Worksheet
Communicating your value is the unshakeable core of a successful product-led growth strategy. If you have simple pricing tiers and plans, users will upgrade on their own. If you have complicated pricing or users have to reach out to understand your “unique” pricing model… game over, you’ve lost a ton of sales you didn’t even know you could win.
In this course, we’ll cover:
Wes Bush:
To really recap here, there's really just two main things we covered today. The first one is identifying, okay, what is your monetization strategy? Where do you want to sit on the spectrum here? Is it you want to be all focused on users and just getting as many users as possible in your market? If so, that's fine, but it is an imbalance in your customer and pricing model. Maybe eventually you want to go more to the upgrade hungry. You have this strong customer acquisition model. It's working great, but you're spending a ton of money on just customer acquisition and all the other costs that come with it, especially if you have a free model and different things like that.
Wes Bush:
You might say, "Okay, then we got to go all in on the pricing model and try and just get as many upgrades as possible." That's fine too. It's just, if you stay too long on that forceful pricing model while you're testing what levers work best for upgrading users, you might actually hurt your customer acquisition model quite a bit and end up in the short-term profit pool. The way we identify that sweet spot really just comes down to identifying your value metric. If you can do that, it's going to be a lot easier for you to identify what do we give away for free versus what do we put behind the paywall?
Wes Bush:
We did go through a few examples around charging per user or per contact or per prescriber. There's millions of ways you could do it, but it's really important to identify that whatever you choose, make sure it's easy for someone to understand and make sure it grows with the person's value they're getting from the product. Because as that grows, your business grows and your incentives are aligned with your users. The last piece of this is really make sure that you are taking advantage of your pricing model is make sure you do, at the end of the day, have this easy, seamless buying experience where you're using the bowling lane framework to help you get your users to that point where it's really a no-brainer for them to pull it out, pay for your product and continue using it.
Wes Bush:
The action items for this week, there's three. First is I want you to complete the monetization strategy worksheet. This will essentially give you everything you need to know to get better at putting together what your view on monetization strategy looks like. We'll prompt you with some questions around your value metric. There's a second article here called How to Evaluate and Select Pricing Value Michael Using the Decision Guide. Chris Hoff put that together on our blog and he actually has a very great spreadsheet or you can go through and really vet your value metric to a whole nother degree.
Wes Bush:
I know we covered a simple three-step test, but if you want to go the next level, I would encourage you to go through that and, yeah, go through his spreadsheet. It's fantastic. We also have two expert speaker talks that I would recommend going through as well. Patrick Campbell, an amazingly relevant guy whenever it comes to pricing. He went through just like how to identify a value metric for product led companies. We have that talk in the learning portal under this module that I would encourage you to check out.
Wes Bush:
Tamara Grominsky. She is leading product marketing at Unbounce. What I really appreciate about Tamara is... Unbounce went through this whole pricing reevaluation over about a two year period. They were totally charging functional value metrics initially, but then they decided, "Hey, let's try out this outcome-based value metric." It was fantastic for their business to really just align their goal of getting people more conversions from their landing pages with how they charged their value. If you want an interesting case study to go beneath what you see whenever these big brands release their, "We've updated our pricing messaging," it's a fantastic talk to see just the messy middle of what it really looks like to make this change and leave this change.
Wes Bush:
Because as I mentioned at the very beginning of this lesson, one of the biggest challenges you're going to face going from sales led to product led is your monetization. Even if it's just in perspective on how to approach it, I would encourage you to go through both of those talks. And with that, I'm going to leave you to do the homework because at the end of the day, that's where you're going to get the results.
