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Estd 4.22.2023
Pricing is one of the most strategic weapons in a SaaS company’s arsenal, and one of its most dangerous tripwires. A single pricing decision can unlock explosive growth or trigger mass customer churn overnight.
In this post, we apply Monetizely’s Price to Scale framework, which breaks pricing strategy into five steps (Segmentation, Packaging, Metric, Rate, and Operationalization), to analyze three high-stakes SaaS price wars:
- DocuSign, which shifted from per-transaction pricing to feature-based packaging
- New Relic, which bet big on a usage-based model to reignite stalled growth
- GitLab, which controversially retired its low-end plan to drive customers upmarket
Each move was bold. Some paid off. Others backfired. And all three offer valuable lessons when viewed through Monetizely’s 5-step lens.
Whether you're a founder, product leader, or revenue owner, think of this as a playbook from the pricing battlefield, a real-world look at how pricing decisions shape growth, customer loyalty, and competitive positioning.
Let’s dive into the first showdown: DocuSign’s battle to defend its e-signature throne as usage-based pricing turned into a liability.
DocuSign: From Per-Envelope to Feature-Focused Pricing
DocuSign faced a classic commoditization squeeze. The e-signature pioneer initially charged per “envelope” (document sent for signature), but as competitors undercut with unlimited plans, DocuSign had to rewrite its pricing playbook.
1. Segmentation
DocuSign historically served a broad range of customers, from individuals and small businesses to global enterprises, and it actually offered a dual model to address these segments. Smaller customers often opted for usage-based plans (paying for a bucket of signature “envelopes”), while larger enterprises preferred per-user (per-seat) subscriptions that included a generous envelope allotment. This two-pronged approach lets each segment choose what fits best. However, as the e-signature market matured and cheaper rivals emerged, DocuSign’s segments started to blur. Even enterprises began eyeing usage-based deals to lower costs, while some mid-market customers found seat licenses with enforced limits frustrating. Competitors like PandaDoc and SignNow seized on this misalignment by offering flat-rate plans with unlimited e-signatures, eroding DocuSign’s appeal. In other words, what worked for DocuSign’s segments in the early days wasn’t working by the time the market crowded – a red flag that its segmentation and pricing needed realignment.
2. Packaging
Under its earlier model, DocuSign’s packaging was split by metric: customers either bought packs of envelopes or user licenses. Entry-level plans offered limited feature differentiation, and higher-cost tiers mostly added envelope volume or integrations.
But as basic e-signing became commoditized, DocuSign recognized the need to reframe its value proposition. Simply selling raw signing capacity no longer justified premium pricing. In response, the company pivoted from a “pay-per-use” model to a “pay-for-capability” approach.
The new packaging strategy emphasized the value beyond the signature, bundling advanced features such as:
- Automated workflows
- Deep CRM/ERP integrations
- Enhanced authentication and security
- Document storage and analytics
DocuSign introduced feature-based tiers like Business Pro and Advanced Solutions, where every plan included core e-signing, but higher tiers unlocked these premium capabilities.
This shift allowed DocuSign to align packaging with customer needs:
- Small teams could stay on lean, affordable plans
- Larger enterprises with complex workflows had clear incentives to upgrade
By anchoring its “good-better-best” tiers around differentiated capabilities, rather than just usage allotments, DocuSign delivered more targeted value across segments and positioned itself to grow beyond the commodity phase of e-signatures.
3. Metric
Perhaps the biggest change was in the pricing metric itself. DocuSign decided to move away from a usage-based metric (counting each envelope) and go all-in on a per-seat (per user) metric with unlimited usage. Under the new model being tested in 2023, customers would pay for each licensed user and get unlimited e-signatures per user. This is essentially a feature-based or user-based pricing model, where the number of documents signed is no longer metered. It was a bold reversal for a company long associated with “$X per envelope” pricing.
Why do this? By 2023, e-signature transactions had become a commodity – many competitors offered unlimited signatures for a flat subscription (e.g. PandaDoc’s $35/user/month plan includes unlimited docs, compared to DocuSign’s entry $15/month individual plan that only allowed 5 envelopes). Charging per envelope was making DocuSign look pricey and punishing customers for growing usage. The value metric had shifted: customers now saw value in workflow efficiency and integrations, not in the signature itself (which they expected to be unlimited).
