Top Lever to Pull in 2023: Pricing and Packaging
You may see a 27% improvement in ARR, so heck, why not?
Everyone has a magical idea or silver bullet.
PLG, product led growth!
Outbound!
Community!
But what does it all mean basil?
If you want to affect and shape your 2023, there’s one initiative that is cross- functional, a bit tangled, and complex, but it may pay off big.
Yes! Pricing and Packaging.
According to OpenView Partners, here’s why:
There aren’t many things you can do to grow faster and more efficiently. There are even fewer that don’t require incremental headcount.
You’re left with one initiative: pricing and packaging.
The benchmarks found that 61% of SaaS companies adjusted pricing in the last year. Folks who did adjust their pricing reported that they either realized or expected to realize a 27% improvement in ARR as a result.
If you’re not in the 61%, it’s time to put pricing on your 2023 roadmap. If you are, well it’s also time to put pricing on your roadmap. Innovative expansion stage SaaS companies revisit their pricing and packaging every six to 12 months.
That’s a big lift. 27% ARR improvement and it’s likely coming from Feature Flagging, Gating, and providing new value or incentives to users. These appear via in-app promotion and guidance rather than doubling down on your sales team or customer success team to spread the word.
So that’s good too.
Pricing Page Breakdown.
What do they use as the “hook” to pull you to the new plan?
Or how can they guide you - just in the design of the features and breakdown.
Sometimes we see this get lumped in with security features like SSO and 2FA. But where this technique shines is when the path to upgrade is clear and differentiated. Such that a user or purchasing team would not need to speak with Sales but rather feels propelled to upgrade because of a want/need in the feature set and platform capabilities.
Miro
Ok so these are clear examples where the pricing pages have been optimized and you can feel the conveyor-belt-effect guiding you along from Left to Right, where eventually you’d upgrade to the Enterprise plan when you had the size, need, goals, requiring those capabilities.
What about the way you design your pricing. Is it best to charge per Seat? per User?
Well, much has been talked about and there’s no perfect answer.
You’ll want to interview users, review the competitive landscape, and most importantly, follow your long-term business goals to help guide you.
But, if you’re looking for what’s Trendy. It’s Usage Based Pricing (UBP). And a Hybrid blend of Usage & Seat Count.
Just take a gander at how OpenView has polled the SaaS landscape and found that (UBP) is now being implemented and tested by more than 50% of the market.
Source: OpenView 2nd Report on UBP
If you’re liking this idea of re-considering your pricing in 2023 - I would add the following suggestions:
1.) Make it cross functional - get voices and opinions from Sales, Support, CSM, and more!
2.) Run a Test - start small, test a market, test out conversations on Renewals first…
3.) Use a Billing and Revenue Platform rather than juggling Spreadsheets - there are many, many options. I am always happy to help or advise on this consideration. (Drop me a message - Linkedin)
If you found this helpful, please share on Linkedin or FWD to someone you feel this may help.
If this was helpful, you can go deeper on Pricing Pages and ideas for incorporating PLG here.