The lowdown on XaaS pricing changes

In the roughly five months since our initial collection, 70 of the approximately 320 companies in the database have made changes to their packaging models, pricing models, and/or price and discounting levels

May 2022
Author: Bryan Belanger

The state of pricing changes, according to the XaaS Pricing data

We began collecting XaaS Pricing data in mid-fall 2021, with the inaugural dataset completed and published on Nov. 1, 2021. In the roughly five months since that initial collection, 70 of the approximately 320 companies in the database have made changes to their packaging models, pricing models, and/or price and discounting levels.

We’ve tracked nearly 30 different types of changes, covering all aspects of packaging strategy, pricing models strategy, and pricing and discounting. The most common adjustment vendors made was to change actual price points. Nearly 50 of the 70 companies we cover made a change that involved adjusting their price points. Another common change was to adjust product packaging, typically by rebranding, adding or removing (most common) a product edition. Many vendors made this change in concert with updates to price points.

Only two of the 70 companies that made pricing changes had more than one instance of change over the five months we’ve been tracking the data. This suggests that most vendors are implementing pricing strategy changes quarterly or annually, or somewhere in between. Reasons for this include the methods and cadence in which customer and/or competitive research data is collected and analyzed, bandwidth and resources of the pricing team, decision-making and budgeting cycles, and technical systems considerations.

3 interesting examples of pricing changes

While there are many interesting case studies of pricing and packaging changes to dissect from the XaaS Pricing data, we curated three that we thought were particularly interesting, based on the magnitude of the changes made and the potential downstream customer impact.

No. 1 – Postman tweaked copy positioning and adjusted pricing for 2022

Postman changed the names of its paid plan options from Team, Business and Enterprise to Basic, Professional and Enterprise. Additionally, the headline copy for each plan was adjusted to better reflect the target customer profiles.
The “package content” stayed largely the same between updates, but additional features are highlighted in the newest version, and descriptions are re-ordered to emphasize key features.
For example, “collection recovery” has been added as a key feature, and SAML has been shifted to be the first feature listed for the Professional package, versus the last one for the previous Business edition.
The Professional plan increased from $24 to $29 per user, per month for an annual subscription, while the Enterprise plan increased from $69 to $99.

No. 2 – Figma brought FigJam out of beta and added an Enterprise plan

Figma kept its core design and prototyping product editions intact but moved FigJam out of beta and into production as its second official product offering in April 2022.
FigJam was initially positioned at $8 to $15 per editor, per month when it was in beta, but was launched with sub-$5 per-month plans, suggesting that the firm’s GTM intent is to incentivize bundling of FigJam with core Figma plans.
Figma also launched an Enterprise edition, in April 2022. The plan is listed below, instead of in line with, the core plans suggesting that it is being concept tested as Figma seeks to better understand enterprise-level demand before refining the offering into a standard package. Unlike most Enterprise plans, Figma quotes pricing for the Enterprise tier — pricing is $75 per Figma editor, per month, plus $5 per FigJam editor, per month. Again here the core Figma offering is priced at a premium to the Figma Organization plan, but enterprise pricing for FigJam is the same of FigJam Organization pricing.

No. 3 – OutSystems dropped a plan and made a significant pricing change

OutSystems dropped its Basic plan as part of its April 2022 pricing update.
OutSystems previously outlined plan limits on internal and external end users. While OutSystems no longer publishes details on these capacity factors, pricing likely still scales by these elements.
In consolidating its Basic and Standard tiers, OutSystems also has reduced the entry-level paid pricing for its Standard tier from a “starting at” price of $4,000 to $1,500. While details are not provided, this suggests that OutSystems has introduced more volume-based tiering and/or consumption-based pricing to its offering, whereas previously the Standard and Enterprise plans did not impose limits on internal end users.

If you’re interested in tracking pricing changes like these for your market category, specific competitors, and/or aspirational proxy vendors, XaaS Pricing can help. We’re capturing, indexing and archiving our data weekly and in real time based on vendor changes, enabling clients to view past and historical data side by side for a given company or companies.

Another indispensable tool in your pricing change analysis arsenal should be Wayback Machine. Once you’ve identified a change that a peer has made, you can search for their pricing website for specific dates and access the archived version of their pricing page for side-by-side analysis.

A framework for evaluating pricing changes

There is plenty of really high-value content out there that breaks down exactly how to approach making a change to price levels and how frequently you should do so. ProfitWell’s guide is a great primer on the best tactics for executing a pricing change.

There are also many really strong case studies available about vendors that went through pricing changes. A few examples include this one from GitLab and one from Noko Time Tracking for the Stacking the Bricks blog.

Together, the above resources and others like them provide a solid foundational framework for how to execute a pricing change. What we’re more interested in assessing at XaaS Pricing is the part that comes before — when you actually have to figure out what type of pricing change you’re going to make and why.

There’s plenty of general guidance available on the internet on the types of pricing changes you can make. Most articles focus primarily on a single type of pricing change: annual price increases. This is helpful general wisdom, as financial and operational performance benchmarks support the guidance that SaaS companies should consistently charge more and raise prices regularly.

However, a price increase is only one type of change, though it’s a fairly major change with high-impact customer ramifications. But as we noted above, we’ve observed 30 different types of changes in the XaaS Pricing companies we currently track. Pricing increases are one really important angle, but there are many angles with which vendors can experiment with changes. There are options to tweak price-related messaging and positioning on a more frequent and iterative basis, which can be a jumping off point for a more formal approach to pricing changes for companies getting started with more agile price strategies.

To help vendors think about pricing changes, we’ve created a simple framework

We break down the types of pricing changes a vendor can make into four categories, based on a simple quadrant of the effort it takes to make the change versus the potential risk and impact of the change.

The categories of pricing changes we define include:

Agile Pricing Experiments: This category includes changes that can be enacted with lower risk and effort. An example might include renaming a particular edition of your product, and/or making copywriting changes on your pricing page to test if the messaging changes better resonate with your target ideal customer profiles for each plan.
Testing Opportunities: This is a really important area as these changes offer high potential impact and associated risk but can be implemented with lower effort. This category represents a creation opportunity for vendors also, as vendors can create testing opportunities by finding ways to take higher-effort activities and test them in a lower-risk and more agile manner. One example of a testing opportunity would be trialing a promotional discount. A promotional discount can be launched with minimal effort, as there are no changes to product packaging and/or existing pricing strategies. But promotions can have a significant and lasting impact on customer perception and key metrics such as churn, so they need to be carefully structured if used.
Quarterly Road Map Changes: Quarterly road map changes are the plumbing of pricing changes; these are items that are built into an annual road map and executed in the course of business. For example, a company may decide to launch a new entry-level tier of its product in Q2 2022. Quarterly road map changes detail the incremental and tactical steps needed to execute that change. Quarterly road map changes require effort, but are typically de-risked through the research and strategy design efforts conducted in the Testing Opportunities and/or Major Strategy Changes phases.
Major Strategy Changes: These are the major, fundamental pricing changes that vendors undertake, typically on an annual basis. These types of changes require major effort when done well, typically rooted in customer and market research, competitive tracking and customer impact analysis. These changes have cross-functional impact, influencing not only pricing but portfolio and go-to-market. They have major influence on financial performance. Changes may include launching a new product and/or edition, completely overhauling packaging, and/or changing pricing and discounting structures.

If you’re interested in unpacking pricing changes in greater detail through the lens of XaaS Pricing’s data, subscribe to stay updated and we’ll automatically send you our next pulse report, publishing in May, which will focus on pricing changes observed since XaaS Pricing’s launch.