DocuSign’s new per-seat metric aligns better with how customers perceive value – you pay for the number of people using the service and the advanced capabilities you need, not for each action they take. Importantly, this metric shift also increases predictability for enterprise customers (a fixed cost per user rather than variable costs for usage) and removes the psychological barrier of a “meter running” on each document. It’s a case of adjusting the pricing metric to what customers care about most at this stage of the market. (Interestingly, many SaaS firms are adding usage-based pricing today, but DocuSign shows that the opposite can make sense when your core usage becomes ubiquitous and low-value.)
4. Rate
As DocuSign introduced a new pricing metric and packaging model, it also had to recalibrate its price points and rate structure. Unlimited usage per seat meant the price per seat needed to rise to offset the loss of overage charges. Enterprise seat licenses were reportedly priced around $780 per user per year (roughly $65/month) as a baseline in negotiations, likely optimized through customer research and competitive benchmarking, such as matching PandaDoc’s business plan at approximately $650/user/year.
At the same time, DocuSign deliberately lowered the effective price per signature during this transition. Insider accounts suggest the company gradually reduced the price-per-envelope in a controlled manner, encouraging volume growth without drastically undercutting revenue. In practice, this translated into:
- Generous envelope limits (a kind of “soft” unlimited usage) for seat-based customers, and
- Discounted high-volume packs for those still on the legacy pricing model.
By the time full unlimited plans rolled out, many customers were already enjoying lower unit costs, effectively easing them into the new model. This was not a reactionary price war move, but a strategic reduction in unit economics on DocuSign’s own terms. It helped retain its large install base by making its perceived value and pricing comparable to cheaper rivals, preventing customer churn.
In essence, DocuSign traded some short-term revenue per transaction for higher long-term account value and competitive defensibility. True to the Price to Scale ethos, the company shifted from nickel-and-dime pricing to rates that reflect the total value of the solution. With feature-rich bundles and unlimited usage, customers were more willing to pay a premium seat price, enabling DocuSign to maintain healthy margins, even as the commodity cost of a signature approached ~$0.
5. Operationalization
Switching pricing models at DocuSign’s scale is like turning a cruise ship, it demands precision, coordination, and care. DocuSign executed this transformation through a gradual, well-orchestrated rollout that balanced innovation with risk management.
They began by piloting the new pricing model, unlimited envelopes per seat, with a select group of high-growth enterprise customers. This gave them early signals on adoption and customer perception in a controlled environment.
During the transition, dual pricing models ran in parallel:
- Legacy packages with envelope limits
- New “unlimited” seat-based options
This overlap allowed DocuSign to monitor impact without cutting off a known revenue stream prematurely. It also gave customers time to explore the new value proposition.
Internally, the shift demanded a full operational revamp:
- Sales Enablement: Reps had to pivot from selling volume (envelope overages) to selling value and expansion (seat licenses).
- Incentives: Compensation plans likely moved from overage-driven bonuses to rewards for seat growth and account expansion.
- Billing and Tracking: Systems were updated to accommodate unlimited usage and surface feature engagement metrics instead, critical for spotting upsell signals.
- Marketing and Web Experience: Messaging was refreshed to clearly explain the new packages while keeping the buying journey simple and intuitive.
The transition was carefully messaged as a customer benefit: more value, fewer limits, and no envelope anxiety.
By rolling out in phases and communicating transparently, DocuSign avoided the backlash seen by others, like Intercom, whose abrupt pricing change (a 5x increase with just 30 days’ notice) sparked user outrage.
In contrast, DocuSign’s measured approach gave customers time to adapt, internal teams time to align, and the company confidence that its new pricing would succeed at scale.
Results & Key Takeaways
DocuSign’s shift from usage-based to feature-based pricing proved to be a strategic win. It eliminated a pricing disadvantage against competitors and refocused customer attention on what truly sets DocuSign apart, its robust feature ecosystem and enterprise-grade reliability.
