Learn key marketing strategies for accelerating subscription business growth and hear best practices first-hand from businesses that have done it. Learn how to use pricing and packaging as a strategic weapon to increase customer acquisition, value per customer and reduce churn.

1. #Subscribed14
Innovative Pricing and Packaging
Strategies
Moderator: Joe Andrews
Sr. Director, Marketing, Zuora
Joe Sawyer
VP Marketing, CareCloud
Andrew Landrum
Director of Finance, Acxiom
Eran Shtiegman
VP Products, Fuze
Presentation: Matt Johnson
Managing Partner, Simon-Kucher & Partners
@JP_Sawyer@Acxiom @fuze
@andrewsjoe

2. Marketing Panel: Innovative Pricing and Packaging Strategies
Day 1:
11:15AM
Moderator: Joe Andrews, Sr Director Marketing, Zuora | Matt Johnson, Managing Partner, Simon-Kucher | Andrew
Landrum, Director Finance, Acxiom | Joe Sawyer, VP Marketing, CareCloud | Eran Shtiegman, VP Products, Fuze
Marketing Leaders: Meet and Greet2:00PM
A Tale of Two Pricing Journeys: Evolving to Usage Models11:00AM
Todd Krautkremer, VP Sales & Marketing, Pertino
Joe Hamlet, Sr Manager, Business Systems, SendGrid
Using Analytics to Optimize Revenue and Drive Profitability1:30PM
Matt Shanahan, VP of Product Strategy for Scout, ServiceSource
Day 2:
Innovating Subscription Business Models and Reinventing Your Go-To-Market
3:00PM
Clodagh Murphy, Managing Director, Eclipse Internet
Marketing Track Agenda
Five Secrets for Your Pricing and Packaging Journey
4:00PM
Guy Marion, Sr Director, Online & Acquisition, Zendesk

3. Simon-Kucher Capabilities Briefing 3
www.simon-kucher.com
Smart Profit Growth – Best practices in subscription pricing
Simon-Kucher & Partners
June 3, 2014
Matt Johnson
100 View St. – Street
Mountain View, CA 94041
Tel. (650) 691-3315
Fax (650) 641-4317
e-mail:
matt.johnson@simon-kucher.com

4. Simon-Kucher Capabilities Briefing 4#Subscribed14

5. Simon-Kucher Capabilities Briefing 5
Simon-Kucher at a glance
Source: German manager-magazin Aug 2007 & 2011 / Institute für Management und Beratung; Survey among 264 top-managers; Maximum 500 points
Global presence since 1986 Competence ranking "Marketing & Sales"
> 2,000 projects in past three years World market leader in pricing
1 Simon-Kucher & Partners
2 Boston Consulting Group
3 McKinsey & Company
4 Bain & Company
5 Roland Berger
395
379
359
347
342
27 offices worldwide 700+ associates
Amsterdam
Beijing
Bonn
Boston
Brussels
Cologne
Copenhagen
Dubai
Frankfurt
Istanbul
London
Luxembourg
Madrid
Milan
Munich
New York
Paris
San Francisco
Santiago de Chile
Sao Paulo
Singapore
Sydney
Tokyo
Toronto
Vienna
Warsaw
Zurich
 Pricing excellence
 Growth and competitive
strategies
 Product portfolio (re-)design
 Customer relationship and
customer value management
 Sales strategies and sales
channel optimization
"world leader in giving
advice to companies on how
to price their products"
"…the world's leading
pricing consultancy…"
Peter Drucker
"... in pricing you offer
something nobody else
does."
"pricing strategy
specialists"
Smart
Profit
Growth
Strategy
>400
Marketing
>500
Sales
>500
Pricing
>1,000

6. Simon-Kucher Capabilities Briefing 6
Simon-Kucher works with industry leaders in all sectors…
Source: Simon-Kucher & Partners.
TMT Consumer Industrials Healthcare Financial Services
Tech Consumer Brands Chemicals/ Construction Pharma Banking
Media Retail Manufacturing Biotech Payments
Telecom Leisure Automotive Medical Devices Insurance
Top 25 largest
companies
Top 10 largest
companies
Top 10 largest
companies
Simon-Kucher clients: 80%
Simon-Kucher clients: 70%
Simon-Kucher clients: 96%

7. Simon-Kucher Capabilities Briefing 7
..and has deep experience in subscription businesses
B2B SaaS companies Transitioning to SaaS
Simon-Kucher has a long track record of helping companies accelerate their growth through effective
pricing strategy and execution
#Subscribed14
Consumer internet
companies

