Software Monetization Strategies & How to Implement
How can you make your software profitable?
Software products can be monetized in many different ways. We spoke to several successful SaaS entrepreneurs to learn how they transformed their ideas into profitable SaaS businesses.
We selected diverse stories to help you better understand marketing, sales, and different methods of monetization.
We’ll cover four different strategies.
- Try HTML0 for free
- Freemium
- Pay-as-you-grow
- Value proposition proprietary
These tips are from business owners who know how to convert curious customers into paying ones.
Pricing strategy 1: Monetizing free trial
Christina Bechhold Russ is the Director of Samsung Next, Samsung’s investment and innovation arm. Russ explained that she is responsible for identifying early-stage companies (from Series A to B), which fit into Samsung’s key verticals.
Russ says, “We chose Beekeeper because they did something that had never been done before. Beekeeper, a mobile-centric platform designed to facilitate collaboration and communication among non-desk workers.
The majority of digital services are aimed at desk-based employees. The majority of digital services are aimed at desk-based staff.
The passion, dedication, and technical expertise displayed by the founders impressed us. This was a team we knew could be trusted to work well together and accomplish great things.
According to Russ
Our investment approach is hands-on and practical. We provide them with resources and support to help them succeed. I’ve worked with Beekeeper’s team closely, providing advice and working together on strategies for building and scaling their business.
Beekeeper Pricing Model
Russ explains that the first step in pricing and monetization is to identify your value metrics. It is important to determine what and how much you will charge based on the customer’s experience and value (in terms of cost savings and revenue). “
This question’s answer is critical for the monetization of your website.
Once you’ve identified your most likely customers, meeting their needs is the easiest way to monetize.
For example, Beekeeper chose the free-trial model for its monetization because customers would rather try it out before they sign a contract than choose a freemium service. Russ says that the freemium model is better suited to small business owners who purchase software using credit cards.
Russ explains that Beekeeper doesn’t display their prices on the internet. It is common for enterprise software companies to charge based on client needs.
Common pricing mistakes
Russ is a serial entrepreneur and has been involved in many startup companies. I wanted to find out if there are any themes that they have all had. Which SaaS firms make the biggest mistakes when it comes time to monetize?
Most people make the mistake of pricing their products too low. This will result in a customer base that sees little value. They’ll pay even more as your business grows.
The freemium model is also tricky, and it’s often promoted more than the paid tiers. In the SaaS space, they simply don’t work.
Freemium Pricing Strategy 2
AJ Bruno is the founder of two SaaS companies.
Both experiences were interesting to me. First, he told a bit about Trendkite Accelerator’s history.
Within three months after founding TrendKite, we completed an Accelerator course called Dreamit Ventures. Our product went from a sketch on a napkin into a fully-functional and profitable finished product. “
Bruno’s strengths helped him win customers early.
I continued to do what I was good at, cold prospecting via emailing, phone calls, and demos. We closed two or three out of every 100 prospects in two months.
TrendKite is promoted as part of Cision’s suite of products using the trial/demo method. Bruno will be launching a new product called QuotaPath with a different monetization model.
Switching from Freemium
Bruno chose freemium because he has a product-based mentality.
QuotaPath, he says, is available for free to sales reps and managers. We want to make sure that the users are going to enjoy using it before we start charging for it.
The company plans to offer expanded options with admin and reporting capabilities this autumn.
The product will be available in August. The product will be live by August.
Bruno decided to focus on product and customer retention after his experience with TrendKite. TrendKite spent its first years doubling down on efforts to gain new customers. It invested less to keep existing customers.
This harmed our customer retention and now I’m making an effort to correct this in my second startup. “
Before users upgrade to a premium service, they must be satisfied with the basic functionality.
Price Strategy 3: Pay as you grow
Itai Lahan, the CEO of Cloudinary, Tal Lev ami, the CTO, and Nadav sferman, launched Cloudinary, a cloud platform, in 2011. The story behind Cloudinary is a common one for developers. The developers needed to solve a persistent problem, so created the platform for internal use.
Other developers also struggled with the same problem. Cloudinary realized that they could package up their solution for internal use by other teams. Cloudinary was created entirely manually.
Cloudinary gained momentum within months and had several paying clients. Cloudinary has three SaaS subscription tiers, including Plus, Custom, and Advanced, and a freemium option.
WeWork is home to CNN, TED, and many other internationally-recognized companies.
Lahan: “That developer-centric approach in our early years helped us grow organically because the developer community shared positive experiences about the tools they help to succeed. “
Even though our software and services have been extended to marketing and creative stakeholders, we will continue to build them for developers.
Cloudinary’s Pay-As You-Grow Approach
Cloudinary has a pricing structure that is multi-tiered and includes a “free” option. Cloudinary offers a multi-tiered pricing plan that includes a free option.
Lahan says that “in a very rare circumstance, we could continue to concentrate our attention on developers’ needs, while we grow and develop our platform without any external pressures by VCs. “
We knew from the start that we would provide something more than just a free trial. We wanted developers to be able to use our solution for however long they needed.
The customer is well-known to him.
We understand developers’ curiosity to find out what works. Tiered pricing lets users choose the product that best suits their needs at this time and can grow with them.
You have a complete sense of solidarity with the users.
Cloudinary’s success was largely due to its bootstrapped nature. While it is difficult to know for sure if our outcome would have differed if we received VC funds, we were able to develop the company culture that we believe has contributed to its growth. By growing organically on our customers’ foundation, we have had the opportunity to create the kind of environment we feel was crucial to the business. Our ability to
Freemium vs. Pay-As-You-Grow?
The pay-as-you-grow model is very similar to the freemium model. Many may argue it falls under freemium. So what’s their difference?
Cloudinary predicts that small businesses will require more storage space as they expand. The increased cost of the capacity is a result of the growth.
Pricing strategy #4: Software can be used as a lead generator
Marie Poulin and her partner Ben Borowski run Oki Doki, a digital creative company.
Doki is a product that was developed by our Client Services team. It involved custom development, integration, and design for online programs, masterminds, and coaching programs. Poulin claims it delivers services faster.
The software isn’t the main source of revenue in this case. Many people signed up for the software and needed more help than the basic technology. It was foolish to assume that the issue was only technical.
Poulin observed that online courses were becoming more popular and people would rush in to take them without the proper preparation. Doki introduced Poulin, his company, and Borowski to new clients.
We had a much larger audience of beginner users than we did in the past. While many people designed courses, they lacked experience and knowledge in creating products people will pay for. These people lacked market research as well as any design skills.
As the number of requests for help with launching courses increased, Soon they discovered that product demonstrations provided a good source of new leads for their consulting service.
Ben gave demos to the people. But when they told him they weren’t quite ready, or they had questions beyond technology, Ben suggested they talk with his partner. She does this.
Many of the initial demos led to new clients that hired them as retained consultants. It generates 10 times the revenue of a SaaS monthly subscription.
Poulin also offers a training course for their customers that have requested a demonstration but need more assistance. It is an excellent way to learn how the software works and it also benefits their customer service department.
Our clients benefit from our diverse revenue streams.
You can monetize in many different ways
These stories show how entrepreneurs successfully monetized their software. You can alter many factors when you decide how you want to set up your pricing and marketing. Your monetization strategies will be determined by the product you are selling, as well as your customers’ expectations.
You can advertise on every screen. You should be cautious as if you overdo it your reviews may be bad.
Let’s chat! Comment down below if you need help.
