Why your Average Return Per User (ARPU) matters, with Patrick Campbell, ProfitWell65 min read

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Let’s demystify pricing.

“Everything you’re doing is driving a human being to a point of conversion or justifying the product or the price” – said Patrick Campbell, Founder & CEO of ProfitWell, at a recent SaaStock Founder member event.

What we see very often is businesses fixating on an actual price point too much. But, what really matters is your average revenue per user (ARPU), and you should be looking at that number over time. Is it growing? If not, why not?

You want to make sure that the customers that you acquire today are growing at a higher rate than those you acquired a year ago.

How can you do that? Influence your pricing. On average, businesses change something about their pricing every three years. Simple, and the most valuable, ways to do so include: implementing localization, offering better annual discounts, making sure you have an add-on strategy, and so on. Then you can think about increasing your pricing.

You can read the full transcript of this workshop on value-based pricing below.

To get more insights on ARPU, and/or be part of our member-only events, become a SaaStock founder member. Apply now. 👇

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Transcript

Alex Theuma:
All right, looks like I am live, who is here? Welcome. Welcome. Let us know if you are here in the chats perhaps in the sessions chats. Let’s see where you are and where you’re calling in from. Let me know if you can hear me as well. I’ll just put in the event chats. Hi Piper, can you hear me Piper? Thumps up. [inaudible 00:00:36] Good to see you, Alex Rose. 2A you can hear me. PC can hear me. Bjorn’s in Brazil. No way, I’m jealous Dave Nuuk, good stuff. All right. Well, it looks folks can hear me. Welcome members to this week’s SaaStock member event. And it’s a workshop from somebody that has spoken at many SaaS live events. I think probably he doesn’t need too much of an introduction.

Alex Theuma:
He’s, I think, a Saastock OG as I like to call him. And someone that as we move to virtual have missed certainly seeing in person. So we’re going to have Patrick Campbell, who’s the CEO of ProfitWell run an interactive workshop on value based pricing for you today. Patrick will be going through some data on pricing.

Alex Theuma:
He has seen inside more SaaS companies than most human beings on this planet. And he’s going to pull out some interesting data on a topic, which is super important to SaaS companies growth. And he’ll also be using some live, I guess, case studies from SaaStock members looking at your pricing pages for those that submitted them. And yeah giving some feedback, advice. I don’t know if he’s going to be tearing them down. He’ll be doing it in his own way, which will be, I think, super valuable in a slightly different format from some of the other members events that we’ve done. So very excited for that. So let me just welcome Patrick to the stage. Here he is. How’s it going?

Patrick Campbell:
It’s going well man, how are you?

Alex Theuma:
Yeah, I’m good. He’s so far away, this is what happens virtually. So you’re Utah for life now.

Patrick Campbell:
Yeah, well you know, you and I the times you would see each other just traveling and I have been in one place for basically a year. So that’s a little scary, it’s a little different than the previous five years. I’m actually in Florida right now though. I came down to see what the hype was about in Miami. I don’t know if you guys are hearing about that across the pond, but Miami is getting a lot of hype in the age of COVID here for tech and things like that. So yeah excited to chat some pricing, excited to chat and be as helpful as I can.

Alex Theuma:
Well, I think on that note, actually I wanted to share one thing with you before I hand it over to you. I checked today on YouTube knowing that you were going to speak just seeing how you’ll talk, lessons from seeing inside 3000 SaaS companies was doing and it’s seven views away from 100,000 which would be… Well, it’s still almost most popular talk ever, and we just need seven people here or seven people from [inaudible 00:03:46] team to put it up to 100K. And when it gets to that I’ll certainly share that fact on social media. So that’s probably going to happen [inaudible 00:03:53] but that’s good stuff. Patrick look, it’s all yours, excited for this. And yeah, I’ll come back when you’re done.

Patrick Campbell:
Yeah, let’s do it. So just to get a feel for the room here how many folks have seen kind of me talk about pricing or you’ve read some content that we publish about pricing. This isn’t an ego check, it’s more of just should I start from the beginning? Should I start kind of in the middle? But yeah, let’s blow up the chat a little bit. Who here has kind of read or heard me talk about pricing? All right. We got two, a lot more of you have been to… All right. First time. No apologies necessary Yugen. All right, cool. So we’ve got some readings, something like that. Okay, cool. And we’ve got a couple of first-timers, great. I just want to make sure that if everyone was like, oh, I’ve seen this pricing talker, I’ve been to a webinar. I wanted to make sure I didn’t bore you at all.

Patrick Campbell:
So I think what we’ll do here is let me walk through kind of some foundational kind of theory/strategy on pricing. And then I think I was given four pricing pages, and I think that there was some of your pricing pages, and then we can kind of walk through some recommendations and things like that.

Patrick Campbell:
And that’ll open up a bunch of other questions. And so my biggest ask for all of you is to ask questions in the chat I think makes sense. Mainly because that’s going to kind of guide the content because I don’t want to kind of talk the entire time. I can, don’t worry. I can definitely talk for days about this type of stuff, but I want to make sure that we give enough time. And the other little note, just very small note. My screen set up is a little weird. So if I’m looking over here, this is where my monitor is, and I’m not necessarily looking right at you, but yeah. Does that sound good to everybody? That’s how are we fired up? We pumped? You guys got to be pumped. There you go. Yugen, Elton you’re my best friends. Got it. All right. So let’s jump in here, let me share my screen.

Patrick Campbell:
Good old hop in here. All right. Cool. I’m not going to be able to see you when I share my screen. Can you all see this deck right here before I push play? Just give me a thumbs up or a yes.

Patrick Campbell:
All right. Cool. So let me kind of jump in here. And the first thing I want to do is I want to give you a little bit of framework. We’re going to talk probably for about 10 or so minutes here and just kind of laying a foundation for pricing. So if you’ve seen some of our stuff before, this will be a little bit kind of a repeat [inaudible 00:06:24].

Patrick Campbell:
Give a little bit of background here. Who the heck am I? So Patrick Campbell, CEO founder of a company called ProfitWell. My background’s in econometrics and math. I started my career, I worked in the intelligence community in DC. Hunting bad guys and girls with data. And then I worked at Google, basically hunting more money with data. And then I started a company called ProfitWell basically to help subscription companies with revenue acceleration. And we have a couple of different products. The one product we’re known the most for is this free subscription financial metrics product. So you plug it into your billing system, Recurly, Chargebee, Stripe, whenever you’re using. Let me give you free access to really, really deep, accurate financial metrics. And so that’s a product that’s now used by about 20% to 25% of the entire subscription in SaaS market, depending on how you want to measure the market.

Patrick Campbell:
So that gives us a lot of data that we kind of study and understand, but it also gives us really good access to understanding what the themes are within the market. And the way we make money as we have a couple of different products that help one basically recovers your churn and your cancellations on autopilot it’s product called Retain. And then we have a product called Price Intelligently that essentially does price optimization and monetization for subscription in SaaS companies. And so I’m giving you this background not to sell you, that was kind of a terrible sales pitch. But just to give you a little bit of context on where a lot of this data is coming from and ultimately where kind of our perspective comes from. So with that being said let’s do this setting the stage here.

