Modern Pricing Plans with Dor Sasson, CEO Stigg

Lee Atchison: 00:00:00

Most companies aren't in the billing space, yet

 

Lee Atchison: 00:00:03

they need to deal with pricing and billing as a core piece of

 

Lee Atchison: 00:00:06

technology. Whether they want to or not. Stiggs is an easy to

 

Lee Atchison: 00:00:11

implement headless pricing and packaging platform that takes a

 

Lee Atchison: 00:00:14

lot of the hassle out of pricing and billing for your SaaS

 

Lee Atchison: 00:00:17

application.

 

Voiceover: 00:00:21

This is the modern digital business podcast, the

 

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technical Leaders Guide to modernizing your applications

 

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and digital business. Whether you're a business technology

 

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leader, or a small business innovator, keeping up with the

 

Voiceover: 00:00:33

Digital Business Revolution is a must here to help make it easier

 

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with actionable insights and recommendations. As well as

 

Voiceover: 00:00:40

thoughtful interviews with industry experts, Lee Atchison

 

Lee Atchison: 00:00:45

Stiggs is an easy to implement headless pricing

 

Lee Atchison: 00:00:48

and packaging platform that takes a lot of the hassle out of

 

Lee Atchison: 00:00:52

pricing and billing for your SaaS application.

 

Lee Atchison: 00:00:55

Their API's help developers launch new pricing plans faster,

 

Lee Atchison: 00:01:00

that lead to better customer buying experiences. Doris Hassan

 

Lee Atchison: 00:01:05

is the co founder and CEO of stake and he's my guest today,

 

Lee Atchison: 00:01:08

dar Welcome to modern digital business podcast.

 

Guest: 00:01:11

Hey, Lee, great to be here. Thank you for having me.

 

Lee Atchison: 00:01:15

Of course, I'm so glad you're here. And I have to

 

Lee Atchison: 00:01:18

tell you, I'm I'm envious. Okay, and the reason why is, I often

 

Lee Atchison: 00:01:23

thought that what the SAS world needed was a platform that

 

Lee Atchison: 00:01:27

handled the standardized pricing and billing logic that every

 

Lee Atchison: 00:01:31

application has to build, you know, I'm talking about

 

Lee Atchison: 00:01:33

something more involved than just a simple stripe

 

Lee Atchison: 00:01:36

integration, that includes all of the, you know, the pricing

 

Lee Atchison: 00:01:39

strategies, and all that sort of stuff. And now you've gone ahead

 

Lee Atchison: 00:01:42

and created it, you've taken my idea. Now, if you take any run

 

Lee Atchison: 00:01:47

with it, I'm just I think it's great. And so tell me, like you

 

Lee Atchison: 00:01:52

to create steak.

 

Guest: 00:01:54

Hey, Lee , that was a really good way to get started

 

Guest: 00:01:57

the conversation, by the way, we're still hiring. So we should

 

Guest: 00:02:00

talk after the show. You want to opt in? I'm already excited. So

 

Guest: 00:02:08

how do we begin? So so a lot of folks that we we've talked to

 

Guest: 00:02:14

early on and still chat with today and work with today,

 

Guest: 00:02:17

whether their customers are part of our community, or folks that

 

Guest: 00:02:20

we can help think through their pricing and packaging

 

Guest: 00:02:24

strategies, they share the same emotion that you just described

 

Guest: 00:02:28

that it doesn't and it didn't made sense that there wasn't any

 

Guest: 00:02:32

off the shelf SAS infrastructure to solve this problem. Many,

 

Guest: 00:02:37

we're still used to think about pricing and packaging is a

 

Guest: 00:02:39

problem that comes in from the billing fraud from the

 

Guest: 00:02:42

financial, front of the company, where billing, and you know, and

 

Guest: 00:02:48

collection and payments and reporting. And all of that is,

 

Guest: 00:02:52

is something that financial teams should or revenue teams

 

Guest: 00:02:55

should be concerned about, or think about, and find ways to to

 

Guest: 00:02:59

solve that efficiently. And I think, with many interesting

 

Guest: 00:03:04

trends that are happening nowadays in SAS, it's becoming

 

Guest: 00:03:07

more and more evident that pricing and packaging is an

 

Guest: 00:03:10

experience. And so because it's an experience, it becomes more

 

Guest: 00:03:15

and more a product and r&d problem. And as such as

 

Guest: 00:03:19

developers and as product, people, we need a new point of

 

Guest: 00:03:25

view and new refreshed way to approach pricing and packaging

 

Guest: 00:03:29

that fits the way we think about this problem. And that includes

 

Guest: 00:03:34

flexibility and nimbleness agility, and many, many ways

 

Guest: 00:03:40

that developers are now nowadays developers, engineers, product

 

Guest: 00:03:44

managers have nowadays standardized how we build

 

Guest: 00:03:46

software, and we want to bring a lot of that way of thinking and

 

Guest: 00:03:52

way of being into pricing and packaging.

 

Lee Atchison: 00:03:55

So that's great. That's that's a good description

 

Lee Atchison: 00:03:58

of what you're doing. But why did you start this? What Why

 

Lee Atchison: 00:04:02

What was your motivation to get into this space?

