Subscription businesses use multiple strategies to drive growth, including nimble billing systems that enable highly adaptable pricing and growth strategies. In this session, we'll review Zuora functionality that drives business growth - including the ability to create multiple editions, promotions, up-sell paths, cross-selling opportunities, consumption-based pricing as well as the steps to enable international expansion. This session is designed for users familiar with the Zuora product catalog, including how to create a product, product rate plan and product rate plan charge, charge types (one-time, recurring, usage), charge models (flat fee, per unit, tiered) and billing frequencies (monthly, annually).
Time Series Foundation Models - current state and future directions
Subscribed 2017: Agile Pricing & Packaging Strategies With Zuora
1.
2. Agile Pricing and Packaging with Zuora
A Zuora Reader
Richard Sawey
Customer Success Architect, Zuora, Inc.
3. Subscription businesses use multiple strategies to
drive growth, including nimble billing systems that
enable highly adaptable pricing and growth
strategies. In this session, we'll review Zuora
functionality that drives business growth -
including the ability to create multiple editions,
promotions, up-sell paths, cross-selling
opportunities, consumption-based pricing as well
as the steps to enable international expansion.
This session is design for users familiar with the
Zuora product catalog, including how to create a
product, product rate plan and product rate plan
charge, charge types (one-time, recurring, usage),
charge models (flat fee, per unit, tiered) and billing
frequencies (monthly, annually).
let’s get going...
6. Grow Fast or Die Slow
What do we mean by growth?
Why is it so important?
7. ≈
McKinsey report:
“Grow fast or die slow”
"If a software
company grows less
than 20% annually,
there is a 92%
chance of failure.”
8. Pricing and packaging drives growth
✓ Responding to the market and customers
✓ Competitive response
✓ Periodic price change cadence
✓ Launch new products
✓ Launch new features
✓ Expand to new international markets
✓ Run marketing promotions
of companies change their pricing
at least once annually
60%+ Company
COMPANY LAUNCH
Single product
Simple monthly
pricing
PRODUCT
EXPANSION
Add-on products
Product bundles
INTERNATIONAL
GROWTH
Multiple currencies
Regional pricing
PRICING
OPTIMIZATION
Pricing Tiers
Usage + overages
A/B testing
REVENUE
ENHANCEMENT
Product upgrades
Billing frequencies
Business
Maturity
MANY PRICING OPTIONS
9. what should my pricing be?
page
09
pricing lessons from 5k subscription
companies
4:15 today
Patrick Campbell - Price Intelligently
10. Pricing and packaging drives growth
✓ Responding to the market and customers
✓ Competitive response
✓ Periodic price change cadence
✓ Launch new products
✓ Launch new features
✓ Expand to new international markets
✓ Run marketing promotions
of companies change their pricing
at least once annually
60%+ Company
COMPANY LAUNCH
Single product
Simple monthly
pricing
PRODUCT
EXPANSION
Add-on products
Product bundles
INTERNATIONAL
GROWTH
Multiple currencies
Regional pricing
PRICING
OPTIMIZATION
Pricing Tiers
Usage + overages
A/B testing
REVENUE
ENHANCEMENT
Product upgrades
Billing frequencies
Business
Maturity
MANY PRICING OPTIONS
11. Will all customers move to the new pricing?
✓ Are customers grandfathered into the old
pricing plan?
✓ Can customers renew with the old pricing?
✓ Can customer maintain the same billing
frequency?
Will existing customers still receive the same level of
support even if they do not move to the new pricing
plan?
What is the rollout plan for new pricing?
✓ What is the timeline for the rollout?
✓ How will you communicate this?
Will new pricing be available on all channels?
How will the back-office handle impacts of the new pricing
strategy?
✓ Will billing or collections change?
✓ Will revenue be recognized differently?
✓ Does data migration need to happen?
How will you measure the effectiveness of the new pricing
strategy?
How do you achieve a fast time-to-market
without disrupting your existing customers and
operations?
FOR EXISTING CUSTOMERS FOR YOUR BUSINESS
12. For pricing to be a competitive differentiator, you
need to recognize the need to iterate quickly and be
flexible
13. but let’s be clear
page
013
zuora has no ‘A/B testing’ feature
we’re an enabler!
we provide you with growth levers...