Patrick Campbell:
So the first thing to kind of answer the first thing to understand is what are we actually trying to do with monetization? The reason that I want to kind of set this foundation is because a lot of you out there that really doesn’t depend. It really doesn’t matter what stage you’re at, but your concept of monetization is a bit limited by your experience. And most of us haven’t done anything with pricing. And most of us, when we have done stuff with pricing, it’s just been really, really complicated within our businesses. And I think it’s mainly because pricing sits at this intersection of uncomfortable and important. And whenever you have something in your business, that’s both uncomfortable and important, everyone kind of gets a little squirrely. Everyone gets a little bit like, “Oh, I don’t want to focus on this.” But what I’ve learned in kind of talking about pricing for almost a decade now, is that really the thing with pricing is that it’s not difficult, but it does require effort.

Patrick Campbell:
And it requires kind of taking the understanding that you use for every other part of your business and applying that to the central thing within business. And so what I want to do is I want to kind of demystify pricing a little bit, and that really starts with what in the world are we actually trying to do with monetization?

Patrick Campbell:
And if we go to the 30,000 meter level, what we start to learn is that in your business. It doesn’t matter what type of business you have. You are creating some sort of value. And because we don’t trade goat for wheat and the economies that we’re selling our products in, you were ascribing some sort of currency amount to that value. And in this manner, at the very, very highest level, the way they want you to think about pricing is it’s the exchange of value [inaudible 00:09:29] is that if we go down a little bit of a level now we start to realize that when you look at our business and again, it doesn’t matter what we’re doing.

Patrick Campbell:
There’s a lot of levers that can actually influence value that we may not actually think about in the context of monetization. And if you think it’d be a business, everything you’re doing is driving a human being to a point of conversion or justifying the product or the price. So even there, those three nouns start to become super, super important when it comes to your monetization. For instance, you can change who you sell to. If you go upmarket or downmarket, you change the vertical you sell to. All of a sudden their value perception of your actual product is going to shift and they’re in it to influence what you can do and what you can’t do with your monetization. You can change up your products, not only this includes changing mirror or how you position or package your product, but it also involves maybe I should pull features out and make them an add on. Maybe I should change up how I charge, my value metric.

Patrick Campbell:
And then of course there’s also the actual price point, which I think a lot of people fixate too much on, not because it’s unimportant, but ultimately because compared to all the other things that you should focus on, especially if you’re earlier in your life cycle, it’s one of those things that you should understand, hey, am I 100 euro product? Am I 1000 euro product? You shouldn’t be fixated om am I my 19 euros, or I’m at 20 euros? That’s a question for maybe a couple of years into the business, let alone not the first couple of times or days in your business. And so the big thing to kind of think about is that when you look at your pricing, the one number that I kind of want you to think about is your revenue per customer.

Patrick Campbell:
So you should be looking at your revenue per customer over time. And basically that number should be going up. Essentially not only in aggregate, meaning your customers you acquire today are spending more with you than your customers acquired a year ago, you should flip that. But you should also be making sure that those customers that you acquire today are growing at a higher rate than those customers that you acquired a year ago. And this basically comes down to making sure that you’re actually taking this seriously and making sure all the numbers in your business, you’re actually doing things to basically influence this number. And what can you do if we go all the way down to the rail? I mentioned a bunch of things already, but there’s a lot of different things you can do to influence your pricing. And this is not an exhaustive list. There’s easier things like dusting your value metric, like how you charge, obviously increasing prices is something that we can get into.

Patrick Campbell:
Making sure that you have an add on strategy, I talked about before. And then there’s harder things now where going up market or changing who you target is now a harder thing to do. In addition to that feature differentiation has actually become much, much harder which I’ll talk about in a second. But the big thing I kind of want you to take away from this particular section is ultimately the revenue per customer is the game when it comes to monetization, for that in a bunch of different ways, ACV, ARPA. It doesn’t really matter how you measure it. You should obviously measure it properly for your business. But this is the thing where if we look at most businesses this number is flat and anemic because there’s [inaudible 00:12:32].

Patrick Campbell:
In the world, what they end up doing, is they end up changing something about their pricing, almost every single quarter. And what that results in is really, really good ARPU growth. And what you’re looking at here is a basket of about 3000 companies. And you’re looking at their ARPU growth or the revenue per customer growth over time. And then the different lines represent how often they change something about their pricing. And to be super clear, this does not mean that they are increasing their price every quarter. I’m going to say that six more times, because inevitably, someone’s going to ask the question, how do people change their prices every quarter like this? That’s not what I mean. What I mean is one quarter they implement a localization. The next quarter, they implement packaging changes. The next quarter they implement some better annual discount.

Patrick Campbell:
And then the next quarter after that they do actual increases. The point is that you want to make sure that you’re actually using this as an actual lever within your business. And as you can see by the data here, it’s rather intuitive. When you focus on a particular metric, you tend to move that metric and the direction that you’re trying to move it with the folks on the top here, the top line being those who change it every three months and then the bottom here being either changing something about their pricing every three years, which is basically the average right now. Now, the last kind of philosophical thing that I want to kind of get into before we get into a little bit more looking at pricing pages and getting really, really tactical is really… And I think this is super, super important.

Patrick Campbell:
And it’s something that I’m in kind of ringing the bell of for a couple of years now, because I think that a lot of us get a lot of advice from many different types of people. But a lot of the advice we’re getting is very, very much rooted in kind of SaaS 1.0 or SaaS 2.0 kind of age. When we’re kind of in the next age. And what I mean by this is if a company in the early 20000 even up to the 2010s. The biggest barrier to you building a company were the tech physical barriers, meaning trying to actually get the product out. We didn’t have proliferation of the cloud. We didn’t have DevOps tools, we didn’t have all these things. And instead, what ended up happening is that we had all these brand new marketing channels opening up every quarter as well. This phenomenon where you not only were able to ship stuff faster and faster every quarter, you’re also able to expand and distribute better and better.

Patrick Campbell:
Well, what’s happened now is that we actually are looking a market where we haven’t had a brand new marketing channel since 2015. And this is inventing things like hair price sales, which is just that’s what we’re calling ABM now. Or we’re trying to figure out all strategies because we need to basically get better and better at our jobs. Now, the result of this is that we as businesses we have power. And what I mean by that is we’re looking at a market where customer acquisition costs are up about 70%. And this is basically blended in both B2B and in consumer products. So a customer that might’ve cost you 100 euros, six, seven [inaudible 00:15:26] they’re not costing you about 170 euros today to acquire. And whenever we segment this, however we segment it, the trend is still so similar.