 

Guest: 00:04:06

Yes, so So I used to be a product person at New Relic I've

 

Guest: 00:04:11

joined in after New Relic acquired my previous startup

 

Guest: 00:04:14

signify we used to build AI ml models for the observability and

 

Guest: 00:04:21

production environment space. We basically helped SRE teams and

 

Guest: 00:04:26

development teams deal better with the alert fatigue and noise

 

Guest: 00:04:30

reduction and we've put the work different practices of machine

 

Guest: 00:04:34

learning in AI to help deal with immense load of alerts. And it

 

Guest: 00:04:42

was after that New Relic acquired signify that I became

 

Guest: 00:04:46

more and more aware to the concerns and the and way of

 

Guest: 00:04:51

thinking related to pricing and packaging and SAS more more

 

Guest: 00:04:57

specific we were how Having a lot of major organizational

 

Guest: 00:05:02

change at the time that I was part of the company, and we had

 

Guest: 00:05:07

new leadership basically coming in and wanting to go in all the

 

Guest: 00:05:12

way on product, led motion, user led motion. And as part of that,

 

Guest: 00:05:18

scrutinizing and honing our pricing and packaging strategy

 

Guest: 00:05:21

towards the usage based and pay as you go motion. And as an

 

Guest: 00:05:26

organization, you know, cutting edge technology, and you really

 

Guest: 00:05:29

are some of the best engineers, best architects, you know, GTM,

 

Guest: 00:05:33

teams technologist, you know, at the forefront of building

 

Guest: 00:05:36

software, you know, as a new, you know, freshman product

 

Guest: 00:05:41

person didn't just join the team, I expected this, oh, this

 

Guest: 00:05:45

is going to be like an easy peasy, right? Like, it's gonna

 

Guest: 00:05:47

be a walk in the park to do this, to this overhaul. Little

 

Guest: 00:05:52

did I know that it's going to be almost a year until we are in a

 

Guest: 00:05:56

in a position where we're able to launch. And it touched upon

 

Guest: 00:06:01

every single function and department in the organization,

 

Guest: 00:06:05

everyone had to figure out how their things or their products

 

Guest: 00:06:10

or their features are going to live in the new world. And I

 

Guest: 00:06:14

think my very first moment that I said, this should be software

 

Guest: 00:06:19

like this should not you know, what we're doing this there

 

Guest: 00:06:22

gotta be another way was when I got an email with a spreadsheet

 

Guest: 00:06:28

that said, entitlements. And under this spreadsheet, I was

 

Guest: 00:06:32

supposed to list the features that I was responsible on the

 

Guest: 00:06:37

NDAA group, and I was supposed to identify them as

 

Guest: 00:06:41

entitlements, so that we can go to market and sell them in an

 

Guest: 00:06:44

appropriate way that fits the organization strategy. And when

 

Guest: 00:06:48

I saw this huge spreadsheet with all the information with all the

 

Guest: 00:06:52

different entitlements, I was like, this cannot be managed in

 

Guest: 00:06:56

spreadsheet. What if we want to change? Like, I started to ask

 

Guest: 00:07:00

all these questions, what happens if we're wrong? Like

 

Guest: 00:07:02

what? What happens if the way I'm, you know, I'm configuring

 

Guest: 00:07:05

our entitlements right now for our group is going to be wrong

 

Guest: 00:07:09

next quarter, and we're going to need to change it. Where are we

 

Guest: 00:07:12

changing? Like, I started to have, like, so many questions.

 

Guest: 00:07:14

But this was one of my early moments, like very early

 

Guest: 00:07:17

moments, though, it came aware to the concept of entitlements.

 

Guest: 00:07:22

And I began to be more and more convinced that this should be an

 

Guest: 00:07:29

infrastructure, and this is a big problem across the entire

 

Guest: 00:07:33

industry.

 

Lee Atchison: 00:07:34

Yeah, it's, it's funny is, so I was involved with

 

Lee Atchison: 00:07:38

new relics. Back end pricing engine for a while too before, I

 

Lee Atchison: 00:07:43

think before you joined the company, I was back when we were

 

Lee Atchison: 00:07:46

still, you know, virtually 100% appeal G driven company, give us

 

Lee Atchison: 00:07:52

your credit card, we'll go from there, you'd have to do the free

 

Lee Atchison: 00:07:55

trial, right? Or the free free tier. And, and we just started

 

Lee Atchison: 00:08:00

moving into an SL G's model for enterprise customers, and added

 

Lee Atchison: 00:08:06

all that complexity, and then started the process of going

 

Lee Atchison: 00:08:09

public. And everything was up in the air and changed and the

 

Lee Atchison: 00:08:15

pricing model was just in horrible shape at the time, I

 

Lee Atchison: 00:08:19

mean, I'm not talking anything bad that was customer facing or

 

Lee Atchison: 00:08:22

anything, but the system itself was just a hard mess, to try and

 

Lee Atchison: 00:08:30

deal with. And we were doing, trying to do simple things. And

 

Lee Atchison: 00:08:34

trying to, to, to turn it into a system that could easily add new

 