17. growth levers
page
017
01
tailored product editions
Each edition appeals to a different
segment of your customer base.
02
upselling
Sell a more feature rich (and
expensive) edition to happy
customers on longer billing
frequencies.
03
cross selling
Sell additional products or add ons
to existing customers to provide a
more comprehensive solution
04
consumption pricing
The ‘purest’ pricing, easily
understandable and defensible,
aligns to customer needs and
growth.
05
international expansion
Bill and collect in multiple currencies
using multiple payment methods.
Price for the local market.
06
promotions (freemium)
Drive adoption but beware the
perils of freemium
26. consumption
pricing
The ‘purest’ pricing,
easily understandable
and defensible, aligns to
customer needs and
growth. One survey
indicates only 25% of
SaaS offer consumption
pricing!
Customers feel like they’re
getting what they’re paying for,
as opposed to being forced into
buying something they don’t
really want.
“
” CollabNet
29. international expansion
currencies
payment methods
Language
Bill and collect in
multiple currencies
using multiple payment
methods. Price for the
local market.
Keenan Simmons
“reducing involuntary
churn and supporting
international expansion
with Zuora Payments”
1pm today
31. temporary pricing reduction or
enhanced feature availability
promotion codes not native to
Zuora
promotions Drive adoption but beware
the perils of freemium
Karol Chudy
“leveraging connect apps
to support pricing and
growth”
3:15pm today
33. growth levers
page
033
01
tailored product editions
Each edition appeals to a different
segment of your customer base.
02
upselling
Sell a more feature rich (and
expensive) edition to happy
customers on longer billing
frequencies.
03
cross selling
Sell additional products or add ons
to existing customers to provide a
more comprehensive solution
04
consumption pricing
The ‘purest’ pricing, easily
understandable and defensible,
aligns to customer needs and
growth.
05
international expansion
Bill and collect in multiple currencies
using multiple payment methods.
Price for the local market.
06
promotions (freemium)
Drive adoption but beware the
perils of freemium
35. perils of freemium
IS FREEMIUM THE RIGHT
BUSINESS MODEL? 10
QUESTIONS TO ANSWER
https://www.zuora.com/guides/is-freemium-right-
business-model/
page
035
37. perils of freemium
things to consider:
conversion to paid process?
when to collect a payment
method?
is it a lead? a billing
account?
beware of the revenue!
page
037
Should this be in Zuora?
38. four ways to discount
page
038
negative charge models
subscription specific pricing
charge model discounts
tiered/volume pricing
39. four ways to discount
page
039
negative charge models
-$5!
easy to understand
gets it’s own revenue schedule
subscription specific pricing
easy to understand, discount
permanent
can be hard to control discounting
discount not reported automatically
charge model discounts
set and forget temporal discounts
- %/$
discount can have it’s own GL
account
past net mmr issues
proration wrinkles
tiered/volume pricing
easy to understand, discount
calculated automatically
not good if quantity changes
frequently (more than once a
month)
discount not reported
automatically
40. four ways to discount
page
040
negative charge models
-$5!
easy to understand
gets it’s own revenue
schedule
subscription specific pricing
easy to understand, discount
permanent
can be hard to control discounting
discount not reported automatically
tiered/volume pricing
easy to understand, discount
calculated automatically
not good if quantity changes
frequently (more than once a
month)
discount not reported
automatically
41. four ways to discount
page
041
subscription specific pricing
easy to understand, discount
permanent
can be hard to control discounting
discount not reported automatically
charge model discounts
set and forget temporal discounts
- %/$
discount can have it’s own GL
account
past net mmr issues
proration wrinkles
42. growth levers = churn prevention!
page
042
01
tailored product editions
Each edition appeals to a different
segment of your customer base.
02
upselling
Sell a more feature rich (and
expensive) edition to happy
customers on longer billing
frequencies.
03
cross selling
Sell additional products or add ons
to existing customers to provide a
more comprehensive solution
04
consumption pricing
The ‘purest’ pricing, easily
understandable and defensible,
aligns to customer needs and
growth.
05
international expansion
Bill and collect in multiple currencies
using multiple payment methods.
Price for the local market.
