Estd 4.22.2023
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Execution starts with alignment (and diffusing team biases): Operationalizing any pricing strategy in the SaaS space is inherently complex, primarily because different teams within an organization often have very different views on pricing. These differences stem from the unique perspectives and inherent biases each team brings to the table. Jan Pasterna
For example, the Product team might perceive the value of a feature or functionality as being much higher than customers do simply because they judge its worth based on the development effort that went into creating it. On the other hand, the Sales team might believe that deep discounting and lower price points will accelerate the sales cycle and maximize revenue, often underestimating the potential long-term impact on the brand and profitability. (Also, in the numerous organizations I have worked in, I was never able to find a strong correlation between the level of discounting and the time it took to close the deal).
None of those team-specific perspectives is entirely accurate when viewed in isolation. The role of the Pricing team, therefore, is to act as a balancing force, correcting these biases and ensuring that pricing decisions are made with a holistic understanding of the entire business landscape. This requires full alignment across all teams, with everyone agreeing to the assumptions and goals.
Operationalizing pricing changes is particularly challenging when it comes to broad re-packaging projects, such as the introduction of a brand-new product lineup. These initiatives are complex because they involve nearly every department within the company, from Sales and Marketing to Customer Support, Legal, and IT. To illustrate the main principles of successfully managing such a project, I’d like to walk you through an example from my experience at Citrix.
In 2016, Citrix Online was a well-established player in the SaaS space, known primarily for its flagship product, GoToMeeting. GoToMeeting was a premium video conferencing solution. However, despite its strong reputation, the product was increasingly seen as expensive, especially in the face of fierce competition from Webex and the rapidly growing Microsoft Teams. The market dynamics were shifting, and it became clear that without a strategic adjustment to our pricing and product lineup, Citrix risked losing its competitive edge. This is where I came in, I was hired to drive a transformation that would revitalize the product lineup and introduce a more competitive pricing structure.
We were introducing a Freemium package and repackaging our offerings to create lower-price-point options. This move was designed to expand our customer base and make our products more accessible, but almost everyone in the organization had reservations. These reservations stemmed from several sources of resistance and a general lack of buy-in, which are common challenges in large-scale pricing and packaging changes.
The Sales team, for instance, was worried about meeting their quotas with the new pricing structure. Sales teams are often heavily incentivized based on revenue targets, and any change in pricing can directly impact their ability to close deals and earn commissions. Their resistance was driven by the fear that lower price points might reduce their average deal size, lengthen the sales cycle, or lead to a perception that the product was being "discounted" in value, making it harder to negotiate deals. They were also concerned that introducing a Freemium model would result in longer sales funnels, with more customers opting for the free tier and delaying their transition to paid plans.
The Customer Care team had its own set of concerns. They feared the increased volume of support requests that would inevitably come with additional seats sold, especially from users on the Freemium tier who might require more guidance but contribute less to revenue. The introduction of new pricing tiers and packages also meant that the support team would have to quickly familiarize themselves with the nuances of these offerings to assist customers effectively, potentially leading to an increased workload and the need for additional training. This fear of being overwhelmed without adequate resources or preparation was a significant source of their hesitation.
Finally, the team managing our website was concerned about the site’s stability under the new demands. The introduction of new pricing models, especially a Freemium tier, would likely lead to a surge in traffic and user activity, requiring the website to handle increased load and maintain performance. Additionally, they would need to update the site’s architecture to accommodate new pricing tiers, subscription management tools, and a seamless user experience for both free and paid users. Their concerns were driven by the fear of potential downtime, bugs, or performance issues that could harm the company’s reputation and customer satisfaction.
Some of those concerns were valid, some were a result of a poor understanding of the proposed changes. For most of them, the projected scale of issues and difficulties was inflated. It reflected a strong focus on the priorities of their respective roles without considering any overarching benefits for the company.
We realized that this Pricing project wasn’t just about models, analysis, market intelligence and go-to-market. It was about bringing the team together with us on that journey. The success of this initiative hinged on getting everyone on board. That’s where I reached for a tool that was promising in tackling the challenge in hand: ADKAR methodology:
ADKAR is a structured change management model developed by Prosci that serves as a practical framework for both individuals and organizations to successfully navigate change. The model is built around five key stages, each representing a critical milestone that must be achieved for change to be successful:
ADKAR is designed to ensure that all aspects of change are addressed, helping to overcome resistance and achieve successful and lasting transformation within an organization.
How did we apply that in practice?