Lee Atchison: 00:08:41

capabilities and features as we went along. And quite frankly, I

 

Lee Atchison: 00:08:45

think we failed at that. I mean, we it just it was such a complex

 

Lee Atchison: 00:08:49

system, we just couldn't make anything happen. And so your

 

Lee Atchison: 00:08:52

whole mindset that say it took a year for you to launch because

 

Lee Atchison: 00:08:56

of pricing. I buy that I absolutely see that. And you're

 

Lee Atchison: 00:09:01

right, you know, then, you know, I've that was probably the first

 

Lee Atchison: 00:09:04

time I saw it a little bit, I guess at Amazon, but you were

 

Lee Atchison: 00:09:08

dealing with customers at Amazon, but not that much. But I

 

Lee Atchison: 00:09:11

saw it in spades and New Relic. And then after that when I

 

Lee Atchison: 00:09:14

started talking to customers, and you know, when I after my

 

Lee Atchison: 00:09:17

book and all that sort of stuff, when I started going out and

 

Lee Atchison: 00:09:19

talking to customers, then I started hearing that issue was

 

Lee Atchison: 00:09:24

really common and really prevalent. And so I absolutely

 

Lee Atchison: 00:09:28

understand and can hear where you're coming from here. This is

 

Lee Atchison: 00:09:30

a huge issue. But but let's let's get into a little bit more

 

Lee Atchison: 00:09:34

of the specifics here. Let's, let's make sure that people you

 

Lee Atchison: 00:09:38

know, we level set exactly what we're talking about here. And so

 

Lee Atchison: 00:09:40

let's talk you know, ask the basic question that some people

 

Lee Atchison: 00:09:44

listen to this are going to be asking now and that is why can't

 

Lee Atchison: 00:09:48

I just integrate with stripe? What's wrong with that and what

 

Lee Atchison: 00:09:51

am I missing from stakes by if I just integrate with stripe? What

 

Lee Atchison: 00:09:56

else is there?

 

Guest: 00:09:58

Okay, so first For most stripe is by far one of the

 

Guest: 00:10:03

most, you know, advanced and complete solutions out there.

 

Guest: 00:10:07

When it comes to Billing payments and whatnot, I think I

 

Guest: 00:10:12

have plenty to say about how pioneering their way both in the

 

Guest: 00:10:16

way they went to market as well as the way they structured their

 

Guest: 00:10:19

product and their infrastructure and etc. I think what is change

 

Guest: 00:10:23

is not necessarily tied to just stripe, I think there's a couple

 

Guest: 00:10:27

of other things that may help shine some light into why this

 

Guest: 00:10:31

is so important. And what becomes so difficult. So, stripe

 

Guest: 00:10:36

is became almost a synonym for developers to we need to charge

 

Guest: 00:10:42

for this thing. Whenever you know, whether you are an early

 

Guest: 00:10:45

stage or even you know, as your grow, if you you know, if

 

Guest: 00:10:49

somebody from the business side, or the leadership comes in and

 

Guest: 00:10:52

say, Hey, we need to be able to charge and they would come with

 

Guest: 00:10:56

this, you know, let's call it like problem statement, do r&d,

 

Guest: 00:11:01

the almost immediate response will be okay, let's, you know,

 

Guest: 00:11:04

let's enter stripe. And the main reason is because stripe did an

 

Guest: 00:11:09

amazing work in making themselves almost synonym to

 

Guest: 00:11:15

charging an ends in internet. The problem is, or the problem

 

Guest: 00:11:21

begins, where you don't need to just charge. So if you were an E

 

Guest: 00:11:27

commerce, business or company and you're selling something on

 

Guest: 00:11:31

a shop, or you know in Shopify, or on the internet somewhere,

 

Guest: 00:11:35

yeah, you probably just need to charge. But SAS is SAS really

 

Guest: 00:11:40

about just charging? The answer is almost never know. Because

 

Guest: 00:11:44

value adoption and pricing in SAS and the customer journey,

 

Guest: 00:11:49

it's not just about the checkout, it's not just about

 

Guest: 00:11:52

the elements in the code, the stripe elements that allow you

 

Guest: 00:11:55

to safely and securely insert credit card details and close

 

Guest: 00:12:00

the transaction. There's so many before that in between and

 

Guest: 00:12:07

afterwards, that is not covered by the stripes of the world,

 

Guest: 00:12:12

that it's just literally scratching the surface. And now

 

Guest: 00:12:15

it plg motion and user led motion. It's even becoming more

 

Guest: 00:12:19

and more evident. How far are we from software that solves this

 

Guest: 00:12:23

the right way. Stripe gives you powerful solutions all across

 

Guest: 00:12:29

the board on all those fronts billing, you know, subscription

 

Guest: 00:12:33

management quotes, ability to charge payments, Dunning and

 

Guest: 00:12:38

etc. But when you think about pricing and packaging, a lot of

 

Guest: 00:12:43

these things actually fall between the cracks of how the

 

Guest: 00:12:46

founders of stripe, thought of stripe, when stripe begin, it

 