Patrick Campbell:
Products has gone down and the reason for this is that basically you’re living in an environment where products aren’t as magical as they once were. You used to be able to put a login screen on a database and you were looked at as a God. Now, if it doesn’t have good design, doesn’t have good support and a whole bunch of other things, we’re not even going to give you the time of day. And you can actually see this where we measured willingness to pay at different increments over the past seven years for a bunch of different products. It’s a million data points, a million different respondents or customers of these products and basically found that that sales force integration that you might’ve charged $1000 a month in addition to your core product, that’s now only about 30% in the eyes of the consumer because the market has gotten denser and denser and we’ve arrived.

Patrick Campbell:
Anyone in their mother can start a product today, spin up a server, spin up a websites. They’re pushing traffic to that website, wouldn’t necessarily be a great product, but it does kind of had to be in the market. And the final kind of nail in that coffin is our customers they’re more ungrateful than ever. I don’t mean that they’re actually ungrateful. The thing you got to think about is NPS scores, because product has lost that magic and NPS is a measure of customer satisfaction. It’s considerably and it’s not that your customers aren’t happy. It’s just their expectations have changed dramatically. And got a bunch of advice from people who were really successful in the early 2000s. And we don’t look at this from first principles you end up with a phenomenon of, oh, let’s just keep spending money like it’s 2005, right?

Patrick Campbell:
Let’s just keep dumping more and more cash into some acquisition, which you’re still going to have to do, but the problem you do this now, it’s one of those things that you have to be good at acquisition just to survive. The average company, the average SaaS company, and we did a study on this. They spend about half of the budget on sales and marketing. And it’s not that you’re going to stop doing that. You’re probably going to keep spending at least half your [inaudible 00:17:38] if not more, in some cases on sales and marketing, but the data indicates that we’re basically at a point where acquisition is in stakes. We did this study where we isolate three main growth lovers in a subscription business, acquiring customers [inaudible 00:17:54] them and retaining them. And what we found is that if you improve each of these same levers, by the same amount you get very, very different outcomes.

Patrick Campbell:
So if you improve your acquisition, your net new leads, your conversion volume by about 1%, you’re actually going to see about a 2% boost in your overall revenue. And if you do that same 1% increase to your revenue per customer activation or your retention, keeping those customers around longer, you actually end up with about four to eight X impact. And to be super clear I’m not advocating for spending less money on acquisition. I think that would be a terrible strategy. I am saying though that if you don’t think about, and you don’t have anything going on with improving your retention and improving your monetization, basically the things that are pushing these hyper-growth companies forward, because it’s not just because they’re good at acquisition it’s because they have all three of these levers, basically moving in the right direction, at different velocities, don’t get me wrong.

Patrick Campbell:
But they take a balanced approach to growth. And so the big thing to kind of keep in mind here is I’m not trying to make you feel terrible, I’m not trying to make you feel like the world is ending, it’s not. This is all because of our success. SaaS has arrived, right? But the big thing you got to think about is you got to be good at pricing. You got to be good at retention. You don’t even have to be at great. You just have to be average actually. And you got to be good at acquisition in order to be a successful company in this current market. And so yeah, I may have made everyone feel bad, but I think that’s the foundation I want everyone to know. That’s the biggest thing I want you to take away is I take this stuff seriously because the market has changed so dramatically and you’re not going to be successful unless you get really low.

Patrick Campbell:
Which people are getting less and less lucky over time as the market becomes nice and even but it’s a big thing to kind of think. So I’m going to pause there because I think as we get into answering and looking at people’s pricing pages, we’ll actually get into a bunch of different practices. I can jump back and forth with the deck, but as I pause here let me see if there are any questions in terms of answering that I can get into. Elton, hunting bad guys and girls with data sounds catchy, what’s the professional term. I was an analyst at the NSA, so that’s the official term.

Patrick Campbell:
Technical issue? I hope everyone was able to hear everything, but maybe not. Just passionate about my recommend on a slide on subscription tax study, it looks interesting. You can just email me at Patrick a profile and I can send you the stuff that we’d launched public. But any other questions on this section? Or can we keep jumping in? All right. Cool. Cool. Cool. All right. Here’s what we’re going to do. I’m going to jump in these four pricing pages that were sent over. And then from there, what we’ll be able to do is basically not only give kind of critiques of their pricing pages, but also make sure that we’re going into some of the underpinnings of the sites. One more question here from Elton, how has the current subscription model for SaaS may not be applicable? Any strategies you have better customer acquisition I was thinking of vertical to add value.

Patrick Campbell:
I’m not seeing the question there. Maybe you’re just making a comment. How is the current subscription of SaaS? Yeah, if you could readjust your question, it might be me just misinterpreting it. But let’s jump in and we’re going to talk about, I think it’s Froged based on what’s going on the site. But if it’s Froged, stop losing customers, engage with them now. So I’m just going to give my initial reaction, then I’ll go a little bit deeper here. Communication tools for onboarding, retention tools, customer support, we provide one of the best widgets to offer stunning support. So my first thing, and this is a really important thing when it comes to pricing, is that it’s one of those things where it’s important and we all fail at this because we all get our own times when it comes to copy.

Patrick Campbell:
But the big thing that I’m struggling with here what do you actually do Froged? That’s the biggest thing. I see customer success up here. So I want to assume you’re a customer success software, and obviously talk about not losing customers, engage with them now. But it’s the fastest way for subscription-based businesses to improve customer onboarding and retention while avoiding churn rate. So does that mean you do customer onboarding? Does it mean you do posts engagement? I’m a big fan of your H1 can kind of be super ethereal or a very value focused of what you have, stopped losing customers. But then H2 should be, in my opinion, at least there’s been some studies on this should be very clear. Your customer success software to help you onboard and then do post purchase engagement or something like that.

Patrick Campbell:
That’s a little bit more obvious. Just so I know exactly what you do. Now, if we go to the pricing page. So we have starter gross scale and enterprise with kind of different Froged, which is kind of interesting. I think one thing to kind of think about here and one thing that Froged is doing really, really well is right now a lot of folks when they come to a pricing page, your goal should be essentially to have them understand, know what the plan that they should go to should look like within 30 seconds or so. So when I look at this, it’s a little bit hard for me to get that.

Patrick Campbell:
They talk about being affordable for everyone. Might not be the best pack because when I look at affordable for everyone, is it like are you trying to signal that you’re the cheapest product widget which doesn’t necessarily have-

Alex Theuma:
Just jumping in here because it seems to be frozen. Can anyone hear and see me? I see Patrick’s coming back or he’s left. You can see me. Okay. Yeah. Got you. All right. Yeah. Sorry about that guys about what’s happening there, but it all seems that we were all having a bit of an issue. So whether it was a hopping or a browser issue, but I can PC is back, you back.

Patrick Campbell:
Can you hear me?

Alex Theuma:
Yay. I can hear you. You were just about to jump into Froged or Froged. I don’t know, as you say how to pronounce it, perhaps someone can help us. But it seems you’re back and things are working. So maybe it was just a browser issue, but I’ll leave it with you. And hopefully we’ll be smooth sailing from here.

