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:
Let's go to some of the most common mistakes, as it relates to this. One of the biggest ones just comes around user-based pricing. I want you to ask yourself, why do you think that's the case? Why am I just hating on user-based pricing right now? Try and write down a reason or two. Why is that the case? Why do so many companies make a mistake of just charging per user?
Wes Bush:
So I'm giving you a couple of examples. If you are planning on charging by the user-based pricing, you must answer true to each of these conditions. I call this the per-user-pricing scratchpad. The first condition that must be true is does each user receive differentiated value from accessing the product? So if it's like LinkedIn recruiter and that's true, good, okay, you're on the right path. Does each customer have a strong need to standardize their department or company on the platform? We think of Salesforce. That's definitely true. It would be even worse if there was like five or six different sales serums in your company, every salesperson had their own. Just from a tracking perspective, oh my goodness, that would be so frustrating. So yes, I'm putting that as true.
Wes Bush:
The product has network effects where initial users want to collaborate and invite others. So when we think of Slack, yes, there's huge network effects, much like Salesforce. It wouldn't be fun to have like five different messaging tools for the team. It just makes sense to have as minimal communication methods as possible so things don't get dropped.
Wes Bush:
The next one is budget predictability and control is critical for your buyer's personas. So in this case, I think of DocuSign. That is absolutely true. Then there's the buyers less sophisticated needs, easy to understand pricing. Okay. So whenever it comes down to this [inaudible 00:02:11] and pricing, absolutely. This one's a given though, regardless if you do user based pricing or not.
Wes Bush:
Then the last one is usage metrics in your industry have become commoditized and are becoming table-stakes. So whenever you're in this industry and everything's becoming commoditized and everyone's rallying behind users, then it will make a ton of sense for you. Think of just the industry that Slack is in. Since I don't know, GitHub's industry as well for thinking of Microsoft teams and all these other competitors to them, they're all charging per user. So when you're in an established market, it can make sense to just go with the flow in that particular case and use user based pricing if that's how the market has established they like to be charged by.
Wes Bush:
So big question comes down to you. Well, how do you find your value metric? So we've put together a worksheet that you have access to just check the resources on learning portal, but this will walk you through step-by-step on just how you can go through your monetization strategy and identify your value metric. And there will be research. I hate to break it to you, but although we can discuss a lot of these ideas and get close to what the value metric is, the best way to do it is definitely to validate it. So-