Let me walk you through the main steps and how we applied them in the context of Pricing transformation:
The first step was to create awareness of why this change was necessary. I worked closely with senior leadership to communicate the strategic importance of the pricing and packaging overhaul. We used data and market analysis to show why this was the right move for Citrix. Multiple communication channels were employed: emails, town hall meetings, and even intranet posts. All that to ensure the message was heard loud and clear across the organization.
Building a genuine desire among teams to support the change required more than just addressing technical or logistical concerns. It meant truly listening to every team member. Resistance is often a knee-jerk reaction when people feel overlooked or marginalized, especially if they believe their input wasn’t considered early on. To overcome this, it was crucial to ensure everyone felt heard, whether in large meetings, smaller group discussions, or one-on-one conversations. We involved all teams from the outset, not just to address their concerns but to genuinely include them in the decision-making process. By doing so, we transformed potential resistance into support.
For example, we highlighted to the Sales team how easier-to-sell packages could boost their sales volume. With the Customer Care team, we discussed strengthening support resources to manage the expected increase in customer inquiries. The Legal team’s concerns were mitigated through detailed assessments and reassurances, while the web team was included early to plan for site stability during the transition. By giving everyone a voice and involving them early, we earned their support ensuring a smoother and more collaborative change process.
Creating awareness and desire was just the beginning. We needed to equip everyone with the knowledge necessary to navigate the new landscape. Tailored training programs were developed for each team. Sales received guidance on how to pitch the new pricing models, while Customer Care was trained on the specifics of the new packages. We also created comprehensive documentation—FAQs, process guides, and cheat sheets—to ensure that everyone had access to the information they needed.
(We used some help with the Sales Enablement team and Product Marketing team in this process.)
With knowledge in hand, it was time to translate that into ability. We launched pilot programs that allowed teams to practice their new roles in a controlled environment. This gave us invaluable feedback and helped build confidence across the board. We also designated change champions within each team to provide ongoing coaching and support, ensuring everyone had the help they needed as they adapted to the new structure. The 'Champion’ function and role was designed to maintain that buy-in earned at the “Desire” stage when things get rough or difficult. We needed someone within each team to be the proponent of the project and make sure the feedback keeps flowing.
Finally, we focused on reinforcing the changes to ensure they stuck. We celebrated early success: both big and small, to build momentum. Continuous monitoring and feedback loops were established to catch any issues early and make adjustments as necessary. This wasn’t just about making a change; it was about sustaining that change over the long term.
Looking back, ADKAR was instrumental in guiding Citrix through this complex transition. It wasn’t just a methodology; it was a roadmap that helped align the entire organization around a bold new direction. Despite the initial resistance, the structured approach of ADKAR allowed us to turn skeptics into supporters, ensuring the successful implementation of our new pricing and packaging strategy.
I find that it is often very easy to focus on accuracy of the analysis, on technical details, code, design and financial forecasting whilst the main make-or-break of such projects is within a team, their performance and alignment.
The importance of the Pricing team being highly cross-functional cannot be overstated, particularly in a complex and fast-paced SaaS environment. Pricing decisions are far-reaching and impact nearly every aspect of an organization, from sales and marketing to product development and finance.
The Freemium model allowed Citrix to attract a broader audience (almost double the number of new users), including small businesses and individuals who might not have been willing to pay for the full version initially. This expanded the user base significantly, which, over time, led to an increase in paid conversions as free users upgraded to paid plans to access more features.
By introducing lower price points, Citrix was able to tap into different market segments, which diversified its revenue streams. While there was a risk of reducing revenue from existing customers who might downgrade to cheaper plans, the strategy overall led to an increase in total revenue by 22% due to the volume of new customers.
The new pricing strategy put pressure on competitors like Webex and Zoom, as Citrix positioned itself more aggressively in the market. This helped GoToMeeting maintain and even grow its market share in a highly competitive environment.
Initially, there was a dip in revenue due to existing customers downgrading to cheaper plans. However, this was offset over time by the influx of new users who started on the Freemium tier and later converted to paid plans.
Implementing the Freemium model and adjusting pricing required close alignment across various departments, including Sales, Marketing, Product, Legal, and Customer Support. This organizational shift helped foster a more collaborative environment, as different teams had to work together to ensure the success of the new pricing strategy.
The Freemium model also influenced the product development roadmap. There was a greater emphasis on creating features that could entice Freemium users to upgrade to paid plans. This shift required the product team to balance the development of new premium features with the maintenance and improvement of the free offering.
Now that you’ve got our 5-step pricing framework under your belt, it’s time to hunt down those hidden gaps and close them. If you’d like a friendly expert hand to help you capture a 20–30% ARR lift, let’s chat, and get you a free pricing assessment.