Pricing & Packaging Flexibility Drives Subscription Growth (Subscribed13)
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Zendesk - Guy Marion, Sr. Director, Customer Acquisition Okta - Jake Randall, Director of Business Operations There are many pricing levers available for subscription models and the challenge is knowing where to start and how to iterate over time. Come learn lessons from pricing experts at Zendesk and Okta, where we’ll discuss the pros and cons of different models and how to use different promotional strategies and test plans to achieve your business strategies.
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Pricing & Packaging Flexibility Drives Subscription Growth (Subscribed13)
- 1. Pricing & Packaging Flexibility Drives Subscrip8on Growth Guy Marion Senior Director, Online & Customer Acquisi9on Jake Randall Director of Business Opera9ons
- 2. The Nine Keys to Subscription Success $ PRICE ACQUIRE BILL COLLECT NURTURE ACCOUNT MEASURE ITERATE SCALE
- 3. Pricing & Packaging: Your New Strategic Weapon Guy Marion Senior Director, Online & Customer Acquisition
- 4. Agenda • About Zendesk • How Zendesk Uses Zuora • Our Pricing Journey • Secret Pricing Weapons • Summary
- 5. Company Highlights CUSTOMERS 30K+ INVESTORS 400+ EMPLOYEES FOUNDED 2007 ORIGIN Denmark HQ San Francisco SAN FRANCISCO LONDON COPENHAGEN MELBOURNE DUBLIN TOKYO MADISON MANILA BUENOS AIRES OFFICES USERS 200M+
- 6. How Zendesk Uses Zuora Background P L A T F O R M O V E R V I E W Business Model The Challenge Zendesk: Cloud-based Customer Service and Engagement platform B2B SaaS (multi-tenant) Direct: Self-serve and sales assisted Channels: Marketplace, Service Partners Easily add new products/services Self-service payments, flexible billing terms Enable easy upsell/cross of the base Support for multi currency Native Salesforce integration
- 7. Zendesk Pricing Journey Plan Consolidation Zendesk Launch (2008) Free Trial + Bundles August 2009 Price Change May 2010 Enterprise Plan Aug 2011 “Causeware” Feb 2012 Re-launch of Advanced Plans September 2013
- 8. Five Pricing & Packaging Secrets Secret #1: Start simple with a low friction offering Causeware Freemium
- 9. Secret #2: De-risk your pricing launch by testing the waters first Five Pricing & Packaging Secrets
- 10. Secret #3: Evolve multiple editions to drive revenue while keeping competitive Customer Support App Development Five Pricing & Packaging Secrets Priced per user per month Priced per 5 users per month
- 11. Secret #4: Build a repeatable low touch sales model to reduce CAC and focus your upstream sales efforts Five Pricing & Packaging Secrets
- 12. Secret #5: In SaaS, 90%+ of your MRR comes from existing customers, so price and package to upsell Five Pricing & Packaging Secrets
- 13. Summary • Start simple with a low friction offering • Test the waters before releasing new pricing • Multiple editions drives revenue while keeping you competitive • Build a repeatable low-touch sales model to scale • Price and package to upsell your customer base
- 15. Pricing and PackagingA finance and operations perspective Jake Randall Director of Business Operations
- 16. Agenda 1. Okta Overview 2. Evolution of Okta’s Product and Packaging 3. Lessons Learned 4. QA
- 18. OKTA M a r k e t l e a d e r i n I d e n t i t y a s a S e r v i c e ( I D a a S )
- 19. Okta Pricing & Packaging Journey Okta initially used “standard” per user per month pricing Multi-Edition: Per User per Month Customers needed a scalable UoM licensing modelExperiment with term lengths / billing Maximize ARR while ensuring customers’ success
- 20. Okta Editions M u l t i - E d i t i o n s , O n e U o M
- 21. Use UoM to Expand Market Scale Predictability ROI Create a license model/UoM that expands your market and increases value to existing Customers
- 22. Term Length and Billing Frequency VolumeBasedPricing Term Length / Billing Based Discounts 1. Created negotiation/pricing that tied to improved LTV of Customer 2. Focus on how you position each “package” to Customer 3. Understand your churn, WACC, etc. to know how much discount makes sense for your business
- 23. Bundled Services M a x i m i z e A R R – M a x i m i z e C u s t o m e r S u c c e s s Non-‐Recurring Fees Subscrip9ons Per User Per Login Professional Services Problem: − Customer has a limited budget for project − Okta wanted to maximize recurring revenue Non-‐Recurring Fees Subscrip9ons Per User Per Login “Bundled” PS Result: − Increased avg. ARR per deal (10% - 20%) − Ensured customer received appropriate on- boarding
- 24. Lessons Learned Flexibility Bundle Listen to your customers − Create units of measurement that tie to your customers business model Experiment with term length/pricing − Understand your churn and consider appropriate discounts for multi-year Maximize value of every dollar − Consider packaging your one-time fees as “included” to maximize ARR/MRR. Extend
- 25. Lessons Learned Flexibility Bundle Native ability to manage UoMs Automate renewals, billings, etc. for different term lengths and billing cycles Control packaging of products with “Charges” and “Rate Plans” Extend
- 26. Q&A Thank You!