as first criteria when setting the pricing.
3. Unbundled features
Historically, we offered two different premium plans: One with all advanced features, and one with no advanced features. As we shipped great new features over the past few months, it was time for us to unbundle those.
To unbundle the right way, we looked at feature usage per type of customer. We saw that a specific group of customers were big users (and almost the only one) of a specific feature (export). After running interviews, it was clear that the value delivered by this feature wasn’t taken into account in our pricing. Again, money was sitting on the table.
We unbundled our advanced features across our three plans, respectively: The Starter plan (no advanced feature), the Growth plan (access to statistics), and the Company plan (access to statistics and export).
Takeaway: Understand how your customers are using your product in order to determine how to price it. Look at consumption patterns, use cases among different customer segments, and when all else fails, ask them.
By making those three changes, we increased and ARPA by 296%, resulting in strong MRR growth and a big boost in our inside sales model. That will be for the next post
Questions about our new pricing model or about the changes we’ve made? Please leave them in the comments, and I’d be happy to discuss!
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