Early results pointed to improved financial performance and stronger customer retention. The introduction of unlimited pricing helped DocuSign attract and retain large clients who might otherwise have defected to lower-cost alternatives. More importantly, it unlocked new revenue streams: rather than relying solely on e-signature volume, DocuSign began monetizing advanced functionalities like document generation and analytics modules, positioning them as high-value differentiators.
The takeaway for SaaS leaders is clear: When your core usage becomes commoditized, don’t hesitate to change your pricing metric and packaging to highlight where your real value lies.
DocuSign recognized that clinging to a per-use model would only lead to a race to the bottom. By switching to a per-user model with tiered features, they reframed the customer conversation, from “how much per signature?” to “what’s the value of an integrated, secure agreement workflow?”
Equally important was how they executed the transition. Their phased rollout emphasized operational excellence: testing, smoothing the transition, and mitigating customer risk. This reinforces a critical lesson, successful pricing changes depend not just on strategy, but on execution.
Simply put, “most pricing failures stem from misalignment on goals and customer segments”.
DocuSign avoided that trap by aligning pricing with how their customers now define value — and it paid off.
Takeaways from DocuSign:
- Evolve your value metric when your market changes: Don’t hesitate to abandon a legacy pricing model if it no longer aligns with what customers value. DocuSign moved away from per-use pricing once e-signing became ubiquitous, shifting to a metric that captured value (users and advanced features) rather than commoditized units.
- Use packaging to highlight differentiated value: Simply charging for usage wouldn’t fly once cheaper unlimited plans appeared. DocuSign’s feature-based packages gave customers a reason to pay more – they’re buying a superior solution, not just transactions. Good packaging turns pricing into a win-win: customers get the capabilities they need, and you justify your price.
- Gradual rollout and testing: High-stakes pricing changes shouldn’t be an overnight surprise. Pilot new models with a subset of segments, gather feedback, and iterate. DocuSign’s dual-model test allowed them to validate the unlimited plan’s impact without jeopardizing existing revenue.
- Competitive pressure can spark positive change: This was essentially a “price war” response done right. Instead of slashing prices recklessly, DocuSign responded to competitors by changing the rules of the game (unlimited usage) and leveraging its strengths (enterprise features). The result protected its customer base and long-term revenue, showing that smart strategy beats a race-to-the-bottom.
New Relic: Big Bet on Consumption-Based Pricing
New Relic’s story is a tale of bold transformation. Facing stalled growth and customer pushback, the observability platform tore up its complex, seat-based pricing in favor of a usage-based “consume as you go” model. The gamble: that easier, more value-aligned pricing would re-ignite growth, and it did.
1. Segmentation
New Relic’s pricing overhaul stemmed from a fundamental realization: their customer base had shifted, but their pricing hadn’t kept up.
Originally, New Relic gained traction among developers and SMBs through a classic freemium model. But by 2019, the business had become enterprise-heavy, with 77% of revenue coming from $100K+ accounts. In chasing those large deals, they had inadvertently alienated the long tail, individual developers and small teams, by introducing friction and scaling back their free tier.
This skewed segmentation was stifling growth. While big enterprise logos looked good on paper, New Relic was losing the grassroots adoption that fuels product-led growth and word-of-mouth. When the tech economy tightened, even large enterprises began demanding more cost flexibility.
New Relic responded by re-segmenting the market and redesigning its pricing to work across both ends of the spectrum. The goal: win back the self-serve developer segment while retaining enterprise customers. The solution: usage-based pricing.
This new model featured:
- A generous free tier, enabling developers and small teams to get started without sales interaction or upfront commitment.
- Pay-per-use billing, which made the product accessible at any scale and aligned well with enterprise procurement, helping avoid overbuying.
In essence, New Relic repositioned pricing as a scalable growth lever, one that could serve both the self-serve and enterprise segments in parallel. It’s a textbook example of using pricing to expand your addressable market, rooted in a simple insight: when designed well, usage-based pricing can unify divergent segments under a single, flexible model.
2. Packaging
Prior to 2020, New Relic’s packaging had become unwieldy. The company sold around 13 different SKUs, APM, infrastructure monitoring, logs, and more, as separate add-ons. This à la carte model meant customers had to pick and choose modules or buy bundles, often leading to partial adoption (e.g., someone might buy APM but skip logging to save costs), which diluted the platform’s overall value.
