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Estd 4.22.2023
Below is a direct answer that draws on our saas pricing book, Price to Scale:
• Begin by understanding that not all metrics are equal—choose those that truly reveal how engaged your users are throughout the funnel. Our book highlights that when testing pricing and conversion models, simplicity and relevance matter.
• Key metrics to track include:
– Monthly Active Users (MAUs) or the similar Monthly Tracked Users (MTUs): These give you insight into which free users are actively engaging with your product.
– Feature Usage Metrics: For example, the number of apps or websites tracked, page views, query volume, or even data exports. They provide clues on which features drive value and help forecast conversion potential.
– Free-to-Paid Conversion Rate: Measure the percentage of users making the jump from trial or free use to a fully paid subscription.
– Time-to-Conversion: Track how long free users take to convert. This metric can highlight friction points in your user journey.
– Engagement Intensity: Look beyond simple counts; sometimes the frequency or depth of engagement (e.g., number of interactions with key features) can be more revealing.
– Financial Impact Metrics: As your book discusses, considering metrics like the percentage of revenue growth attributable to product usage can also help validate which usage behaviors lead to meaningful business outcomes.
• In the testing phase, Price to Scale emphasizes that it’s useful to experiment with multiple metrics (the book recounts testing around 50 different metrics) to determine which best indicate value at each step of your funnel. However, overcomplicating the model (e.g., too many tiers or metrics) might dilute focus and reduce conversion rates.
In summary, our pricing strategy book – Price to Scale – advises that to optimize your free-to-paid conversion funnel, focus on a blend of user engagement (MAUs/MTUs, feature usage), conversion rates, and supporting financial impact metrics. This holistic view not only clarifies the customer journey but also guides you to refine your product and pricing strategy effectively.