Guest: 00:12:50

was all about the ability to monetize in charge and the

 

Guest: 00:12:53

Internet and they solve payment gateways really well. And they

 

Guest: 00:12:57

solve checkout really well. And they solve, you know with

 

Guest: 00:13:00

collecting payments and doing subscription. But they they had

 

Guest: 00:13:04

mostly retailers and commerce in mind when they started, they did

 

Guest: 00:13:09

shifted and invested later downstream in SAS, but some of

 

Guest: 00:13:13

it is still very much behind to what the industry require. And

 

Guest: 00:13:19

this is where companies like Stig are developing into solving

 

Guest: 00:13:23

these set of problems that are becoming more and more and more,

 

Guest: 00:13:28

you know, painful. So just by by a few examples. So implementing

 

Guest: 00:13:34

trials, how do you implement trials in the right way?

 

Guest: 00:13:37

Nowadays, people think about reverse trials, quota based

 

Guest: 00:13:40

trials, not just time based trials, do you insert credit

 

Guest: 00:13:44

card before the trial? Or you don't have to, you know that to

 

Guest: 00:13:47

begin the trial? So all these things are just trial, right?

 

Guest: 00:13:51

The the banner inside your web application, the email

 

Guest: 00:13:54

automation around the trial behavior, automation? And how do

 

Guest: 00:13:59

you let GTM teams know about the trial progress is the customer

 

Guest: 00:14:03

in the right direction within the lenses of the trial. So all

 

Guest: 00:14:06

those things are just trials in stripe, many of the things I

 

Guest: 00:14:10

just listed, they don't they don't really, you know, support

 

Guest: 00:14:14

or solve all of them out of the box. And, and this is just you

 

Guest: 00:14:21

know, a small, typical use case that comes to mind. But even

 

Guest: 00:14:25

more so like if you take it even to a more simple use cases,

 

Guest: 00:14:30

right? So when you think about pricing and packaging in

 

Guest: 00:14:34

general, the conversation doesn't begin with the ability

 

Guest: 00:14:39

to charge you first need to understand what are you charging

 

Guest: 00:14:42

for? What is your strategy, what is the value prop? What are the

 

Guest: 00:14:47

benefits of using your software versus the alternative? And all

 

Guest: 00:14:52

these questions are not, you know, payment questions or

 

Guest: 00:14:56

necessarily billing questions. These are strategy questions

 

Guest: 00:14:59

product Questions experience questions? Do we go cell

 

Guest: 00:15:04

service? Or do we do SL G? You know, do we allow in app

 

Guest: 00:15:10

upgrades and downgrades? Are you? Do you have to contact

 

Guest: 00:15:12

sales for that? Will we monetize over seats? Or over a platform

 

Guest: 00:15:19

for you and add ons? You know, how will we basically package

 

Guest: 00:15:23

our software? All these conversations are much, you

 

Guest: 00:15:28

know, ahead of thinking of how will how, let's let's go in and

 

Guest: 00:15:32

integrate stripe, typically integrating stripe and what

 

Guest: 00:15:35

comes after we made those decisions that we made some

 

Guest: 00:15:38

bets. I don't know if that was helpful, by the way, leave and

 

Guest: 00:15:42

I'm happy to kind of elaborate more into that.

 

Lee Atchison: 00:15:45

It absolutely does. And, you know, if I could

 

Lee Atchison: 00:15:47

maybe try and put a, you know, just a 10 or 20 or 100. word

 

Lee Atchison: 00:15:51

summary, on, on on what you're saying is, you provide a layer

 

Lee Atchison: 00:15:56

on top of stripe, that handles things like entitlements,

 

Lee Atchison: 00:16:00

resources, but also the the different motions for how you

 

Lee Atchison: 00:16:07

convert people into real customers. You know, Stripe does

 

Lee Atchison: 00:16:11

simple trial models, but there's 100 different ways to do trial

 

Lee Atchison: 00:16:14

models, 100 different ways to do things like free tiers and

 

Lee Atchison: 00:16:18

resource allocation limits and soft limits versus hard limits.

 

Lee Atchison: 00:16:22

And, and you know, when do you call the customer? When do you

 

Lee Atchison: 00:16:25

email the customer? When do you stop the customer cold? Those

 

Lee Atchison: 00:16:28

sorts of decisions are all part of a layer that's well above

 

Lee Atchison: 00:16:33

stripe, and it's in this area of entitlement management layer. So

 

Lee Atchison: 00:16:39

you provide that so that a application just has to do

 

Lee Atchison: 00:16:42

things like, Well, I just use 10 megabytes of the user space. I

 

Lee Atchison: 00:16:47

don't know if he's, if he's got it or not you take care of it.

 

Lee Atchison: 00:16:49

Oh, does he have it? Yes, he does fine. No problem. You know,

 

Lee Atchison: 00:16:52

and that sort of thing is all the application has to deal

 

Lee Atchison: 00:16:55

with. And what that means is, are all things that you deal

 

Lee Atchison: 00:16:59

with?