Patrick Campbell:
The chat open in case things fall apart again there, so, okay, cool. So I will restart. I had such great content that I just said, so I’m not going to be able to remember it. So, no it’ll give me a do over here. So here’s the thing, when it comes to your pricing the first thing that a lot of people miss is making sure that people understand what in the world you’re actually selling. And I know that that sounds a little trite and maybe a little condescending, but the biggest thing is I need to understand what the value I’m getting is. And oftentimes what we end up doing is we focus a little too much on the ethereal stop losing customers, stopped doing this, these types of things. And then we don’t back it up with here’s exactly what I’m doing. So in the case of Froged, cool website, all these other things.

Patrick Campbell:
But the thing that I had trouble with when I initially was looking at the website was I see that you have some sort of aspect of customer success, especially when I see this up there. But I’m not exactly sure. So like onboarding, okay, understand onboarding. Retention, what do they do for retention and then support, right? So is it a help desk? Is it something that’s apt to use for onboarding? So the thing that I would start with here I know it doesn’t sound like this is monetization, but this is part of positioning is I would totally start with stop losing customers, engage with them now. Keep that, that’s fine. But then my H2 here, I would want to make sure that, hey, let’s make this super specific. Customer success software for onboarding, post-purchase engagement of customers.

Patrick Campbell:
And this is a little too sterile, but hopefully you’re getting the picture and augmenting your help desk support. Right. So that’s a little still like, what do you do? But at least helps me be like, okay, this is what you’re going to focus on. And we all kind of fail at this. I’m sure there’s stuff on prompose website that’s confusing, but it’s one of those things because we get in our own heads when it comes to what is actually happening or what we’re actually doing. And we have so much context in our companies that we don’t realize that someone coming to the site for the first time may not have any context. Now, when we get into the pricing page. So this is Froged’s pricing page, just checking consociate. Yep. One thing that they do that I would rethink is this affordable for everyone.

Patrick Campbell:
Does that mean you’re cheap? Is that mean you’re the small guy or girl on the block, right? Compared to the big folks? Affordable for everyone, if you [inaudible 00:27:19] product, meaning you’re kind of the cheaper version of the market, that’s totally fine. There’s a lot of products, that’s how they build their business, but you have to make sure that there’s a really intentional move. And that’s the thing that I would kind of think through for a lot of folks. The other thing here is something that you do fairly well is when I come here, one of the goals you want for a pricing page is I should understand which tier that I run into within 10 seconds. Really, it should be closer to five seconds. And what they’ve done here was starter, grow, scale, enterprise, even just with the names. Maybe I’m the starter, if I’m coming in and I’m not really sure what the product is, grow and scale.

Patrick Campbell:
It’s like, well, am a scaling business, I think that I should end up here and no one really wants to be a small business. They want to be a growing or a scale business. And so it’s one of those things that helps me. And then here they do really well with kind of these little call-outs. What I would want to do here is make these about half the words in a little bit more obvious. So here I’m at the starter plan and I want right underneath here to be for those just starting off with customer success or whatever their product actually is doing. Here it would be like for those who have an established team and are looking for the proper software for customers, that’s a little long, but hopefully you’re getting the picture. And then underneath here, it gets a little problematic for me.

Patrick Campbell:
Because here it’s hard for me to kind of determine what the key differences are within the tiers. So when I look at a pricing page like this, it’s okay, so one seats, three seats, there’s these features, then there’s these features. It gets a little bit confusing for trying to go back and forth. And you don’t want someone sitting here trying to decipher your pricing page. So what I would do is I would highlight the main differences between these particular tiers. And then what I would do is I would have and maybe they have it, yeah, they had to have this, I would have this down below or, hey, see all the features. So if I’m a buyer or someone who wants to understand, I want to look up here and have a very clear answer. It’s this tier, this tier, this tier, this is what’s included.

Patrick Campbell:
And then below here, this is where I want to get into if I really want to understand all the nitty-gritty details. Yeah. And I think here this just gets tough, there’s just too much information for me. Now, if I’m going to talk to you as human to human on a sales call, maybe this is fine, but I would want this to be a little bit clear about what the key differences are. And it’s hard. It’s hard to be, well, what particular feature do I put up here? What do I not? And in one of the best kinds of companies out there, and I almost don’t like to reference them because Slack on a lot of things going well for them. But notice what they do here for small teams trying out Slack for an unlimited period of time, for small and medium businesses, for larger businesses.

Patrick Campbell:
And then here, it’s like they’re very clear about the three to four things that are different between the tiers. So here’s what’s going on. Here’s what’s going on. And then below this, they have kind of the death by 1000 check marks. If I really, really wanted to know everything that’s going on, and then they have these learn more pages that it’s a completely separate page that can kind of explore. And this is kind of a way to have the best of all worlds where I can kind of figure out what are the key differences. It’s still a lot of information, right. But it’s just organizing a little bit easier manner. Now, the other thing and this is I think an important thing to point out for everybody. Let’s look at these price points.

Patrick Campbell:
So we have a $69 a month, $249 a month, $890 a month. There’s this thing called the, there’s two concepts the mx effect, that we claimed for this phenomenon that happens where, what is the price point that someone in your target customer base is willing to just swipe their credit card or just swipe their payment and just start using it? And when I look at this, it’s one of those things where I think that they are basically a little under priced in some of these. I think 249 is fine, but we’ll be fine when we look at a bunch of data is that essentially the difference between $69 a month and $99 a month or 99 euros is, there’s no difference for products like this at least. For B2B kind of products, particularly in the customer success space, but most B2B apps. If someone’s willing to pay 70 bucks a month or 70 euros a month, they’re probably willing to pay 100 euros a month.

Patrick Campbell:
And if they’re willing to pay 890 a month, they’re probably willing to weigh 1000 a month. So there’s just some little things here and we can get into how to actually test for pricing or collect data on it. But it’s just something that I would think about. I do like the bill annually. The problem here is that there’s no call-out of what am I actually saving? They force me to do the math. Which what I would do is I would simply have this and bill annually and I would add a little smaller texts that was, a one month free or two months free or something like that. And the reason that that’s pretty crucial is because, [inaudible 00:32:19] percentage off, 18% off, 10% off to go annual that does not work as well as one month off, two months off, $100 off, 200 euros off.

Patrick Campbell:
And the reason is because as humans we have a little trouble with percentages. We really understand whole numbers, but when it comes to percentages, it gets a little murky. And so the big thing here is what I would do is I would change and add a little bit of whole number of what I’m actually getting if I go to the annual plan. The other thing is at the enterprise plan doesn’t change with the annual, you might be forcing annuals there, which is fine, but I would still have something change here. Even if you have to change your list price to accommodate what that enterprise plan looks like.