06
promotions (freemium)
Drive adoption but beware the
perils of freemium
43. growth levers = revenue
complexity!
page
043
01
tailored product editions
Each edition appeals to a different
segment of your customer base.
02
upselling
Sell a more feature rich (and
expensive) edition to happy
customers on longer billing
frequencies.
03
cross selling
Sell additional products or add ons
to existing customers to provide a
more comprehensive solution
04
consumption pricing
The ‘purest’ pricing, easily
understandable and defensible,
aligns to customer needs and
growth.
05
international expansion
Bill and collect in multiple currencies
using multiple payment methods.
Price for the local market.
06
promotions (freemium)
Drive adoption but beware the
perils of freemium
48. rate plans vs products
page
048
If you are... Then... Considerations
Create new tailored product editions (upsell) Add as a product Again use clear naming, think about those name, avoid
pejoratives like ‘Basic’, it’s ‘Personal’! Not ‘Regular’, it’s
‘Team Edition’!
49. rate plans vs products
page
049
If you are... Then... Considerations
Create new tailored product editions (upsell) Add as a product Again use clear naming, think about those name, avoid
pejoratives like ‘Basic’, it’s ‘Personal’! Not ‘Regular’, it’s
‘Team Edition’!
Offering the same service at a new price
point, billing frequency or price model (upsell)
Add another rate plan Use clear naming conventions to distinguish this new rate
plan from existing rate plans - on both your website/quote
as well as the invoice
50. rate plans vs products
page
050
If you are... Then... Considerations
Create new tailored product editions (upsell) Add as a product Again use clear naming, think about those name, avoid
pejoratives like ‘Basic’, it’s ‘Personal’! Not ‘Regular’, it’s
‘Team Edition’!
Offering the same service at a new price
point, billing frequency or price model (upsell)
Add another rate plan Use clear naming conventions to distinguish this new rate
plan from existing rate plans - on both your website/quote
as well as the invoice
Creating an add-on that not everyone will buy
(cross sell)
Add a new product Likely need to add rate plans that match to the billing
frequencies of the related base products (this applies to
type two upsells also)
51. rate plans vs products
page
051
If you are... Then... Considerations
Create new tailored product editions (upsell) Add as a product Again use clear naming, think about those name, avoid
pejoratives like ‘Basic’, it’s ‘Personal’! Not ‘Regular’, it’s
‘Team Edition’!
Offering the same service at a new price
point, billing frequency or price model (upsell)
Add another rate plan Use clear naming conventions to distinguish this new rate
plan from existing rate plans - on both your website/quote
as well as the invoice
Creating an add-on that not everyone will buy
(cross sell)
Add a new product Likely need to add rate plans that match to the billing
frequencies of the related base products (this applies to
type two upsells also)
Make an existing product available for a
discount (promotion)
Add another rate plan Consider time restricting the new rate plan (‘tighter’
effective start/end dates) preventing it from being added
to new customers once the promotion is over.
52. rate plans vs products
page
052
If you are... Then... Considerations
Create new tailored product editions (upsell) Add as a product Again use clear naming, think about those name, avoid
pejoratives like ‘Basic’, it’s ‘Personal’! Not ‘Regular’, it’s
‘Team Edition’!
Offering the same service at a new price
point, billing frequency or price model (upsell)
Add another rate plan Use clear naming conventions to distinguish this new rate
plan from existing rate plans - on both your website/quote
as well as the invoice
Creating an add-on that not everyone will buy
(cross sell)
Add a new product Likely need to add rate plans that match to the billing
frequencies of the related base products (this applies to
type two upsells also)
Make an existing product available for a
discount (promotion)
Add another rate plan Consider time restricting the new rate plan (‘tighter’
effective start/end dates) preventing it from being added
to new customers once the promotion is over.
Offer existing products and rate plans in new
currencies for overseas markets
Edit existing rate plans Need new payment methods such as direct debit?
Probably need new invoice templates and Zuora’s
translation features
53. rate plans vs products
page
053
Two billing frequencies
Products? Rate Plans?
54. rate plans vs products
page
054
Product: DocuSign
Rate Plans:
Docusign Personal Monthly
Docusign Personal Annual
Docusign Standard Monthly
Docusign Standard Annual
Docusign Standard Business
Pro Monthly
Docusign Standard Business
Pro Annual
Products? Rate Plans?
