Jul 17, 2022
In Welcome to the Forum
Think of Facebook or Mailchimp. On the other end you have high ARPU and CAC. These are companies like Palantir Technologies. A company's pricing model has to be congruent with the channel. According to Brian Balfour, the worst thing to be is somewhere in the middle. This doesn't mean it won't work, but it might be harder to execute. So what about product tiering, which allows you to offer your products at different prices with different features? Here's an example of product tiering from Mailchimp: Mailchimp product tiering Bigger ghost mannequin effect service products with a variety of features can exist across the ARPU <> CAC Spectrum. If you look at LinkedIn, they have product offers on the low and high ends of the spectrum: Pasted image 07 Where does Slack fit in? We defined Slack as a product that uses virality to grow. Its freemium model allows you to onboard and value-lock the whole team quickly. But most users convert to a paid version in the first three months. This places Slack near left of the middle of the spectrum. On the product tier level, Slack has benefitted from clear pricing. But they also have a solution on the higher end of the spectrum — Slack Enterprise Grid. At SEG, companies manage multiple workspaces with increased security features. Model / Market Fit For some companies, growth can feel like a lumbering mammoth, where you need to put a ton of effort in just to get it moving. For others, growth is a smooth natural process — it feels like growth just happens by itself. Slack is definitely one of the latter companies. why is that? Because the road to 100M + annual revenue is different depending on the pricing model and the market.