 

Guest: 00:17:00

Yeah, I think you you've nailed it. Even piggyback on

 

Guest: 00:17:03

that. And I know, and I'll say there are two basic main ways to

 

Guest: 00:17:09

think about steak one way is the engineering standpoint, and the

 

Guest: 00:17:14

other is the business standpoint, from the engineering

 

Guest: 00:17:16

and architectural standpoint. Yes, it's by its score, and

 

Guest: 00:17:20

entitlement. We like to think about ourselves as like an API

 

Guest: 00:17:24

for pricing and packaging includes endpoint for

 

Guest: 00:17:27

entitlements the SDK is the widgets library includes a lot

 

Guest: 00:17:31

of things that are helping you basically launch faster and you

 

Guest: 00:17:35

know, build without writing a lot of code to build that pieces

 

Guest: 00:17:39

of your software. The, if you were not using something like

 

Guest: 00:17:44

steak, and you were going all the way just directly

 

Guest: 00:17:47

integrating with stripe, you would have to build this piece

 

Guest: 00:17:50

of your software yourself. So it's important to call out that

 

Guest: 00:17:53

it's not like we are like, sprinkle on top right? If you

 

Guest: 00:17:59

want to integrate stripe in 2023, and you want to go to

 

Guest: 00:18:03

market in the SAS world, whether you're doing self service

 

Guest: 00:18:06

trials, usage based pricing, subscription model platform fee,

 

Guest: 00:18:10

no matter the way you're going to market. It's either you're

 

Guest: 00:18:14

building it yourself, or you're taking an off the shelf

 

Guest: 00:18:17

solution. But it's not being solved by stripe in any way. You

 

Guest: 00:18:21

don't have entitlement management, in stripe,

 

Guest: 00:18:23

everything that it is related to usage based ingestion, real time

 

Guest: 00:18:27

event, streaming, everything that is related to aggregations,

 

Guest: 00:18:31

and you know, basically reporting usage for billing

 

Guest: 00:18:35

purposes. All these things are not being solved today by the

 

Guest: 00:18:38

stripes of the world. And so stick is essentially an API that

 

Guest: 00:18:42

sits between your web application and the business

 

Guest: 00:18:45

application. And it helps you manage all that. And by the way,

 

Guest: 00:18:47

it's thing is not just working, integrating once, right, like we

 

Guest: 00:18:50

do either billing solutions as well. When it comes to going to

 

Guest: 00:18:54

market, you want to have more options, your customers wants

 

Guest: 00:18:58

want more options. And so if you're locked to what the

 

Guest: 00:19:03

current billing setup allows you that it's going to be extremely

 

Guest: 00:19:06

painful to be nimble and move. For instance, if if you're going

 

Guest: 00:19:11

to market in a subscription model, and you have a really

 

Guest: 00:19:14

strong competition coming into the market with a usage based

 

Guest: 00:19:18

and you're locked to a billing solution that doesn't allow

 

Guest: 00:19:20

usage based model. Now you have a real problem in your end,

 

Guest: 00:19:24

because you might be losing and bleeding out customers to

 

Guest: 00:19:27

competition based on a GTM model. So that's that's a big

 

Guest: 00:19:31

deal. And yeah, and so stick basically allows you that

 

Guest: 00:19:35

nimbleness and speed in that in that regard.

 

Lee Atchison: 00:19:39

And I think that's actually you hit the nail on the

 

Lee Atchison: 00:19:41

head of the problem that you and I were both facing at New Relic

 

Lee Atchison: 00:19:45

is that the nimbleness wasn't there in the system, this system

 

Lee Atchison: 00:19:48

worked fine, but when we wanted to change the model, to in my

 

Lee Atchison: 00:19:52

case to add new sales motions and to get ready for going

 

Lee Atchison: 00:19:55

public and in your case, when you're a new product Offering

 

Lee Atchison: 00:20:00

was added into the mix. It just wasn't designed to be extended.

 

Lee Atchison: 00:20:05

And so it was built for what it was designed to do, and nothing

 

Lee Atchison: 00:20:08

more. And it wasn't designed to be extended. Now something like

 

Lee Atchison: 00:20:11

steaks. You know, it's I don't want to oversimplify it. But

 

Lee Atchison: 00:20:16

it's, it's a configuration change to change price.

 

Guest: 00:20:18

No, no oversimplify actually.

 

Lee Atchison: 00:20:21

What it is, yeah,

 

Guest: 00:20:22

that's what it is. That's, that's what it isn't

 

Guest: 00:20:25

actually like oversimplifying because I like to be very, you

 

Guest: 00:20:29

know, very specific about what we do. But the end of the day

 

Guest: 00:20:33

entitlements is, is a configuration we want. There are

 

Guest: 00:20:36

ways and faster ways to control that configuration. We want

 

Guest: 00:20:40

observability we want auditing tools, we want the ability to

 

Guest: 00:20:44

control safely how we enable more, we want to be flexible.

 

Guest: 00:20:49

And we want to remove a lot of this work from our engineering

 

Guest: 00:20:54

teams, so they can focus on creating high value. So so so

 

Guest: 00:20:58

yes, 100%. Exactly that.

