IMPORTED FROM SKOOL
Original Post was posted by Jenna Poste on Aug '24
Historically the pricing model for our employee wellbeing product was user license based on total employees, and recently the company has started to test out changing that to be active user based pricing (similar to Slack). I’m curious if others have tried this approach and whether it’s been successful, as we’re seeing this shift has made the decision makers more likely to sign (a bit) quicker, as it alleviates concerns with paying for total employees, when they know not all employees will engag… See more
Ulrik Lehrskov-Schmidt Aug '24 Hi Jenna - thanks for posting. I’ll just lean back and wait a bit to see if anyone else has some input on users as licensed vs. active.
Carsten Kunkel Aug '24 As long as your client has a reasonably accurate expectation of the # of active users, you might want to consider using pre-paid tiers (tier 1 <100 users, tier 2 <250 user, …) to optimize your operational handling while maintaining a consumption-based pricing towards your clients.
Note of caution: I had a case for a new reporting product where the entire market was unsure about how their operational trading volumes will translate into technical reporting volume. This lack of visibility for the client led to a refusal of pre-paid tiered model like described above!
Mikkel Nielsen Aug '24 Hi Jenna, I haven’t tried the approach, but will share my thoughts in case useful.
First off, I would try to align pricing / structure to the value creation from your product. Since I don’t know your product, I don’t know if the value creation aligns better with active users or total users (or perhaps something completely different)?
Also curious to understand which problem were you trying to solve by changing to active users? Long sales cycle/ high CAC? High churn? In the end it’s not necessarily… See more
Ali Taghavi Aug '24 From listening a lot to saastr podcasts by Jason Lemkin I’m leaning that many companies are fighting back against paying for more seats than they actually use as part of cost optimisation efforts around Saas spending.
Personally, I do think the future is going towards pay only for what you are benefiting from, no more no less.
Sebastian Pister Aug '24 (edited) We have the same model, charging for Concurrent Agents(working simultaneously) instead of Named Agents. As
@Mikkel Nielsen
suggested, putting them in ranges/tiers makes total sense. Also, we charge upfront for one year; if they have more Concurrent Agents, they can upgrade prematurely. Downgrading is only possible after the end of the contract period. It is a great benefit compared to our competitors’ named Agent pricing. I hope that helps a bit!
Jenna Poste Aug '24 @Sebastian Pister
Do you use this tier model with SaaS SMBs or Enterprise? Or both? We’re working on launching a true SaaS model targeting smaller businesses (that don’t have the demo route) to trial being more product lead, and I’m curious if that pricing model is successful with smaller companies.
Sebastian Pister Aug '24 @Jenna Poste
We use this model with all customer contract levels and sizes, from SMBs to Enterprises.
Maarten Laruelle Aug '24 Hi
@Jenna Poste
, from my own experience with a customer in the same situation:
- all employees does not feel right, as they seem to be paying for a lot of employees that are not using the solution.
- active users also had a negative tone for multiple reasons:
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- it is hard to forecast, and gives a lot of fluctuations for you and for the customer (hard to predict budgets)
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- nurturing more users on the platform, would be good for you from a revenue perspective, and could be positive for your customer … See more
Jenna Poste Aug '24 Thank you so much for everyones input and feedback! I really like the idea of creating some active user tiers, and making that a quarterly commitment as opposed to the risk of monthly fluctuations.