If you have a recurring revenue business that continually sends updates and invests heavily in market launch activities, you need to go beyond acquisition and retention and start seeing monetization as an equally enabling growth lever.
Recognizing that your prices need to be looked at with new eyes, and boosting customer and market research to refine that outlook are the hard parts. That said, you'd be surprised how many companies drop the ball during the last mile of implementation.
Here's a list of things you need to make sure you've scored before launching a price change - so you're not one of those companies :( -
1# Perform a new value analysis
It is easier to digest a price change when there is a tray of great product enhancements to chew. How do you justify an increase in your prices? You increase the perceived value with it. Any significant change in prices is a good opportunity to re-evaluate your entire understanding of the connection between actual and perceived value. Value analysis involves some guesswork, some input from product teams and, most importantly, comments and usage patterns from your customers. Are they telling you that 'it's too pronounced a jump in the cost of a single function'? Are most of them forever in your freemium without ever raising the price level? Listen to these signals and immerse yourself in more research.
2#Discuss the consequences of impact analysis
In any decision-making process, a full impact analysis, as defined by Bohner and Arnold, should be a two-step activity:
Identifying the potential consequences of a change: This is quite simple. Make a full summary of all the risks involved depending on the route you take, whether you take "grandfathering", "grandfathering" for a grace period, or "no grandfathering". Look at NPS scores, see if your customers will stay with you or leave you.
Estimate what needs to be changed to make a change: Establish the numbers of income you're trying to achieve. Let any price experiment you do be in tune with that goal. Find out how to measure results. Looking for 25% growth in H2? Then you need to measure how your price change is contributing to reaching this goal month by month. Are you moving up a notch? Next, you'll need to learn more about how the new target segment perceives your new price level.
You realize what's going on. Write the biggest goal and work backwards. Make a map of how your price experiment is going to bring you closer to that goal and define the KPIs to measure your success.