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

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

2. @larslofgren #KISSwebinar

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?

29. SHOULD WE DO
Freemium?

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 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