The complexity also made selling difficult. Sales reps had to explain multiple products and assemble custom quotes, slowing down deal cycles and creating friction.
In response, New Relic executed a bold packaging overhaul:
- Unified Packaging: All features were consolidated into a single platform, New Relic One, available to every user.
- Two-Part Pricing: Customers now pay based on:
- Data ingestion (how much telemetry they send)
- User seats (how many people need access)
This effectively shifted New Relic from a product-based model to a platform-based model, like moving from à la carte to buffet-style pricing. Customers get full access to everything (APM, logging, dashboards, etc.) and simply pay for usage.
They also introduced a generous free tier with full platform access up to defined usage limits, lowering the barrier to entry.
This packaging shift was pivotal in repositioning New Relic:
- From a complex enterprise suite to a flexible, consumption-based platform
- From feature-gated pricing to value-unlocked adoption
Startups and enterprises now use the same product, just at different scales, democratizing access and simplifying segmentation. And because all features are included, customers never worry about hitting paywalls; if they’re sending data, they can use any feature. That unlocks deeper engagement and faster time-to-value.
New Relic’s new packaging aligned perfectly with a “land and expand” strategy:
- Land with a free, full-featured version
- Expand as teams grow and telemetry scales
It also gave New Relic a distinct edge in a market crowded with module-based competitors. The pitch became simple and sticky: "Use everything. Just pay for what you use."
3. Metric
The centerpiece of New Relic’s revamped strategy was its pricing metric transformation. They moved away from a traditional subscription model, pricing per host or instance plus per-user fees, to a pure consumption-based approach, primarily charging by data volume (gigabytes ingested), with a smaller component for seats.
Under the old model, customers paid a fixed fee per server monitored. This created a perverse incentive: many would under-instrument to save money. If you had 100 servers, you might monitor only 60, effectively “flying blind” on the remaining 40. As New Relic’s VP of Investor Relations put it, this was like buying health insurance for only two of your three kids, obviously misaligned with actual value.
The old metric discouraged full product use. The new one flipped that dynamic. By charging $X per GB of ingested telemetry data, New Relic aligned price directly with value. Now, customers could send in as much data as they wanted, knowing they were only paying in proportion to usage. More servers instrumented → more data → more visibility → more value.
To keep entry friction low, they priced the metric attractively, for example, $0.25 per GB for core monitoring data, which was often cheaper on a per-unit basis than the old model.
They also introduced tiered seat pricing:
- Full-access users (those creating dashboards, running queries, etc.) were charged per seat.
- Read-only and basic users were free, removing barriers to broader adoption across teams.
The result was a hybrid consumption model, largely usage-driven, but with seat-based controls for advanced functionality. This was a bold move for a public SaaS company at scale. New Relic became one of the first to fully switch a core product to usage-based pricing.
Yes, this came with trade-offs, notably, greater revenue variability. But as Christine Edmonds of ICONIQ noted, usage-based pricing offers higher upside if customers expand naturally. New Relic clearly believed the long-term gains, in product adoption, customer satisfaction, and revenue growth, were worth the bet.
4. Rate
With its new usage-based metric in place, New Relic faced a critical question: what rate would both attract customers and sustain the business?
They chose an aggressive price point, $0.25 per GB, which was significantly lower than what many existing customers had been paying. Some estimates showed it could be up to 10x cheaper for a mid-size deployment under the new model.
To further sweeten the deal, New Relic offered the first 100 GB per month free, along with one free user seat, effectively a $25/month value. Scaled across thousands of users, this represented a big investment in free usage and a clear signal: the company was willing to take a short-term ARR hit to drive long-term expansion.
They knew some existing customers would initially pay less. But the bet was that with lower friction and better alignment to usage, these customers would consume more over time. To manage downside risk, New Relic likely:
- Introduced tiered pricing or committed-use discounts for large accounts to maintain predictability
- Modeled expansion scenarios internally to ensure net revenue growth even with some initial downsell
CEO Lew Cirne called this the most important change in their 13-year history, signaling that leadership was ready for short-term turbulence in pursuit of long-term gain.
The competitive landscape also shaped the rate. With Datadog, Splunk, and others already offering usage-based pricing, New Relic clearly calibrated its $/GB rate to stay attractive in competitive bake-offs.