Patrick Campbell:
Cool, I think that’s enough. I think there’s more stuff we could get into here, but I want to make sure we leave enough time for everybody. If you have questions or you want me to go deeper on a concept, just throw that in the chat. There’s one other content I want to kind of talk about through the deck in a second, but let’s first get to Dixa or Dixa apologies if it’s one or the other. So first let’s look at Dixa, grow your band with better customer service, the fastest, most efficient support software for customers loving teams. Yeah. So this is fantastic, right? So it’s conversational customer service software. I don’t really know what that means, but I know it’s customer service software, right? Grow your band with better customer service, who doesn’t want better customer service. Is a great value proposition, great positioning. And then here, it’s very obvious. The Dixa effect, this can get a little much, but it’s positioning, right? So in a market where customer service software, there’s so many options this is a good differentiator.

Patrick Campbell:
Anyways, going into pricing. So we have customer service software, right? Turn conversations into profits. It’s a lot of different value props. I think I would kind of stick with one or two and try to figure out what is the one that’s going to keep me going. I think turning conversations with the profits, whenever you get to positioning, that goes to the actual heart of what you’re doing, it can be really, really useful. But here my first instinct is I would change this to 150 and this to 200. I think that’s, again, the mx effect and those price cliffs someone who is willing to pay 139, 149 isn’t that much. Put another way that the sales process is probably going to be the exact same. And there’s not going to be much of a difference.

Patrick Campbell:
So it’s something to kind of think about. The one thing I have here is with the euro, pound, sterling and US dollar differentiation. This is really smart from a localization perspective because I want to buy in my own currency. But the thing that I would think about, and we could talk about localization, especially because a lot of you are selling outside of your home region is I actually want to take this a little bit of a step further. And the reason localization is important is because people they trust their currency. Sometimes they’re worried like, oh, what if something happens with that business? These are going to be fraud or something like that. But also their willingness to pay are different in different regions. So the data you’re looking at here is basically about a thousand and a half subscription companies or here on the far left is no localization.

Patrick Campbell:
And you’re looking at their average revenue per user growth. And then here are people who just do cosmetic localization. So Dixa just literally adding cosmetic localization is probably getting some gains from these other regions that they’re selling into, whether they’re selling into the States in addition to Europe, as well as the UK or kind of vice versa. And then here is something to think about where region based localization comes into play. And this basically means having different price points in different regions. So the concept of you’re going to charge the equivalent of 100 euros in the US but the equivalent of 150 euros in actual Europe. And this is just because there’s different densities in different places, and what’s kind of cool, and this is willingness to pay relative to the US for a whole host of products, a bunch of different products that we kind of did a composite study with.

Patrick Campbell:
And so if you asked me what should my price be relative to the United States? Well, I would say if you’re selling into the Nordics, it should be about 30% higher than the US. If you’re selling to Southeast Asia, it should be about 40% less. And so the thing that I would do, and I would test this because while this is a lot of products and a lot of data, the variance is pretty high, meaning some products it’s 80% more and some products it’s basically flat. But if I was selling at least 20% of my base outside of my home region [inaudible 00:37:07] the localization and the bare minimum here is kind of what Dixa is doing with kind of the Euro base.

Patrick Campbell:
But I think what they could do is if they just implemented a little bit of where they basically have different prices in these different regions, assuming enough of their base is in these different regions. So that’s one thing to kind of think about. They’re doing per agent or per user pricing, which for something like customer service software makes sense. I’m not a big fan of per user pricing for most products, unless the product has a very different experience from a user to user basis. So for customer service, I see my tickets. Whereas when you log in, you see your tickets. You couldn’t use my login to do your job, and that’s kind of the key differentiator. But for most folks you shouldn’t be using per user value metrics is what they’re called and I’ll explain value metrics in a second.

Patrick Campbell:
But I think the other thing here, I would pull out these features a little bit more, what are the key differences, very similar to Slack. I can go down here and see all of the other things if I wanted or they could add that kind of too many checks barks as we talked about. But I think right now it’s just a little too much for me to understand and they might be hiding behind the demo. I just want to see that the bullet that really makes sense to me is there, and then I’m going to book a demo. So it’s just something to kind of think about here. I think, yeah, they do have this. So this is what a lot of people do is they’ll have this little compare all features. I would just make this more of a summary and then have this for someone who wants to look through everything.

Patrick Campbell:
But this is an okay implementation, but just a couple of little things to implement. This is good. What should I be using? FAQ’s, people always have FAQ’s. I think that I would organize this. Yeah, this is a lot, so there’s a lot of information it’s kind of okay, because it’s on the bottom of the page, but I would boil this down a little bit, especially if I’m trying to optimize for getting someone on the phone. What are the things that are actually really, really important here? And then I would push the social proof up. Imagine this is closed, give me something right here, that’s like Dixa’s awesome, you got to use it, blah, blah, blah, blah. And then like [inaudible 00:39:20] CTA to get on the phone. Because this social proof, especially in a really competitive market is crucial.

Patrick Campbell:
Now, the one thing I talked about, and this is the one thing that if you get everything else wrong in your business, but you get this one right, you’re typically will be okay with your pricing and this is known as the value metric. So the value metric is how you charge. So for Dixa it was per agents, per user. For Froged… Sorry if I think it’s Froged, maybe getting that wrong, apologies if you’re on here. It was per user, per agent, essentially as well or proceed. Now again, if you have a different experience from user to user proceed might actually make sense. But for a lot of us proceed is a relic of the past perpetual license world. But for most of us, we can [inaudible 00:40:15] it’s based on the number of people that use the live chat, the Intercom live chat. So if you have a thousand people use the live chat, your price is A, if you have 2,000, your prices is A plus B.

Patrick Campbell:
One of their competitors Drift basically charges on a per seat basis. So how many agents are actually using the product. And what’s interesting is they both are successful companies, Drift targets sales and marketing, whereas Intercom targets support, sales, marketing product, et cetera. So there’s a little bit of differentiation there. So Intercom needs a little bit more of a genericized value metric.

Patrick Campbell:
But the reason that this is so powerful, is that if you think back to your economics class back in the day, your professor or teacher he or she put a point on the demand curve and said, “Oh, at this price point, if we shade in the area underneath that point, that’s the revenue you’re going to get as a company.”

Patrick Campbell:
Well, what a value metric does, is it gives you seemingly infinite price points. You have a price for Disney who has lots of users, and then you have a price for Johnny or Jane startup who has a small amount of users. And so you’re paying different amounts and you make sure you’re not charging them the same amount, and it works in terms of growth.

Patrick Campbell:
So here, you’re looking at the light green or value metric based companies, the dark green are just feature differentiated. So the only difference between tiers is the features. And basically growth is just so much higher. And where that growth comes from is one is your cancellations and churn are much, much lower with value metrics. So here on the far right, you’re looking at churn revenue, churn monthly revenue, churn for a value metric based companies. On the far left, you’re looking at feature differentiated, and obviously we want lower churn than more.

