What is feature gating, and reasons to use it or avoid it | 2024

Calista Reyes

We’ve heard this time and time again — offering exclusive features only to higher-tier subscribers could be viewed as unfair. 

Our view is simple: It actually isn’t. 

The strategy is called feature gating and it can be a win-win both for you and your customers. 

In this primer, we’ll cover:

  • What is feature gating?
  • 4 reasons why you should start using it
  • Implementation challenges to consider
  • Should you implement feature gating in your business?

Let’s jump right into it! 

What is feature gating?

Feature gating means controlling access to certain features or services of your software based on a customer’s subscription tier or payment plan.  

Unlike other deployment strategies that focus on technical implementation or user experience testing, feature gating is squarely focused on the business and monetization aspect of product development. 

Feature gating also allows for more nuanced product offerings, where advanced features are leveraged as incentives for users to invest in high-tier plans. 

Reasons to use feature gating

Here’s a quick rundown of four reasons why using feature gating is such a highly praised strategy by so many SaaS companies:

  1. It’s fair and user-centric. For SaaS businesses, feature gating allows you to match features to the specific needs and budgets of different customers. 

    For example
    customers on starter or basic plans get essential features, while customers on premium plans get full perks. In essence, it’s all about tailoring offerings to different audiences and charging fairly on the value provided.  
  1. It’s a great risk-reduction strategy that also enhances product development. You can release an update to a select group of customers before rolling it out to your entire user base.  

    This is a great way to test the waters
    and get some authentic feedback. This grows in relevance for heavy users in particular — who are likely to find use cases for your solution that can give you insight into future upgrade possibilities! 

    The best part?
    This feedback will help you identify issues and improve your solution before making it widely available to all your customers. It’s a win-win situation.
  1. Feature gating supports subscription models. By reserving exclusive features for higher subscription tiers, you’re making a transparent distinction between different plan offerings and their actual value.

    The result is not only an increased perceived value for premium plans
    , but it also allows you to test different pricing strategies to find the optimal balance between revenue and user acquisition.
  1. Feature gating creates opportunities for upselling and incremental revenue growth. When customers see what’s available in higher-tier plans — and the features align with their needs — it motivates them to upgrade to gain access to more features. 

    What’s more, existing customers may also pay for add-on features individually, boosting your recurring revenue.

Challenges of implementing feature gating

Feature gating may seem like a no-brainer, but it does come with a few hurdles you’ll need to overcome:

  • Building the infrastructure: You’ll want to integrate systems that facilitate access control based on subscription tiers. Essential components include robust user authentication, subscription management, and access control mechanisms. 

    You should also consider using feature flagging,
    as it enables dynamic toggling of features for users, but the core focus is on using these tools to confirm premium features are accessible only to those in the right subscription tiers. 
  • Managing customer expectations: Anticipate strong reactions when features become exclusive. Communicate transparently how gated features benefit users, such as funding product improvements or enabling lower entry points. 

    Consider offering introductory discounts or free trials
    for premium plans to allow users to experience the value firsthand. Prioritize open communication and actively address user concerns to build trust and maintain a positive customer relationship.
  • Nailing pricing and packaging: Avoid gating critical features, but ensure premium features offer enough value to justify price increases. You might need to restructure pricing tiers or product bundles. Start by gating non-essential features while you refine your pricing strategy.

    You’ll get better results if you also conduct market research and analyze user behavior
    to understand which features are most valuable to different user segments. This will guide your decision on which features to gate and at which tiers.

Is feature gating right for your business?

Even if you’re considering implementing feature gating for your SaaS, feature gating is not for everyone.

To help you decide, here are a couple of questions you should be asking yourself before committing to a feature gating strategy:

Does my SaaS product have features that could be deemed as premium? 

If your product only has one tier or very few features to gate, feature gating may not make sense. Conversely, this strategy will work best when you have a range of features at different price points that you can actually put behind a premium paywall.

Will my customers understand why I’m gating features behind higher tiers? 

Be transparent in your messaging so customers know what features are available at each tier. In turn, you’ll avoid alienating or upsetting your customer base with murky messaging that could be wrongly interpreted as a money grab

Some users expect full access to all features for their subscription price and may react negatively to gating. Think about how you’ll navigate this before moving forward.

Can you handle the technical requirements that come with feature gating? 

Feature gating requires controlling access to specific features for different user groups. Make sure you have a system in place to manage entitlements, authentication, and permissions. Some SaaS platforms offer tools to help with feature gating.

Will it actually drive new revenue? 

The primary goal of feature gating is to generate more revenue from your product. Analyze how much potential revenue could come from gating premium features before investing resources to implement it. 

You need to balance the revenue opportunity with the potential customer frustration. Start with gating a few key features to test the strategy, understand what works and what doesn’t, and expand from there.

Next steps

So, you’ve decided feature gating could benefit your SaaS product. 

Now it’s time to think about implementation. Integrating feature gating into an existing product requires technical resources and expertise that is best spent on your core product features. 

Partnering with a company that can aid you in implementing feature gating and pricing optimization is the fastest, most effective way to reap its benefits. 

That’s where a platform like Orb becomes invaluable.

Orb’s extensive set of features can help you hit the ground running fast. Here’s how:

  • An expert’s eye: By analyzing your product usage data and billing patterns, Orb can guide you in identifying which features could be effectively gated to improve your SaaS pricing models, ensuring they align with both customer value and your business goals.
  • Implementation made easy: Orb handles the technical implementation required to gate features and bundle them into new or updated price tiers. How? Orb comes with integrations to data warehouses, finance tools, and even has a direct SQL editor. It’s a done-for-you solution. 
  • Dynamic improvement: Orb supports continuous refinement of feature gating by offering ongoing support and tools for monitoring usage data. With plan versioning and entitlement management, Orb ensures you’re always keeping up with the changes. 

Learn more about how Orb can solve your monetization strategy.

April 4, 2024

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