⚡ IL - Subscription-based pricing is dead

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• Influencers take money upfront and it didn't work well for brands. To overcome this problem TikTok and Instagram are preparing affiliate program systems. This way brands don't have to pay upfront, and influencers will get a revenue share for each sale. 
• Small businesses in the USA can create websites now as Microsoft launched a free website creation service.
• I have used multiple bookmarks managers. But no-one can beat Raindrop. It's amazing. Plus, its IFTTT integrations are amazing. Just like / save or upvote anything across Reddit, YT, and Twitter. Then it will be saved to your bookmarks. It's available on all platforms.
• Deliver value consistently and results will follow. (Tweet link)
• Reading the “open jobs” page for a big company is a 100% legal way to snitch on their product roadmap. (Tweet link)
• It's easy to be busy. It's hard to be productive. (Tweet link).

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Smart SaaS companies are shifting to usage-based models

In a usage-based model, expansion “just happens” as customers are successful and it also widens the top of the funnel.

HubSpot offered three subscription packages ranging in price from $3,000 to $18,000 per year for it's first five years in business.  But it struggled with poor churn and anemic expansion revenue. Net revenue retention was near 70%, a far cry from the 100%+ that most SaaS companies aim to achieve.

Something needed to change. So in 2011, they introduced usage-based pricing. As customers used the software to generate more leads, they would proportionally increase their spend with HubSpot. This pricing change allowed HubSpot to share in the success of its customers.

By the time HubSpot went public in 2014, net revenue retention had jumped to nearly 100% — all without hurting the company’s ability to acquire new customers. HubSpot annual revenue for 2020 was $883 million.

In a usage-based model, a company doesn’t get paid until after the customer has adopted the product. From the customer’s perspective, this means that there’s no risk to try before they buy. Products like Snowflake and Google Cloud Platform take this a step further and even offer $300+ in free usage credits for new developers to test drive their products.

And of the IPOs over the last three years, seven of the nine that had the best net dollar retention all have a usage-based model. Snowflake in particular is off the charts with a 158% net dollar retention.

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Worth Reading

1. Survival of the fittest or the boldest? How market leaders get ahead

2. Product vision vs. mission

3. Calculating churn and understanding its impact

4. How to use buyer intent data for effective sales and marketing alignment?

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Shopify's merchant acquisition channels (Source: page 8 of Shopify's Q4 financial results

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