Patrick Campbell:
And the other thing which is really powerful is your expansion revenue is much, much better for a value metric because it’s not like you have to sell them the upgrade. It’s more just hey, you’re using more, that’s awesome, congrats. We’re just going to move you up to this next tier, which works really, really well. And so here’s some data on that, the same categories and I’m going to share this afterwards.

Patrick Campbell:
I know I’m going through it pretty quickly, but typically if you’re using a value metric, you have double the expansion revenue if you’re not. So the big thing here keep in mind is if you get everything else wrong, but you get your value metric right, you’ll typically be okay when it comes to your pricing. And the best thing to think about to actually putting this together, Froged, sorry. Thanks, Alex.

Patrick Campbell:
The best thing to think about is what’s the perfect value metric. So if you think about your perfect value metric for a B2B business, which most of you are, it’s going to be some measure of revenue that I bring you, revenue I save you. Well, if you can charge on that and you can get your customer to agree to that measurement, fantastic. That’s how you should charge.

Patrick Campbell:
And that’s what we do with Retain. We’re able to charge based on recovered revenue, and then we can get our customer to agree to it. So all of a sudden it’s a very symbiotic relationship. Whereas if we are in a situation where you can’t charge on it, or you can’t get your customer to agree to it, which is most of us, you have to take a step back and find a proxy.

Patrick Campbell:
So for Dixa, it might be turning conversations into profits. We are a customer service software that helps you get more profits [inaudible 00:43:16]. Perfect value metric is the amount of revenue that you can bring in through the Dixa software through customer support. Well, it’s probably going to be hard to measure it. Was it just because I had a really good sales rep? Is it because of the software? What does that look like?

Patrick Campbell:
So it’s a little bit harder, so they make basically a proxy list. They could charge based on the number of conversations, you have of customer service, based on the number of agents, based on the number of help docs, could be a whole host of things. And then you go out and you look at that and you talk to your customers and do some research, to determine how you should push this forward.

Patrick Campbell:
Now, for most products, something like customer service, it’s pretty well known. So unless you’re going to try to shake up the market by using a different value metric, we’re probably going to end up using per agent or proceed. So that’s what Dixa has essentially done. Cool. Before we go to the next one, any other questions we can get into stuff that’s we’re not even talking about?

Patrick Campbell:
We’ve been talking about raising prices, whole host of things as well. So if you want me to go into something else, make sure to ask the question in the chat there. But let’s move on to the next one. And keep in mind I know very little about these businesses. So they might be going you know nothing Patrick, and that’s totally fine. I’m giving more advice from, hey, I’m someone coming to this for somewhat the first time from a pricing perspective.

Patrick Campbell:
So let’s look at Apify, so cool. Again, first thing I would do here. Yeah, so I think this help is interesting. I would change this to a physical number. One month free $100 off whatever it ends up being. Let’s look at their actual site. So make the web work for you. Apify can automate anything you can do manually in a web browser and run it at scale. We’re your one stop shop for web scraping data extraction, web RPA. Okay, cool.

Patrick Campbell:
So I know what it is. It’s like the web scraping data extraction, basically anything in a browser. Fantastic. This is great. And so if I go to the pricing and this is where I think some of you are bringing this up a little bit multi-product, which we’ll talk about in a second here. But as we go through Apify, what they have is they have a little bit of a differentiation. It’s kind of multi-product, but it’s not quite for individuals.

Patrick Campbell:
So a $0 plan, a personal plan and then for companies, so small teams, these types of things. Now, the reason this gets a little tricky is because they’re showing two personas, two customer segments, individuals and companies, and multiple plans for those segments. So I have two tiers for personal and I have three tiers for companies.

Patrick Campbell:
So what I would do is I would combine this into one line basically. So I might pull out my free plan and make it let’s just put that on the top of the page. Hey, get started for free. You get up to X gigs or something like that. And then I would have personal team [inaudible 00:46:21] your pricing page. A lot of people think about it as a single move game. Hey, I’m going to get them to convert and that’s it. It’s a multi move game.

Patrick Campbell:
So when I look at this particular page, I’m okay if I’m one line, there’s personal team and enterprise, because that person who gets on team when they come in, or you can make it personal business enterprise if you want, based on this popular, they’re trying to drive people to this particular tier. But what I would do is I would basically set it up in a way that I can get someone through the door, and then their usage is going to bring them up to higher tier plans based on that value metric.

Patrick Campbell:
Or I want to talk to them on the custom plan for the enterprise side. And the reason for this is this just gets confusing. So I know that it sounds ridiculous. For individuals for business, this should be obvious to people. And I know that’s probably what someone has said, but the big thing is you’re adding some complexity here in addition to all of this other complexity.

Patrick Campbell:
And this is the other thing I would think about. So right now [inaudible 00:47:20] four or five value metrics. That’s a lot. And this is something where Apify I imagine you’re a little bit more technical if you’re using the product. But maybe you’re not as technical as using developer product. So if this was AWS, there’s 16 different value developers, so it’s I totally passed through, I will learn exactly what I’m using.

Patrick Campbell:
Here, if I’m coming to this and I’m like, let’s say a marketer or someone who’s a growth marketer. It might be hard for me to be okay, so I get 30 shared data centers, the max active or 32. Do I want 32 gigs, or do I want 64 gigs? I’m not really sure. So all of a sudden you have a bunch of these questions. So what I would do here, is try to find is there one of these metrics or two max, that’s a proxy for the rest of them.

Patrick Campbell:
And this is going to take probably doing some histogram analysis, which you learned in fifth grade, but then you never really used unless you were in stats. But basically what I would do, is I would look at my user base and I would do histograms for each of my tiers across [inaudible 00:48:33] true or not. But well, you might find is the number of proxies is not that important.

Patrick Campbell:
And I’m sure there’s a subset where it’s very, very important. But what I would do then is I would just eliminate that differentiation until you get to the enterprise. Where it’s just here’s a cap of this many, because right now I’m confused as to what do I need and that’s causing me not to maybe sign up. And so there’s two solutions here one, simplify this by basically just showing three tiers and just getting someone to sign up. And then basically getting them to figure out what they need inside the app and having a bunch of triggers for them to upgrade based on what they need.

Patrick Campbell:
The other solution is simplify the actual tiers, where you only have one or two value metrics which are proxies, meaning I’m already going to be paying for this plan and then I’m going to need 300 proxy is just something like that anyways, so let’s just charge based on this one thing. I know a lot of people like to try to be everything to all people.

Patrick Campbell:
They’re like well, we sometimes have these types of customers and those types of customers need this and there’s that constituency. You want to pick that center lane of who that customer is, in order to make sure that you’re not causing confusion. Now, again, if their buyer is strictly someone who’s more technical when they show up here and they know exactly what platform usage credits are, data center proxies, max sector memory, data retention are, then fine.