 

Lee Atchison: 00:21:02

I imagine there are hundreds of different

 

Lee Atchison: 00:21:05

pricing models. Certainly, I've seen hundreds of different

 

Lee Atchison: 00:21:08

pricing models across the internet, I'm sure you have to

 

Lee Atchison: 00:21:10

there's there's a lot of different ways to do pricing and

 

Lee Atchison: 00:21:14

packaging for SaaS applications that you just boggles the mind

 

Lee Atchison: 00:21:18

the number of variations and creativity that people have. I

 

Lee Atchison: 00:21:25

think everybody, but I get your point there. Yeah. But what do

 

Lee Atchison: 00:21:29

you find is, in the world of the customers, you've talked to you

 

Lee Atchison: 00:21:33

what's the most common or the most used? What's the most

 

Lee Atchison: 00:21:37

prevalent types of pricing models in the industry today?

 

Lee Atchison: 00:21:42

And how do you think that's changed?

 

Guest: 00:21:44

Okay, cool. So, by the way, as a side sidebar

 

Guest: 00:21:48

conversation, we actually released two completely free

 

Guest: 00:21:51

completely open data applications that you can opt

 

Guest: 00:21:55

into to actually learn more about the exact question, one we

 

Guest: 00:22:00

call pricing dot quest. So if you hit pricing dot quest, we

 

Guest: 00:22:04

basically captured all the pricing changes and pricing

 

Guest: 00:22:09

pages that some of the top Sass companies out there has done

 

Guest: 00:22:14

including the actual historical pricing pages. And we've

 

Guest: 00:22:18

analyzed that in in comparison to ARL and, and the speed of

 

Guest: 00:22:26

changes. And basically, like we've took all the ones that

 

Guest: 00:22:29

made the most changes, the faster cadence like faster is

 

Guest: 00:22:33

faster intervals. So check it out, it's very helpful. And the

 

Guest: 00:22:36

secondary source is GTM. We call it GTM. Explorer. Honestly, it's

 

Guest: 00:22:40

an air table. But that airtable is pretty neat. Because early

 

Guest: 00:22:44

days in when we started to build stick, we basically research, I

 

Guest: 00:22:48

think it was like 137, or something like that. pricing

 

Guest: 00:22:53

pages all across the industry of all of all stages, SAS companies

 

Guest: 00:22:56

at various stages. And it's like a summarized aggregated

 

Guest: 00:22:59

information on what did we learn on pricing, among others? How do

 

Guest: 00:23:03

people go to market and etc. Now,

 

Lee Atchison: 00:23:05

I'll put those links into the show notes too.

 

Lee Atchison: 00:23:08

So if you Yeah, listen to this podcast, check out the show

 

Lee Atchison: 00:23:10

notes. And you can click the links there.

 

Guest: 00:23:13

So now to your question. So it depending if you ask the

 

Guest: 00:23:18

founders, so you ask the VCs, and I'll explain. So VCs will

 

Guest: 00:23:23

tell you that usage based model is the most prominent nowadays

 

Guest: 00:23:26

and everyone are all about usage base and like subscription

 

Guest: 00:23:30

minute you know, subscription model is dead, long live the new

 

Guest: 00:23:34

king Long live, you know, usage based not. If you ask founders,

 

Guest: 00:23:40

I think you will hear something a little bit different. And if

 

Guest: 00:23:43

you ask bias, you're able to hear something completely

 

Guest: 00:23:47

different. What I mean by that is the industry is definitely

 

Guest: 00:23:52

making a push towards usage based model. The problem is that

 

Guest: 00:23:56

if you ask folks what is usage based model to them, you will

 

Guest: 00:23:59

you will hear folks saying that slack is usage based model AWS

 

Guest: 00:24:03

is usage based model Algolia is usage based model and data dog

 

Guest: 00:24:06

is usage based model. And the problem is each one of the

 

Guest: 00:24:09

companies I just described are completely something different.

 

Guest: 00:24:12

And so the thing is, you know, if you go back into the theory

 

Guest: 00:24:16

into the academy books, right, go back into the pricing

 

Guest: 00:24:19

conversation. When you build packaging, and you build

 

Guest: 00:24:23

pricing, one of the early things to think about is what is the

 

Guest: 00:24:27

value metric? What is the thing that I'm trying charging for it

 

Guest: 00:24:31

has to be like, like a variable that I can monetize on. And so

 

Guest: 00:24:37

almost every pricing, even in the subscription world, even in

 

Guest: 00:24:41

the Zuora world, there was always some variable. It could

 

Guest: 00:24:44

be seats, it could be storage units, it could be something

 

Guest: 00:24:48

else but there was always a valuable and so calling these

 

Guest: 00:24:51

things usage based is less saying everything is usage

 

Guest: 00:24:54

based. So it's like saying everything and nothing all at

 

Guest: 00:24:56

the same time. And so I would say this Do you definitely see

 

Guest: 00:25:01

the developer tools and infrastructure solutions or

 

Guest: 00:25:05

paths or Yes, they will incline towards the Pay As You Go model,

 

Guest: 00:25:10

which is what I would call, you know, usage based model like pay

 

Guest: 00:25:13

as you go where AWS being a typical, exactly, exactly. And

 

Guest: 00:25:19

it makes sense why because there is tied directly to the cost. So

 

Guest: 00:25:23

there is a certain margin that you want to keep on top of the

 

Guest: 00:25:27

cost at all times. And this is why the Databricks is and the

 

Guest: 00:25:32

snowflakes and the AWS is of the world, you know, this model

 

Guest: 00:25:36

makes sense. And also for the customer, there is some logic

 

Guest: 00:25:41

that, you know, I'm paying from what I'm using, right? It's,

 

Guest: 00:25:44

it's an infrastructure, and even if you go early 2021, this model

 

Guest: 00:25:49

was sold to founders is like the silver bullet, it's always

 

Guest: 00:25:53

everything, you just do pay as you go, it's always everything.

