PLG Weekly #8: Usage-based pricing goes mainstream, Expensify's bottom-up motion, and more.
Welcome to the eighth edition of the PLG weekly. Last week there was a lot of buzz with OpenView's Usage-based pricing report, and the KBCM SaaS survey released. We saw an interesting trend for usage-based pricing and decided to dive deep into it.
💥 Usage-based pricing goes mainstream.
Only 41% of the companies that participated in the KBCM SaaS survey were priced by seats. The survey had a lot of participation from infrastructure and API companies which isn't too surprising. However, the next time you think about pricing, remember that if your customer isn't gung-ho about seat-based pricing, maybe usage-based is the way to go.
Adoption for usage-based pricing has doubled in the past 4 years, according to OpenView.
And more companies are planning to add a usage-based component in 2022!
What's causing this shift to usage-based pricing?
PLG and usage-based pricing are directly related as the end-user wants to adopt software that provides value upfront. Starting for free and paying later as usage grows reduces friction to adopt PLG SaaS offerings.
Three other trends that affect seat-based pricing paradigms are Automation, AI, and API.
As more SaaS vendors add Automation and AI features to their products, they should think about moving away from seat-based pricing since these features eliminate the need for seats. Moreover, the value of these features isn't tied to the number of seats that someone purchases.
If you have more questions on launching usage-based pricing at your company, this read about how Cypress went about it is a great starting point! It's time to start thinking about usage-based pricing today.
💥PLG stat of the week - Expensify
60% of Expensify’s Revenue can be attributed when an employee who used their free app first and recommended it to their manager!
From their S-1,
”After downloading our free app to submit expenses and realizing the benefits of Expensify, our enthusiastic members champion our platform internally, spread it via word-of-mouth or invites to other employees, and often convince decision-makers to adopt Expensify company-wide. For the six months ended June 30, 2021, 60% of our revenue can be attributed to an instance where an employee used our application first and recommended it to their manager.”
It’s amazing to see Product-led growth come to verticals like Finance. If there is a bottom-up motion that can exist for your SaaS category, you can bet that someone is building it.
🕸 Good PLG reads from the internet
1️⃣ Three notifications that you can add to your product today to power your product-led growth from Knock.
2️⃣ Arcade’s guide to product-led growth is an amazing resource for someone to understand PLG.
3️⃣ Heap on how to nail Product-led growth.
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