Patrick Campbell:
They can get away with this complexity, but I would try to simplify this if you’re trying to go after folks who are a little bit less technical. Some other things here. I would really simplify, that would be my thing. Even if you want to keep a lot of this, just simplify the actual visualization as we talked about. Just get them through the door.

Patrick Campbell:
Whenever you have a lot of help text, that’s when you know maybe we’re getting a little too complicated. Again, I don’t know their business, but I would work on getting them through the door than going [inaudible 00:50:36]. Have you got any examples of how you can do a product suite pricing? So this is something that Apify could theoretically do a little bit as well. So with product suite pricing, it basically means if we look at HubSpot, for example.

Patrick Campbell:
So HubSpot they have suites. So they have free tools, marketing, CRM and sales, customer service CMS, so much information. And it’s not pretty and then they also have these bundles. So this isn’t pretty, but what they’ve done is they’ve solved this problem by basically pushing you to sales. So every single person in the world of HubSpot basically talks to a sales person, unless you’re signing up for the free products, which they do have obviously.

Patrick Campbell:
But I think the big thing to think about is you’re going to have to differentiate a little bit. So here’s what they do with just differentiating their multi product and then they also have a bundle option. This is pretty overwhelming. But as soon as I went here, even though I’m already a HubSpot customer, I guarantee you I got an email from someone being lie, oh, you checked out our pricing page, because I use HubSpot a lot and every time I go here, they send me an email.

Patrick Campbell:
It’s hey, it’s generic, but it’s one of things where they’re trying to push you to sales. The other thing is Slack, what they’ve done. So when you go to their pricing page, they have [inaudible 00:52:00] where I can go here and I can talk about enterprise or a particular product. And then typically you’re pushing me to talk to sales or something to that effect. And that’s how they’ve handled it.

Patrick Campbell:
So HubSpot essentially has the same thing where their pricing page gets a little complicated, but it at least has everything on the page, and then pushes to a sales person. If you’re not in sales or you’re trying to do PL growth and you’re doing it with a suite, you have to just be careful. So the one thing that we did with ProfitWell pricing, you have to choose what our competitors is advertising. That’s great.

Patrick Campbell:
What we do is we push people to one thing. So the profitable metrics, we push them to one thing. And we show them, here’s all the things they’re getting, enterprise. Honestly, this is a decoy. We do have all these features, but they’re available basically for everyone. But this is just a decoy and when you’re using a free plan, big companies, sometimes they’re like, oh, free that must be bad.

Patrick Campbell:
So this is a decoy and then you kind of explain why it’s free. And a little later we do our bundles is we basically have, hey, here are other products. And then you can basically learn more or talk to a sales team. And then there’s other ways they can go through some of our other products, and then they can find pricing and talking to a human being and things like that.

Patrick Campbell:
So I think that’s the thing to think about. It’s you just need these different spokes to bring people into the hub and the hub being basically the sales team. That’s how I would do it Dave and Philip. And if that isn’t go deep enough, hit me up I can go deeper based on your particular company as well. Let’s see here. Let’s go through the last pricing page just for time, and then we can answer other questions.

Patrick Campbell:
Is this helpful? Is everyone learning something? How are we feeling? Are you feeling pumped? If not, if you’re not learning something, I will pivot hard. I will go deep. Okay. Cool. All right. So let’s look at Videocommerce boost your video. Let’s go to the homepage. Video personalizing, advertising, sharing. Okay. Interact with your customers like the way you interact with your friends. Turn any video to highly engaging, personalized and interactive video.

Patrick Campbell:
I don’t know if I want to interact with my customers like I want to interact with my friends. I know why you’ve put that there, but I don’t know if that’s the value prop that I would harp on from a positioning perspective. I’m assuming this is your product though, this is what it looks like. So if I hit video growth, okay, then I’m going to go to a separate page. Okay. Interesting. Very cool.

Patrick Campbell:
Yeah. So here’s a fun fact spokespeople or the appearance of spokespeople, it actually improves willingness to pay pretty considerably. So this woman, I don’t know if she’s associated with the company, she might be one of the founders or something like that. I’m trying to go back to their home page. Even if they’re not associated with a company like spokespeople, to help boost willingness to pay, which is pretty interesting [inaudible 00:55:10] the spoke person that has some cloud in the space and is recognizable.

Patrick Campbell:
So let’s go back to the boost your video marketing to take your business to new heights. So here we have a lot. So this is pretty this visualization, but I would reinforce is it video marketing, like Wistia? Is it the concept of having this chat that has the video marketing in it? I would define a little bit more what I’m going to do, the personalized interactive video.

Patrick Campbell:
If it’s this, that’s great. But then when I go to the pricing page, I want to be able to see that as well. And maybe I can, and I just was too dumb to see it. Nope. Maybe not. I might be just missing it, but here’s the other thing this is good. I think this is a lot of real estate for not truly reinforcing the value of the product. That’s the one thing I would think about, and this is just a little generic or a little too general, I should say, it’s not generic, but I would make this a little bit more specific.

Patrick Campbell:
And then the all plans include the following features. This is a good strategy if you’re not separating out feature differentiation really a lot. But I would move this down, because when I come to the price, I want to know what the price is and I don’t want to have to search for it a bunch. And it’s better than not putting the price in the page at all. Although there are reasons to do that. But in this particular case, I want to move, I’m already getting discounts before I even got to the price.

Patrick Campbell:
And then there’s just a lot of information here, so I would try to cut half of the content on this site and just simplify. And I would move this up basically to right after this, just show me the price. And then underneath that, I would put all features these types of things. And the one thing to think about is here, so the value metric is basically based on the views.

Patrick Campbell:
I would cut some of these value metrics, very similar to what I was talking about Apify. The other thing I would think about is I don’t know what this personal is or the freemium, if those are different, but what I would do is I would actually pull one of these out and make them a separate section. [inaudible 00:57:23] think about. Just for B2B, unless you are a discount brand, there’s some specifics there.

Patrick Campbell:
You want to be used sparingly. You want them to be time boxed, you want to be discreet like a specific part of the base. When you put them in the front of your website or on your pricing page, it can come off a little down. And I know that, that’s not the intention obviously, but when I’ve gone from here, I’m slipping the price, putting a discount in front of me it’s kind of like [inaudible 00:57:55] it’s a little confusing.

Patrick Campbell:
So all of these things together, they just need to be simplified and a little bit more straight forward. And then if you have my email address, you can email me, hey, I noticed you’re taking about price point. We actually have this really good deal going on right now. If you sign up before the end of the month, we can give you 50% off the trial. Or I would actually make it [inaudible 00:58:16] percent. You start to have people that are just buying because of the discount, and they end up being terrible customers and they just churn the next month anyways, and they burn through them really quickly.

Patrick Campbell:
So that’s the one thing I would do is, it’s not that discounts are bad, it’s just you have to use them a little bit more targeted manner. And then I would just simplify this. And here’s the other thing is you have these three plans and this one is personal. Does that mean it’s the premium plan? Because normally the enterprise plan is over here, it doesn’t look that way, because then all of a sudden we get down to the ambitious plans.