 

Guest: 00:25:56

And you know, as everything in life, you know, it all matters

 

Guest: 00:26:00

of you know, you know, when you choose a framework, you need to

 

Guest: 00:26:04

you need to employ the framework in the right context in the

 

Guest: 00:26:07

right, you know, setup. And so, you know, you can just skip or

 

Guest: 00:26:13

short circuit, thinking about the basics, what is my business?

 

Guest: 00:26:19

What is the value? What is the willingness to pay? Have my ICP

 

Guest: 00:26:24

my ideal client profile? Who are the personas that you know, who

 

Guest: 00:26:28

is buying my software? Who is using my software? And so all

 

Guest: 00:26:31

these questions, all

 

Lee Atchison: 00:26:32

those are independent variables from Yes,

 

Guest: 00:26:34

yeah, yeah. Yeah. And you know, who is pulling, you know,

 

Guest: 00:26:38

but whose budget is this coming from? And all these questions

 

Guest: 00:26:40

will help, you know, will help you think about your pricing

 

Guest: 00:26:43

more so then, you know, one model over the other, and then

 

Guest: 00:26:46

you can start thinking about, Okay, this model fits more to

 

Guest: 00:26:48

what I'm trying to do. You know, my persona is not used to, you

 

Guest: 00:26:53

know, to buy software in a pay as you go model. So this will

 

Guest: 00:26:55

not work. So, what you end up with people saying they're going

 

Guest: 00:26:59

to market based on your usage base, but ultimately, when they

 

Guest: 00:27:02

close the deal, they give a regular subscription. So

 

Lee Atchison: 00:27:06

you look at the largest AWS enterprise deals,

 

Lee Atchison: 00:27:11

and the vast majority of the costs are prepaid expenses,

 

Lee Atchison: 00:27:16

prepaid commitments,

 

Guest: 00:27:18

even stripe, are doing pre, you know, I mean, they have

 

Guest: 00:27:23

their regular you know, pay as you go model where it's like

 

Guest: 00:27:26

part of the transaction, they'd have show model. With big deals,

 

Guest: 00:27:29

they don't do that they do. Pre commitments, they do SAS, they

 

Guest: 00:27:33

do other things. You need to be able to think about your pricing

 

Guest: 00:27:36

in a way that fits, who are you're selling to.

 

Lee Atchison: 00:27:39

That's great, I was actually a much better

 

Lee Atchison: 00:27:41

answer than I was expecting.

 

Guest: 00:27:44

Giving you a heads up, my team knows that that I can speak

 

Guest: 00:27:48

until it until eternity. So

 

Lee Atchison: 00:27:53

end up being a little bit longer episode, but I

 

Lee Atchison: 00:27:55

think it's definitely going to be worth it. Because that was a

 

Lee Atchison: 00:27:57

great answer. And I love that. So what a parallel question to

 

Lee Atchison: 00:28:05

you know, what's the most popular model is what's the most

 

Lee Atchison: 00:28:07

asked for change? What what do you hear the most from your

 

Lee Atchison: 00:28:12

customers? And this could be, you know, trends to the future.

 

Lee Atchison: 00:28:16

It could be just things you haven't done yet. That's fine.

 

Lee Atchison: 00:28:18

But But what do you hear from your customers the most as far

 

Lee Atchison: 00:28:21

as what they want to hear from you?

 

Guest: 00:28:23

Okay. So it varies between the different segments

 

Guest: 00:28:27

or split it into early stage, growth stage. And then, you

 

Guest: 00:28:31

know, let's call them like, later stage, which is like, pre

 

Guest: 00:28:35

post IPO. So, so you see different things. So. And also,

 

Guest: 00:28:38

by the way, it's very much tied to macro dynamics, like

 

Guest: 00:28:41

macroeconomics. So I'll give an example right after the

 

Guest: 00:28:44

downturn, right after the downturn, we've saw a wave, you

 

Guest: 00:28:49

know, folks knocking on our doors and say, Hey, door, we

 

Guest: 00:28:52

need to monetize tomorrow, especially like early stage

 

Guest: 00:28:55

companies. There was a lot of like a round sometimes even be

 

Guest: 00:28:58

around companies that they're still not monetizing yet, at the

 

Guest: 00:29:03

time. And they basically realize that revenue efficiencies King

 

Guest: 00:29:07

is the new king, and they need to monetize right away. So we

 