Perhaps the boldest move? Bringing back a free tier. Previously, meaningful usage cost ~$2,000/year. Now, with modest usage free, the barrier to entry dropped dramatically, and it worked. After reintroducing the free tier, sign-ups grew 10×, massively expanding the top of the funnel.
Of course, conversion from free to paid remained a key question. But early signs were promising: in regions where the new consumption pricing was launched, revenue per account rose by 15% on average. In other words, customers who switched to usage-based pricing ended up spending 15% more than they did under subscriptions, a strong proof point that the rate was well chosen to grow wallet share.
Bottom line: New Relic’s rate-setting was a balancing act, low enough to spark adoption, smart enough to fuel expansion, and bold enough to reset the market narrative.
5. Operationalization
Executing this pricing transformation was a massive operational effort, essentially rebuilding New Relic’s go-to-market and billing infrastructure in under a year.
On the product side, they unified 13 distinct tools into a single platform, requiring substantial engineering work to deliver a seamless user experience and a unified data ingestion pipeline.
On the billing front, they overhauled the system to support real-time metered usage. This involved tracking usage live, generating variable invoices, and integrating with customers' procurement systems for billing accuracy. It's likely they invested heavily in advanced billing platforms like Zuora or built custom systems to manage this complexity.
Sales and sales operations had to pivot hard. Reps accustomed to selling large, upfront, host-based licenses were now asked to sell usage-based plans, often tied to uncertain consumption forecasts. This required new compensation models that rewarded:
- Adoption and consumption growth
- Free-to-paid conversion
- Long-term customer expansion rather than just large initial deals
This was a non-trivial cultural shift. Usage-based pricing initially feels risky to sales teams because it can shrink initial deal sizes. To overcome this, New Relic emphasized how the new model could attract larger customers who previously hesitated, and how usage-driven expansion (NRR) would improve over time. Early signs of success, like a ~15% boost in net revenue retention, helped secure internal buy-in.
Meanwhile, self-service channels were scaled dramatically. The combination of a free tier and transparent pricing led to a 10x spike in sign-ups. To handle the influx, marketing and product teams bolstered:
- Documentation
- In-app onboarding
- Possibly a new growth team focused on converting free users
From a finance perspective, forecasting revenue under a usage model required entirely new adoption-based models. They may have implemented usage alerts or caps to help customers avoid bill shock, keeping the model customer-friendly.
Customer success and support teams also had to adapt, learning to help customers track usage, control costs, and maximize value from the platform, ensuring transparency and preventing surprises.
Crucially, New Relic was transparent about the change. They announced it in investor letters and press releases, clearly articulating the rationale and acknowledging the risks. The messaging was centered on customer value: no more choosing which hosts to monitor, instrument everything, and just pay as you grow.
This framing resonated. What could’ve been seen as a pricing landmine instead came across as a bold, customer-first move.
In sum, this wasn’t just a pricing change, it was a company-wide transformation. By investing deeply over the course of a year (culminating in their July 2020 launch), New Relic ensured that their bold new strategy was operationalized end-to-end, without breaking the business.
Results & Key Takeaways
New Relic’s pricing reboot is widely seen as a success, and a potential blueprint for other SaaS firms. In the immediate aftermath, customer acquisition and expansion improved significantly. Free-tier signups jumped by an order of magnitude, dramatically widening the top of the funnel. More critically, customers on the new consumption-based model spent more: early cohorts saw net revenue retention rise, with a ~15% revenue lift in accounts that transitioned.
This shift helped New Relic return to growth after a stagnant period. Analysts noted that if the company had reached 120% NRR, the benchmark for high-performing SaaS firms, its growth could have doubled. The pricing change was a key lever toward that goal, enabling customers to expand usage with minimal friction.
Beyond the metrics, New Relic regained developer mindshare by removing barriers to entry. In a crowded observability market (with rivals like Datadog), this pricing model became a differentiator, not just the product.
The broader takeaway: even mature public SaaS companies can reinvent pricing, when it’s done for the right reason. In New Relic’s case, legacy pricing was limiting adoption. By aligning cost with actual value delivered (pay for data monitored), they unlocked more value for users, and reignited their own growth in the process.