Patrick Campbell:
There just needs to be half the amount of content on this page. And then I would simplify by really understanding who in the world your customer is and targeting them. Not trying to be everything to all people, which is common mistake when it comes to pricing. But I think we’re right on time. I can keep going, but I think Alex there’s other stuff going on.

Patrick Campbell:
Any other questions, up to where you had one here? I’ll wait for Alex to come back on stage. I think they call it our B2B SaaS customers is like a fixed price per month, with value based, not fluctuate the price month to month. Also from this conversations, I’ll have to pay for something that can be outside of my control.

Patrick Campbell:
Yeah. So it’s okay then if it’s out of your control, your value metric. That’s the point it’s supposed to be the value that they’re getting. And sometimes it’s a measure of usage and sometimes is the actual value. You can solve the fluctuation really easily. So you can solve it either by moving it to you don’t enforce the overage, unless it’s a consistent theme.

Patrick Campbell:
So this is what Wistia does. Wistia basically if you go over in a particular month, they send you an email. It’s like, hey, congrats. It does have to be awesome. You’re getting a lot more video. That’s great. Right now, technically we should move you up to the next plan, but we’re not going to do that because it might just be a fluke. And so if this remains a consistent trend, we’ll bump you up to the next plan next month.

Patrick Campbell:
Or if you think this is going to be consistent, you can upgrade right now. And there’s a lot of people who just hit upgrade on those emails and go right away. Then there’s some people who will delete some of their videos and stuff like that. So the big thing with value basis is about your customer, it’s not about you. And it aligns you with that customer as much as possible. And there’s a lot of things structurally you can do to account for those fluctuations and things like that. But Alex, I don’t see any other questions, you got any questions [inaudible 01:00:38]?

Alex Theuma:
Just say to the audience, if you do have any other questions I see they are just coming in. And PC, I don’t know if you’ve spoken for an hour as you said. I know you can speak forever on this, but I think the event is due to shut off in 15 minutes. Do you want to carry on asking questions for 15 minutes, or have you got a conscious of your time?

Patrick Campbell:
Yeah, I can stay for probably about five, so maybe I take some of the questions coming in. So beyond any data on whether moving to monthly and annual plans options improves conversions, as opposed to being just monthly or just annual? So the reason you want longer terms is less about conversion. I don’t think that’s what you’re asking, but just to state it flatly.

Patrick Campbell:
The reason you do this is more for retention. So your retention is going to be higher than the longer your contracts are it stands to reason. So normally if you force annuals, your conversion will go down depending on the product. If you’re a $10 product and you’re offering $100 annual plan, you actually will see really good conversion because you’re in that Amex effect.

Patrick Campbell:
There’s plenty of people who $100 for a year is not something that they’re going to think much about. So your conversions will likely go down though, and your retention will go up dramatically. So this is what MasterClass did when they launched. It was only for an annual plan and they were able to basically juice their conversions. And then when they added, they were able to figure out conversions when they added monthly, their conversion just skyrocketed, because they had already figured out a bunch of things.

Patrick Campbell:
They increased their retention problems, but it’s just one of those things to think about. So I think long story short, it’s more of a play for retention and the data. I can send you some data. If you email me at [email protected], I can send you. We did a study on annuals that I can send you. Philippa, would you recommend bundles? I think this is in the context of the multi product but yes, bundles are great.

Patrick Campbell:
The thing you got to think about is if you have a feature or a product that is in a bundle, but less than 40% of people in that group are using the product, it’s probably a really good candidate to maybe pull out and put into different tiers or something like that. Because you don’t want some situation where you’re basically just pushing everything into a plan and then no one’s using all the features, because they’re going to get a really weird value differential.

Patrick Campbell:
So you just have to be careful when you’re doing packaging and bundling basically. Tia, I might be pronouncing that incorrectly, apologies if I am. Can you give an example of value based pricing you’ve seen that is working well? So Slack is phenomenal. They have multiple value metrics. Retain it’s personal and a little break [inaudible 01:03:34] time we see churn is when people leave, they leave their business they shut down their business.

Patrick Campbell:
Or if they move to an integration we don’t support, we have seen some churn, and then also we just get natural expansion revenue. Some others Wistia is really good? A lot of the per user folks are great, but the ones that aren’t per user like Wistia or HubSpot are also really, really great. So to be clear, also when we started ProfitWell, there was only about, I think it was 10% to 15% of companies using value based value metrics. And now it’s it just crossed in December of 2020 to 52% of all subscription companies, or SaaS companies in particular.

Patrick Campbell:
And so this is where everything’s going, because people want to pay for what they use or the value they’re getting. They don’t want to pay for a bunch of stuff. This is why you’re also seeing less feature differentiation. You’ve seen less, hey, there’s 40 features that are scattered throughout these tiers. And it’s more everything’s included except these three features are separated between the tiers, because the value of features is also going down as we talked about in the beginning. So it’s just one of those things to think about.

Patrick Campbell:
What do you think of Basecamp pricing, is one plan and one price? Yea, Basecamp, so if you go to Basecamp’s pricing, it’s just a straight up one plan, $100 a month I think. And so Basecamp they’re optimizing for simplicity and conversion. They’re optimizing for being the affordable option on the market. They’re not trying to squeeze every dollar of value out of you.

Patrick Campbell:
Not to say that’s what Asana is doing, but Asana they went public they’re trying to be a big business. And so the result of that is, they’ve pushed themselves into a world where basically they can have more complicated pricing, and they’re trying to maximize revenue. So with Basecamp, I think that it’s trying to get in a market that is astronomically high in terms of logos, number of customers.

Patrick Campbell:
I think you can get away with that, but I think at some point especially if you’re trying to boost revenue, you’re going to want to make things a little more complicated. I do think that most of the time Basecamp it’s hard, it’s like referencing Apple or Slack. There’s a lot of things that went right there. I think 99% of traffic is direct, so it’s just a little bit of a different world that we’re living in, so they can get away with that.

Patrick Campbell:
And they also don’t necessarily care like I said about maximizing revenue. I think we’ve got everybody. I’m Patrick at ProfitWell. I’m on LinkedIn and Twitter. And so hit me up if you have any questions, we probably written something on the question you have and yeah, have a good rest of the day and let me know if I can help.

Alex Theuma:
Thanks PC. That was awesome. Hopefully we’ll see you down at SaaStock Dublin when we’re back.

Patrick Campbell:
Are we back this year? Are we officially going to be back?

Alex Theuma:
Well, we’re not sure. We’ll see, but it’s-

Patrick Campbell:
Maybe another month?

Alex Theuma:
Yeah, we’ll see. But thanks so much. Enjoy Miami.

Patrick Campbell:
Will do.

Alex Theuma:
Everyone please thank Patrick in the chat and we’ll see you at the next members event.

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