Guest: 00:29:11

saw a huge trend, away from plg motion, and away from freemium

 

Guest: 00:29:18

into the realm of sales, sales lead concepts. And that was

 

Guest: 00:29:25

interesting. 21 2000 that was, that was like June of two, I

 

Guest: 00:29:30

guess. Yeah. June to June 22. Yeah. Okay. Yeah. June 22. And

 

Guest: 00:29:36

their main reason was, like people went away from from some

 

Guest: 00:29:39

of those big motions is, they take they take, they require a

 

Guest: 00:29:44

lot of time and cost to build the right way. In terms of

 

Guest: 00:29:49

internal teams processes, how do you nail down your freemium

 

Guest: 00:29:53

strategy? How do you nail down you know, usage based models and

 

Guest: 00:29:57

so people just literally just went away from that because they

 

Guest: 00:30:00

needed to show revenue yesterday. So one of the major

 

Guest: 00:30:04

changes we saw in the early stages like, hey, we need to

 

Guest: 00:30:06

launch pricing, you need to be super simple needs to be

 

Guest: 00:30:08

tomorrow. And it needs to be all about revenue, like cells like

 

Guest: 00:30:12

ASBs, high ESPYS. We're dropping our plg is like something I've

 

Guest: 00:30:17

heard, like so many times in the last six months. The second

 

Guest: 00:30:23

thing I saw on the growth stages,

 

Lee Atchison: 00:30:26

you think it was all economy? Or do you think

 

Lee Atchison: 00:30:28

there was also the reengagement of the Salesforce post pandemic,

 

Lee Atchison: 00:30:34

there's now suddenly a Salesforce that's available that

 

Lee Atchison: 00:30:37

wasn't available during the pandemic. So

 

Guest: 00:30:39

it's interesting, you know, it's a good call out,

 

Guest: 00:30:41

maybe that's also related, I felt merely from my humble point

 

Guest: 00:30:47

of view, you know, based on the deals that I'm doing with steak,

 

Guest: 00:30:51

that we suddenly saw a car customers that were planning to

 

Guest: 00:30:57

do plg, they decided to drop it or deprioritize it, and

 

Guest: 00:31:01

customers that were already doing plg decided to move into

 

Guest: 00:31:07

sales, that motion book a demo, you know, hire sales team, and

 

Guest: 00:31:12

whatnot. And that was interesting, because I felt

 

Guest: 00:31:17

like, definitely we see how being agile and being nimble

 

Guest: 00:31:22

matters. Because you don't know what will happen. You need to be

 

Guest: 00:31:26

able to respond to buyers traits. And, you know, companies

 

Guest: 00:31:31

wanting more, you know, go to market with more options. So for

 

Guest: 00:31:34

us for Stig, it wasn't, it was a good surprise, in a sense,

 

Guest: 00:31:37

right? Because it proves your value statement. Yeah, that we

 

Guest: 00:31:41

always insisted that it's not about one size fits all, we

 

Guest: 00:31:44

always said that from the get go. It's all about flexibility,

 

Guest: 00:31:48

speed. And nimbleness always was the way we saw the market. So

 

Guest: 00:31:53

that was one thing. On the later stages, we were seeing a lot of

 

Guest: 00:31:57

will nowadays for international expansion. We also seeing like

 

Guest: 00:32:05

repackaging either existing products or new, new offers. So

 

Guest: 00:32:12

I'll give an example. Let's say you acquired a new company, and

 

Guest: 00:32:15

a company, or you you've been building some in new

 

Guest: 00:32:21

functionalities or capabilities in a certain space. So sometimes

 

Guest: 00:32:24

it makes sense to repackage the way you go to market with that

 

Guest: 00:32:28

new offer to introduce cross sell or upsell opportunities,

 

Guest: 00:32:33

and that's something that you see a lot on the ground and the

 

Guest: 00:32:35

growth stage. So we've seen a lot of that. What else? Yeah,

 

Guest: 00:32:42

there's always like the most common use case for us is like,

 

Guest: 00:32:45

hey, we want to do self service, or hey, we want to do freemium,

 

Guest: 00:32:49

and help us introduce that.

 

Lee Atchison: 00:32:52

There's Hassan is the co founder and CEO stake, an

 

Lee Atchison: 00:32:55

easy to implement headless pricing and packaging platform.

 

Lee Atchison: 00:32:59

Dora, thank you so much for joining me today on modern

 

Lee Atchison: 00:33:01

digital business.

 

Guest: 00:33:03

Thank you, Lee.

 

Lee Atchison: 00:33:06

Thank you for tuning in to modern digital

 

Lee Atchison: 00:33:08

business. This podcast exists because of the support of you,

 

Lee Atchison: 00:33:12

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Lee Atchison: 00:33:15

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Lee Atchison: 00:33:19

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Lee Atchison: 00:33:24

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Lee Atchison: 00:33:27

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Lee Atchison: 00:33:33

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Lee Atchison: 00:33:36

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Lee Atchison: 00:33:40

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Lee Atchison: 00:33:55

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Lee Atchison: 00:33:58

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Lee Atchison: 00:34:02

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