Secret Pricing & Packaging Framework: "Restaurant menu" for PLG

Complex Packaging gave customers Anxiety 

When we started our PLG journey in the end of 2022, we had very complex pricing and packaging. It's largely because we were taking something we would sell to SMB and mid-market customers with hand-holding and all these apples-to-apples features against our competitors and introducing that to our PLG customers (which are mostly startups and first-time compliance users). 

When we explained the premium tier, it was just listing out. Hey, you could do A, B, C, D, … And that just front-loaded a lot of anxiety and complexity because PLG customers were unclear when they had to pay and upgrade.

We battled this for probably the first six months or so. Then we layer more complexity with premium services. While we're getting sales, it wasn't clear what the levers were. What correlates to a customer wanting to upgrade? 

Takeaway:

Don't stress over coming up with the most excellent packaging in your Excel sheet. 

Clarity from Handraisers (PQLs)

We changed our strategy to making sure that customers feel reassured that they can achieve the goal on the free tier. we just wanted them to proceed and adopt our compliance software. so that as they move forward into the journey, they would encounter advanced features. We also built out paywalls and alert systems when customers hit those paywalls. 

The paywalls are all associated with advanced features that we decided on. When hand-raisers contact us, we hop on call and tell them, "Hey, if you want this advanced feature as part of this tier, you'll need to upgrade to this premium tier." 

And the customers will push back and say, "Well, that's very expensive. I all I wanted was just this one advanced feature." 

This happened a few times. There was also this push-and-pull; eventually, we wanted their business, and they wanted a lower price, so we decided to unlock that advanced feature at a discounted price. 

Something dawned on us. Internally, maybe we need to create like a "restaurant menu". 

Takeaway:

Gate and paywall "customizes" features and sees which feature you get hand-raised. 

List out and price all Individual Items vs. Combo Meals

We have premium services. We have advanced features. We have features that were coming down in the roadmap. We have usage-based products. Instead of packaging them all into big bundles, we created an à la carte menu. 

At first, it was really an idea like a pricing anchor - "Hey, you can choose your à la carte menu or you can buy this bundle, which you will save more money and get more features." It's kind of like the combo meal set at restaurants. Why buy individual items when you can get the combo meal? 

Takeaway:

Sell individual features and see which one resonates. 

Finding your Packaging Lever

We continue to get hand raisers (product qualified leads) for one or two of our most advanced features. We will still get requests for our “bottom” advanced features. Over time, you can see a clear distribution of the most hand-raised upgrade requests.

So now we confidently identified the top level feature inside our pricing and packages.

Takeaway:

The activated customers will tell you what they want to upgrade and why. Lean into those reasons as the root of your packaging strategy.

Re-rolling our Pricing and Packaging

We roll back our "combo meal" bundles using that most requested upgrade feature. We combined the top two most requested features together and sold it much cheaper. 

We also combined more features and upgrades. But now the story and positioning becomes "Hey, you want to unlock this advanced feature as part of this tier? Additionally, you can also get these other really important unlocks." 

We sold individual features unlocked to our PLG customers. And actually, the combo meal became an anchor point. They said, "They don't want a combo meal today; they just want that individual advanced feature." When they want those additional upgrades, they ask if they can roll into the bundles later. To us, this means that there are multiple upsell opportunities here. 

Takeaway:

Now with this individual advanced feature, you can story-tell the purpose of the upgrade. You basically have the "main character" feature for your bundle, and let that main character feature lead the sale and include minor selling points around the supporting features. 

Read more about pricing and packaging on PLG:

• Usage Based Pricing for PLG

• Pricing and Packaging Do’s and Don’ts

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I am Gary Yau Chan. 3x Head of Growth. Product Growth specialist. 26x hackathon winner. I write about #PLG and #BuildInPublic. Please follow me on LinkedIn, or read about what you can hire me for on my Notion page.