55. rate plans vs products
page
055
Product: DocuSign Personal
Docusign Personal Monthly
Docusign Personal Annual
Product: DocuSign Standard
Docusign Standard Monthly
Docusign Standard Annual
Product: DocuSign Business Pro
Docusign Standard Business
Pro Monthly
Docusign Standard Business
Pro Annual
Products? Rate Plans?
56. rate plans vs products
page
056
...a brief note on eliminating ambiguity
with naming conventions…
product name:
Docusign Personal
Docusign Personal Monthly Plan
Docusign Personal Monthly Charge
Docusign Personal Annual Plan
Docusign Personal Annual Charge
57. rate plans vs products
product name:
Zendesk Essential
Zendesk Essential Monthly Plan
Zendesk Essential Monthly Charge
Zendesk Essential Annual Plan
Zendesk Essential Annual Charge
Zendesk Team
ditto...
58. rate plans vs products
for promotions
page
058
we want to encourage adoption!
get Business Pro for 3 months at
the price of Standard!!!
products? rate plans?
59. rate plans vs products
for promotions
page
059
Docusign Business Pro
Docusign Business Pro Monthly Plan
Docusign Business Pro Monthly Charge
Docusign Business Pro Monthly Discount Plan
Docusign Business Pro Monthly Charge
Docusign Business Pro Discount Charge
Docusign Business Pro Annual Plan
Docusign Business Pro Annual Charge
60. rate plans vs products
for promotions
page
060
Docusign Business Pro
Docusign Business Pro Monthly Plan
Docusign Business Pro Monthly Charge
Docusign Business Pro Annual Plan
Docusign Business Pro Annual Charge
Docusign Discount
Docusign Discount Monthly Plan
Docusign Discount Monthly Charge
62. pre-IPO!
12/31 2019
four product lines
eight add ons
20 countries and five
currenciesrecurring and consumption pricing
mixtures
let’s assume...
page
062
initial catalog
07/01 2017
one base product
two billing frequencies
recurring only
success!
six billing frequencies
288rate plans!
71. Dangers of getting pricing wrong - Netflix,
Zendesk
https://www.zuora.com/guides/saas-growth-strategy-1-designing-tailored-product-editions-to-drive-
growth/
Building Strategic Upsell Paths
https://www.zuora.com/guides/saas-growth-strategy-2-building-strategic-upsell-paths/
Is freemium the right business model?
https://www.zuora.com/guides/is-freemium-right-business-model
Common Pricing mistakes by startups:
https://www.zuora.com/guides/5-mistakes-saas-startups-often-make-pricing/
further
reading
81. three months free
page
081
common assisted sales technique is to offer an initial
term of 15 months (say) for the price of 12 months
on the first year of a three year deal
customer pays 12 month price up front (let’s say
$15k for this example), and we need to recognize
revenue accurately ($1k/month first 15 months,
$1250/month in following years)
bill $15k on Jan 1 2017, $15k on April 1 2018 and
$15k on April 1 2019, hopefully renews on April 1,
2020
82. three months free
page
082
new solution! let’s use a new rate plan...
create recurring charge of $1250/month
($1250*12=$15000) and use billing period of
‘Subscription Term’, ‘recognize monthly over time’
discount charge needed to discount first three
months is a fixed amount discount charge of $3750,
end date is ‘Fixed Period after the charge is
triggered’ and set to end after 1 ‘billing period’
common assisted sales technique is to offer an initial term of 15 months (say) for the price of 12
months
customer pays 12 month price up front ($15k in this example), recognize revenue accurately
($1k/month first 15 months, $1250/month in following years)
bill $15k on Jan 1 2017, $15k on April 1 2018 and April 1 2019
92. For pricing to be a competitive differentiator, you
need to recognize the need to iterate quickly and be
flexible
Box A/B tests every
pricing strategy and can
roll out a new pricing
strategy in a week
Informatica Cloud switched
to a “pay-as-you-go” model
by A/B testing pricing
through the years. Today
they have 7 pricing tiers that
include usage for a pay-as-
you-go model.
A/B tested with a $1
subscription to acquire more
customers when first
transitioning to digital