Unveiling the Secrets of Pricing Models: Insights from 50 Leading Consumer Software Companies
I did a deep-dive on the pricing models of 50 leading consumer software companies.
You can find the deeper analysis in the newsletter.
These are the top 4 takeaways:
1 — Subscriptions have come to every industry
In every industry, it’s always worth considering if a subscription makes sense for you.
Recurring revenue, stable cash flow, and higher LTV are all potential prizes.
But, consumers might be annoyed.
2 — Subscriptions aren’t the only game in town
Yes, subscription or “subscription-like” pricing is 56% of this list.
But other options such as one-time fee, ad-supported, and transaction-based pricing also appear.
And consumers often prefer them.
3 — Industry determines your choice set
If no one is using transaction-based in your industry, you can view it either as “not such a good idea,” or an opportunity for counter-positioning.
I actually love counter-positioning. Think: 37Signals’ ONCE brand vs regular SaaS.
4 — The Yin to Your Models’ Yang is your strategy
On top of your model, you should also layer on strategies.
Things like:
- Free trials: 52%
- Freemium: 40%
- Dynamic Pricing: 30%
- Drip Pricing: 28%
- Reverse Trials: 6%
Too often, the pricing story is simplified into “we have to be subscription.”
Often, it is the right choice. But there’s also a litany of other options.