Brad Coffey went from an MBA intern at the startup HubSpot to the Chief Strategy Officer of the Public Company HubSpot. While he used a lot of his talents to make this climb, one particularly important project that helped Coffey show his skills was taking on HubSpot's pricing. By making pricing strategy a core competency, Coffey learned an immense amount about business strategy and was able to propel HubSpot's revenue by picking the right customer. Here's his take on the lessons he learned over the years in the pricing trenches, presented at Price Intelligently's SaaSFest 2016.

1. From Startup to IPOLessons from the pricing trenches
@BradfordCoffey

2. Brad Coffey
Chief Strategy Officer @HubSpot
… started as HubSpot’s first intern
Yes, I dated my wife
in high school

3. 3
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4. HubSpot’s journey

5. Product Market Fit
Well, we need to charge something, right?
HubSpot’s journey

7. Product Market Fit
Well, we need to charge something, right?
Math to Work
Can we even spell LTV:CAC?
HubSpot’s journey

8. 10 seconds on CAC & LTV
PROSPECTS
LEADS
DEMO
CUSTOMER
CAC
Cost to Acquire a Customer
LTV
Lifetime Total Value

9. 10 Seconds on CAC & LTV
$
For illustrative purposes

10. BEFORE
Customer Retention 65%
Revenue Retention 70%
CAC $10k
LTV $25k
LTV:CAC 2.5
Reps x
As reported in HubSpot S1

11. Who are our best (and worst) customers?
What is our stickiest (and least stick) apps?

12. Looking at retention
PROBLEM
Marketing to (some) non-sticky users
Selling non-sticky features
Onboarding poorly to sticky features
No upsell for successful customers

13. Driving retention through pricing
PROBLEM PRICING SOLUTION
Marketing to (some) non-sticky users Add requirements to buy
Minimum of 5 pages on existing website
No website redesign currently in flight
Selling non-sticky features Adjusted sales compensation
Personal retention goals for promotion,
Bonus on personal install base growth
Onboarding poorly to sticky features Required paid services fee on new sales
Annual payment (moving us up market),
Required 8 hours of paid training
No upsell for successful customers Created contact tier pricing
Upgrade based on size of contact list, not just edition

16. Contacts in HubSpot

17. BEFORE AFTER
Customer Retention 65% ~82%
Revenue Retention 70% ~100%
CAC $10k $11k
LTV $25k $52k
LTV:CAC 2.5x 4.7x
Reps x ~10x
As reported in HubSpot S1

18. Advice on how to change prices
1. It’s easier to raise prices than lower them
2. Be generous with your existing customers -- plan to
grandfather them in to favorable pricing
3. Focus on creating great new cohorts of customers

19. Product Market Fit
Well, we need to charge something, right?
Math to Work
Can we even spell LTV:CAC?
Scale the Math
How do we keep going?
HubSpot’s journey

20. One Customer
$
For illustrative purposes

21. One Customer
$
For illustrative purposes

22. One Sales Rep
$
For illustrative purposes

23. MRR
NEW
CHURN
MRR
Y1 Y2
Dependent on Sales
Team size
Dependent on
Install Base size

24. MRR
UPGRADE
NEW
CHURN
MRR
Y1 Y2
Dependent on
Install Base size
Dependent on Sales
Team size

26. HubSpot in 2014
ONE
Platform
ONE
Experience
ONE
Target
Marketing Yes Yes Yes

27. HubSpot in 2015
ONE
Platform
ONE
Experience
ONE
Target
Marketing Yes Yes Yes
CRM [new] Yes ehh kinda No (Ollie)
Sidekick [new] No No No-ish (Anyone)
Leadin [new] No No No (Solopreneur)

28. HubSpot in 2016+
ONE
Platform
ONE
Experience
ONE
Target
Marketing Yes Yes Yes
CRM Yes Yes Yes
Sales (Sidekick) Yes Yes Yes
Mkt Free (Leadin) Yes Yes Yes

30. 100% FREE Starts at $0 Starts at $0

31. Thanks.
@BradfordCoffey