{"id":110736,"date":"2025-07-17T08:22:34","date_gmt":"2025-07-17T15:22:34","guid":{"rendered":"https:\/\/thegood.com\/?post_type=insights&p=110736"},"modified":"2025-07-17T08:22:35","modified_gmt":"2025-07-17T15:22:35","slug":"monetization-strategy","status":"publish","type":"insights","link":"https:\/\/thegood.com\/insights\/monetization-strategy\/","title":{"rendered":"Building A Monetization Strategy That Doesn\u2019t Leave Untapped Revenue in Your User Base"},"content":{"rendered":"\n

Product leaders are rightfully obsessed with acquisition. They pour resources into new sign-ups and track monthly active users religiously.<\/p>\n\n\n\n

But over many years of working with SaaS teams, there is something counterintuitive we\u2019ve learned about this approach.<\/p>\n\n\n\n

The companies that scale fastest aren’t always the ones acquiring the most users. They’re often the ones who build monetization strategies that focus on their existing user base. As users find more value in the tool and increase usage, the tool\u2019s pricing fluctuates accordingly.<\/p>\n\n\n\n

Realistically, every SaaS tool will hit a growth plateau. There aren\u2019t infinite users that will find value in your product, even though we all wish there were.<\/p>\n\n\n\n

The goal is to build growth into your monetization strategies so you don\u2019t leave any untapped revenue in your existing user base. This ensures you don\u2019t reach a premature growth plateau once net new users become stagnant.<\/p>\n\n\n\n

The fundamental shift in monetization strategy from seats to value<\/h2>\n\n\n\n

Before we get started, throw your traditional SaaS monetization playbook out the window.<\/p>\n\n\n\n

For years, companies have relied on seat-based pricing because it made sense. With each new hire, a new account or seat was purchased for tools. Revenue grew linearly with team size.<\/p>\n\n\n\n

But now one person can do the work of two or three people. AI tools, automation, and productivity software mean that the relationship between users and value creation has completely shifted. When your customers can accomplish twice as much with half the team, seat-based pricing isn\u2019t sustainable.<\/p>\n\n\n\n

Smart companies are pivoting to value-based extraction. Instead of charging for the number of people using your software, they charge for the value you create. This isn’t just about switching to usage-based pricing; it’s about fundamentally rethinking how you capture the value your product delivers.<\/p>\n\n\n\n

Consider HubSpot’s evolution. Instead of sticking to their standard seat-based pricing model as the market has evolved, they\u2019ve created a dynamic pricing system. Users can pay for seats at their specific account tier, but also have a layer of contact-based pricing, aligning cost with the actual value delivered rather than just the number of users.<\/p>\n\n\n\n

They\u2019ve also recently added token-based pricing for certain functions in the tool, like marketing email sends, AI features, and API calls. These changes allow them to maintain revenue growth even as customers reduce their seat count.<\/p>\n\n\n\n

You\u2019re trying to capture more of the consumer surplus<\/h2>\n\n\n\n

Most SaaS tools have a consumer surplus<\/a>. There are features or outcomes that customers would pay more for, but don’t have to because of your pricing model<\/a>.<\/p>\n\n\n\n

You can never eliminate all surplus (you need happy customers), but you can likely capture more of it through strategic segmentation and value extraction.<\/p>\n\n\n\n

Think about your demand curve. It’s not a straight line. It’s a complex slope that varies by customer segment<\/a>, use case, and willingness to pay. Most companies set one or two price points and leave massive value on the table. The companies that scale create multiple packages along that curve.<\/p>\n\n\n\n

Netflix understood this when it evolved from a single $7.99 plan to Basic, Standard, and Premium tiers. Each tier captures different segments of willingness to pay while allowing customers to self-select into the option that works for them. However, the real insight wasn’t in the tiers themselves, but rather an understanding that different customer segments valued different features. Knowing that allowed Netflix to extract more value from customers who were willing to pay more while keeping price-sensitive customers from defecting.<\/p>\n\n\n\n

Research changes everything<\/h2>\n\n\n\n

To get started on a monetization strategy based on value and capture more of the consumer surplus, companies have to build their understanding of what customers are willing to pay for.<\/p>\n\n\n\n

Research from monetization and pricing expert Madhavan Ramanujam<\/a> says that 20% of features drive 80% of willingness to pay. The challenge is to make sure you aren\u2019t over-indexing on features that customers don’t actually value while underdeveloping the ones that drive revenue.<\/p>\n\n\n\n

The solution is systematic research that reveals what customers actually want to pay for. Here are three methods to make it happen:<\/p>\n\n\n\n

Max diff analysis<\/strong>: Present customers with feature lists and ask them to identify the most and least important items. With enough volume, you can rank features by their impact on willingness to pay. Features that over 50% of customers want become your “leader” features or the core value proposition that justifies your price point.<\/p>\n\n\n\n

Anchoring questions<\/strong>: Instead of asking customers what they’d pay (which doesn’t work), ask them to compare your value to a known competitor. “If Salesforce brings your team 100 points of value, where do we rank?” This gives you relative value positioning without the discomfort of direct pricing questions.<\/p>\n\n\n\n

Van Westendorp pricing<\/strong>: Ask customers four questions about price sensitivity: What’s acceptable? What’s expensive but you’d consider it? What’s so expensive that you wouldn’t consider it? What’s so cheap that you’d question the quality? This reveals the psychological price boundaries for different customer segments, providing a window of tenable prices that capture both the price-sensitive and high-willingness-to-pay corners of the market.<\/p>\n\n\n\n