Unlock revenue growth with pricing evolution in 2024

Christina Hsu

In 2023, 94%+ B2B SaaS pricing leaders say that they strive to change pricing and packaging at least once a year. Many companies changed either their pricing or packaging to boost business performance — showing that pricing is no longer a static business metric. This includes Cloudflare’s move to simpler and more predictable pricing that is mainly based on usage and value delivery to the customer. It is also a common strategy for AI companies to shift to usage-based pricing to transfer computing costs to their users. If you are planning to implement new pricing and packaging to drive revenue growth and business success, read on to learn four ways Orb can help.

1. Implement price changes in days — not multiple sprints

Today, operationalizing price changes is resource-intensive and nerve wracking because of two main reasons. First, constraints in legacy billing systems make pricing changes difficult. It's important to have a flexible billing tool that allows companies to respond to customer and market feedback by iterating on their pricing quickly. That’s why Orb offers state-of-the-art pricing models out of the box, allowing you and your cross-functional stakeholders to price however you need by using the intuitive drag-and-drop UI. While these common pricing models meet the requirements of most companies, you or your engineering team can also craft bespoke billable metrics using the full flexibility of SQL. Combined with raw events, companies can use Custom SQL to configure unique metrics and calculate billing easily — without having to re-ingest event data.

Second, it is common for product and finance teams to need to split their business across multiple billing systems. For example, some companies will invoice enterprise customers manually in the ERP because of the variety of custom contracts, whereas self-serve customers have standard pricing that can be more easily modeled in a subscription billing tool. Dealing with multiple systems makes migrations messy because of the amount of manual error corrections required, which makes pricing changes even more daunting. In Orb, you can store raw usage data and billing information across your entire self-serve and enterprise customer base. When you make a pricing change, you will automatically see the changes reflected in the invoices and revenue recognition data as well as your CRM tool, such as Salesforce. There's no need to double-check across multiple tools or correct errors from manual data entry anymore. In addition, Orb can handle large volumes and throughput of usage data, so you don’t have to worry about aggregating data outside of Orb.

As an example, Airbyte has been able to continue to evolve pricing and stay flexible as their business changed. Another example is how Dopt changed their pricing model after its customers were starting to outgrow existing pricing plans and incurring overages.

2. Improve customer experience during price changes to enhance retention

While revenue is often closely tied with opening new acquisition channels, it is important to retain existing customers who already understand the value you deliver and become evangelists. A 5% increase in customer retention can increase ROI up to 95%. There are two main ways to ensure a great customer experience even during a pricing change. First, it is expected for customers to feel confused or nervous. However, you can get ahead by making pricing predictable and understandable, and by thoughtfully communicating and providing clear information about how their usage will be impacted by the price change. Orb helps by generating invoices that provide transparent usage information and offering features like webhooks to power real-time usage alerting.

Second, you can tailor recommendations to customer needs by arming sales teams with revenue insights. During a price change, sales team members act as consultants to guide customers to choose the best plan for them. Companies can do so by connecting the usage data with Salesforce, so that the sales team can easily make recommendations.

3. Free up resources from billing to dedicate time to core product innovation

Usage-based billing with homegrown or legacy systems is extremely tedious because of the amount of stakeholders involved. Today, finance teams find themselves stitching together multiple spreadsheets to calculate invoice amounts at month end, or engineering teams are asked to make one-off data pulls to calculate usage. Although the job eventually gets done, it takes away time and energy from the core business value. Your finance team could instead be spending more time developing strategic recommendations to drive revenue increases. Your engineering teams could be exploring the next big breakthrough for their core product. This is the power of moving billing to Orb.

For example, since Stytch adopted Orb, their engineering team has released a number of new products because they freed up resources from working on billing. Logan Gore, a software engineer on their team, spends under an hour a month on Orb and has made next to no changes since he set it up. Their finance team has reduced 75% of their time on invoicing and billing.

4. Stop revenue leakage by automating the quote-to-cash process

For many companies that have adopted a usage-based pricing model, it is still surprisingly common to have to calculate invoice amounts manually at the end of each month. This process is exhausting and error-prone, and it often leads to a dilemma: do I hire additional people to help correct the errors or shift back to a simpler fixed pricing model? There is another way. After manually doing the math for three years, Opus decided to adopt Orb to automate their invoicing process. With visibility into customer usage data, Opus calculates and collects overages automatically, with no manual work required. As a result, their expansion revenue has outperformed their expectations. Their engineers are also able to focus on improving their core product. “We want to focus on solving the problems our customers are having, not worry about how to invoice them,” said Jeff Silver, Opus’ co-founder and CTO.

By making pricing evolution faster and giving teams more control, market pioneers like Replit, Airbyte, and Stytch are able to refocus resources on core product innovation instead of billing and leverage pricing as a business growth lever. Contact us to talk about your next pricing change or learn more about how Orb thinks about pricing here.

posted:
December 27, 2023
Category:
Best Practices

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