Happy Friday everyone! We're in the final 18 days of our equity crowdfunding campaign on Republic, and as promised I wanted to provide another company update before we take a breather over the weekend. In this one, I'd like to give an overview of the pricing and subscription strategy which we've been validating throughout our closed beta and which we'll offer at launch when we transition out of beta in August. There's a lot here, but I'll try to be as succinct as possible so you can get to enjoying your summer weekend as quickly as possible.
In my last company update, I gave an overview of how we've expanded the Parlay platform in order to support individual subscribers in addition to team subscriptions. This is a strategy which has been used to great effect by the most successful players in our space (i.e. those with similar target customers), and is beneficial in many ways, in particular that it allows us to:
- Dramatically lower the barrier of entry to using Parlay
- Generate revenue from individuals while using them to evangelize us to their teams
- Focus on progressive upsells from individual subscriptions to team subscriptions through feature gating and value addition over just outbound B2B sales tactics
- Introduce a viral coefficient into our customer acquisition strategy, allowing us to use referral systems as a way to drive adoption in exchange for individual discounts
- Significantly expand our market opportunity by making Parlay usable by personas outside of the core digital product team
At launch, we will leverage a freemium pricing strategy with our individual subscriptions. The free "Starter" tier will allow individual subscribers to use Parlay to collect feedback on a limited number of ideas (i.e. 5) for free using our new 'standalone' previews, which I described in our last company update. These previews exist independent of a product experience (i.e. on a standalone landing page with its own URL), are limited in functionality, and do not allow for custom branding (i.e. they heavily feature Parlay branding).
Our 'Pro' tier will expand our individual subscribers' experience in two core ways: 1) allow them to collect feedback on an unlimited number of ideas, and 2) allow them to customize the branding of their standalone previews through logos, color palettes, and loading screens. In addition to this feature gating, this Pro tier will also include a referral system called Ambassador, allowing individual subscribers to receive a discount on their subscription by referring other individuals to a Parlay Pro tier. We used a similar system at our prior company, Firecracker, attributing as much as 90% of our new monthly recurring consumer revenue directly to organic referrals. We're confident we can replicate this with Parlay's individual subscriptions.
A few important notes here:
- The primary purpose of these individual subscriptions is to act as a catalyst for future upsells to more significant team subscriptions. By making it possible for individual contributors to begin gaining value out of Parlay, we believe we can significantly expedite our B2B sales process by using individual subscribers as evangelists to expand deeper with their teams.
- Likewise for our proposed referral system, our primary goal is not to generate revenue through referrals, but rather to more quickly gain market traction with individuals who can one day act as a conduit into their company.
- We project individual subscriptions to scale more quickly than our team subscriptions, making up the majority of our revenue until January 2019 when team MRR surpasses individual MRR.
Although much of our plan around team subscriptions remains unchanged, our beta has helped us clarify a few specifics of our pricing strategy post-launch. A quick summary of our team pricing structure post-beta:
- Provide three fundamental subscription levels at launch, allowing early-stage teams ('Startups'), maturing teams ('Scaleups'), and Enterprise-level companies to access progressively more robust feature sets at increasing price points
- Use feature gating, number of team seats, and number of end users/collaborators as the primary variables around which to motivate upsells
- For 'Scaleups' and Enterprise tiers, use companies' numbers of monthly active users (MAUs) or collaboration qualified users (CQUs) as way to progressively scale monthly subscription cost for organizations of various sizes
- Provide subtle discounts for annual subscriptions vs monthly subscriptions
- Rely primarily on self-service purchasing and upgrading flows for non-Enterprise team subscriptions, minimizing customer acquisition cost as much as possible
- Provide optional activation/onboarding training as an add-on purchase during new team sign-up, à la HubSpot's customer training
- Unique security and privacy options available through an Enterprise tier
- We project team subscriptions to make up the majority of our revenue by January of 2019, with the average contract value being $299/month
The above pricing strategy and subscription tiers will go live in late August, but will evolve over time as the Parlay platform continues to expand with the addition of new features and functionality. By the end of 2018, we expect these packages to be even more clearly and distinctly delineated, with justifications for upsells even stronger. You can review our proposed plan for this late 2018/early 2019 package breakdown here.
That's all for now! Thanks again everyone, and have a great weekend.