Lessons from our breakfast seminar: Pricing, plans, and expansion
by Niclas Lilja, on Nov 12, 2019
On Friday, 18 October 2019, we held a breakfast seminar to discuss some of the most pressing topics for SaaS and subscription business models. Together with Startdeliver, a customer success software company based in Stockholm, we welcomed more than 50 attendees to discuss the secrets of growing subscription business.
Pricing and plans
During the seminar, we discussed with the audience the ways to approach pricing and setting plans for customers. We often stress the importance of looking at was it sold now, or rather, thinking about what is included in this moment of time, but anticipating potential future opportunities.
This may be the one and only service, a service and add-ons, a platform, modules and add-ons, or multiple services/products. The important thing though is to specify. Because what is sold now, may differ from the vision of what will be sold in the future. Being specific about what is sold now presents opportunities for upsells in the future, which is crucial for expansion.
Then, we talked about price driver. This is what will justify contract fees. It can be seat based, feature based, transaction based, or a share of revenue/sales/savings. Think about value, and what your customers would be willing to pay for. Finding the pricing model that best reflects upon customer experienced value and scales in accordance with increased value will probably be well received by customer.
When it comes to fee arrangements, we presented a few options:
In our presentation we stressed that depending on your business and industry, you may use variations or customizable options. At the same time, digging too deep into different variations and customizable options can also set the tone for your ability to expand in the future.
When it comes to expanding your subscription business, it's important to keep track of milestones that are indicators for renewals and upsell triggers.
Here are some general milestones and events in a subscription cycle where the subscription model can significantly help the growth of companies.
Think of it this way:
But in order for companies to be successful in doing this, you have to have a handle on your customer and your offerings - which is often the main challenge.
What are the major challenges for subscription models?
One of the biggest questions we faced from the audience was in regards to transforming business. For those who work with traditional purchase and revenue models and want to transition, what are the major hurdles?
For most companies transitioning into subscription models they need to redesign much of their way of thinking, as well as sometimes breaking already established processes. To do this, it's super important to closely monitor the customer's success and how their current subscription provides them value.
You can look at it this way: Milestones are used in the onboarding process, as well as for billing. Milestones, as shown above, can be used for starting a new fee, for example. They can also help you to forecast annual recurring revenue, or understand where you may need to focus on customer support. For instance, if you can see upcoming renewals, (let's say 20% of customers will renew in three months), but out of them we have 10% that are red from a health perspective, you are then able to urgently prioritize these customer relationships. You just need access to the right data in order to take these decisions.
Younium is the subscription management platform that can integrate your tools for managing customers, usage reports, financials, and offerings all in one place to help you identify these milestones, and opportunities to expand the business.
When it comes to pricing, plans, and expansion, the secret is in your ability to encourage customer relationships, and further your offerings. To do this effectively, you need the right tools in place to properly manage the data that can help you set the foundation of your subscription contracts, then find the right opportunities to grow.
Want to learn more about subscription contracts and how to decide what are best for your business? Download the Contracts guidebook now.