For SaaS leaders, New Relic’s story underscores a few key points:
- Don’t let your pricing model become a barrier to your product’s usage. If customers are rationing their usage or only buying a subset of your product because of pricing, you are leaving value (and revenue) on the table. New Relic discovered that charging per host made customers use the product less – a shocking self-own that they courageously fixed. Pricing should encourage, not discourage, fuller adoption of the product’s capabilities.
- Unified packaging can enhance expansion. By bundling all features into one platform access, New Relic made it a no-brainer for customers to send more data and use more features – there’s no incremental charge for adding another feature, only for using it more. This “buffet” approach can increase average spend because customers find more value across the board. It’s a reminder that packaging and pricing metric go hand-in-hand: New Relic couldn’t have gone usage-based on 13 separate SKUs and expected customers to navigate that. It had to simplify packaging to make usage billing palatable and clear.
- Usage-based pricing is powerful for broad segmentation. With one model, New Relic can serve hobbyists (free up to 100GB), growing startups (maybe paying a few hundred dollars for a couple extra seats and data usage), and huge enterprises (paying millions for terabytes of data and many users). This scalability is a key benefit of well-designed usage pricing. It also tends to naturally segment your customers: low usage pays little (or nothing), high usage pays a lot – effectively an automatic volume discount built in for smaller customers. That said, ensure you have operational scalability (billing, support, etc.) to handle this range.
- Communication and customer education are critical. New Relic didn’t just flip a switch; they spent time explaining the “why” to customers and investors. When you make a drastic change, being transparent that you’re aligning price to value can earn patience from stakeholders. Also, providing tools for customers to monitor their own usage and costs is key in usage models so they feel in control (New Relic added admin dashboards for tracking data ingestion, for example).
In the end, New Relic’s “price war” was less against a competitor and more against its own past model. By winning that war, it armed itself better to compete in the market. It exemplifies the Monetizely principle that pricing must be revisited and iterated as your company and market evolve, or as Bessemer Venture Partners puts it, “Pricing is never done.” You should regularly tune your model to match customer value and willingness-to-pay, just as New Relic did in this bold move.
Wrap-Up: Winning the Price Wars with a Strategic Framework
In these two cases: DocuSign, and New Relic, we saw high-stakes pricing decisions play out in different ways, but all underscore a common theme: pricing strategy can determine strategic victory or defeat in SaaS. To recap:
- DocuSign rearmed itself in a commoditizing market by shifting from a pay-per-use model to a value-based model, proving that adapting your pricing metric can protect your market share and customer goodwill when core features become table stakes. The lesson: Continuously align pricing with where customer-perceived value is highest, and don’t be afraid to make a U-turn on your model when the market changes around you.
- New Relic reinvented its pricing to remove friction for customers, showing that bold moves like embracing usage-based pricing and simplifying packaging can unlock growth and expansion revenue. It taught us that the best pricing strategy is one that increases customer success (here, letting them monitor everything), because when your customers derive more value, they will happily pay more over time. New Relic’s success also highlights the importance of operational preparedness; pricing transformation is as much an organizational challenge as a financial one, requiring executive alignment and cross-functional execution.
Looking across these scenarios, a few pragmatic takeaways for any SaaS pricing strategy emerge:
- Start with segmentation and alignment.
- Package value, not just features.
- Pick the right price metric (and revisit it).
- Set rates based on value and data.
- Operationalize effectively, pricing is not just a number on a page.
In SaaS, the winners of the “price wars” aren’t those who charge the least or the most, but those who price with precision. They understand their customers, deliver value at every tier, and adjust course quickly when signals shift. Pricing, as these cases show, is a journey, not a finish line. As one SaaS pricing expert said, “pricing is never done.”
For SaaS leaders, the mandate is clear: treat pricing as a core strategic function. Revisit your segmentation, packaging, metric, rate, and operations as a unified system. Weakness in any one area can compromise the whole. But when all five align, pricing becomes a growth engine and a competitive weapon.
Lastly, remember, pricing isn’t about outmaneuvering your customers. It’s about building a structure where both sides thrive. The strongest pricing strategies deepen customer value and trust, and that’s how you win the price war for the long haul.