8. Simon-Kucher Capabilities Briefing 8
Total
Pharma, biotech/medtech
Consumer goods
Financial services
Automotive
Transport/logistics
6… 35%
Global Pricing Survey:
A minority of companies achieve pricing power
* High pricing power is the ability of a company to fully/almost get the money it deserves for the value it delivers
Source: Simon-Kucher & Partners Global Pricing Study
8
High pricing power*Low pricing power
“Pricing Power” assessment
53
%
47
%
30
%
27
%
19
%
47
%
53
%
70
%
73
%
81
%
Only 35% are
able to get the
prices they
deserve!

9. Simon-Kucher Capabilities Briefing 9
Global Pricing Survey:
Pricing power has strong impact on profits
Source: Simon-Kucher & Partners Global Pricing Study 2012/2014
9
133
100
Average EBITDA of last three years (index)
Companies with
high pricing power
All others
“Pricing power”
increases profits by
33%

10. Simon-Kucher Capabilities Briefing 10
The market has figured this out…and will reward you!
Source: Warren Buffett in an interview
with FCIC, May 2011
"The single most
important decision
in evaluating a
business is pricing
power."
Warren Buffett

11. Simon-Kucher Capabilities Briefing 11
Pricing
Transformation
 Use systematic process to
identify opportunities to drive
greater adoption, revenue,
ARPU, profit
 Quantify and prioritize business
cases
 Align on roadmap for tactical
implementation & value capture
Top 10 pricing programs among subscription businesses
Monetization/Pricing
Strategy
 Evaluate new potential
business/pricing models, (esp.
transition to SaaS)
 Identify optimal pricing and
product portfolio strategies
 Evaluate competitive
positioning, identify white
spaces, prioritize target markets
& channels
Packaging & Pricing
Optimization
Maximize customer lifetime value
with packaging & pricing by…
 Driving cust. acquisition
 Exploiting differences in
customer needs & WTP*
 Encouraging up- & cross-sell
 Improving retention
Mobile Strategy
Determine how mobile best drives
packaging & monetization strategy
 Design mobile channel/
offerings and pricing to extract
full lifetime value: on-board,
upsell, retain
 Minimize cannibalization of
other revenue streams
Demand Generation
 Evaluate & improve
effectiveness of promotions
 Strengthen value messaging
through better personalization &
targeting
 Enhance lead generation &
prospecting processes
Online Sales Dialog
Drive conversion & upsell:
 Facilitate product & needs
discovery
 Ease product selection
 Create call to action
 Encourage upsell & cross-sell
 Utilize consumer psychology
Retention & Churn
Management
 Identify key drivers of churn
(predictive modeling)
 Increase customer delight and
engagement
 Optimize save strategies and
win-back offers
 Assess needs & options for a
loyalty program
Sales Force Effectiveness
 Improve value selling and
negotiation skills
 Enhance key account
management & negotiation
approach
 Design effective incentives &
peer pricing
 Provide relevant pricing
guidance for Sales
Customer Segmentation
 Determine differences in
customer behaviors & needs
and key drivers of willingness-
to-pay
 Classify distinct and actionable
segments
 Design packaging, pricing, &
messaging to align with
segments
Pricing Process/ Perform.
Measurement
 Formalize best-in-class pricing
processes
 Ensure all key pricing activities
have owners with clear
accountability
 Design performance
measurement & tracking to
improve visibility and decision
making
#Subscribed14

12. Simon-Kucher Capabilities Briefing 12
Source: Simon-Kucher
Best practice:
Develop the key insights required for good pricing
Benchmarks & alignment
Sales deep-dive: Deal Reconstructions & Survey
Data analysis
 SKP Scorecard used to
benchmark pricing practices
against hundred of companies
 GoalStrat used to align executive
stakeholders around real strategic
tradeoffs
ImplementationDesignAnalysis
1 32
Pricing stakeholder analysis
 Transaction data:
Sold-together, upsell paths, cluster
analysis, win-loss....
 Usage data:
Feature value, product
engagement, support patterns…
 Deal reconstructions provide
context-rich data points on process
and skills best practices and
breakdowns
 Sales survey allows us to quantify
deal-level pricing drivers and
approach differences
 Price Metric Evaluation
 Leaders/Fillers/Killers: Packaging
framework
 ComStrat
Competitive positioning
 PriceStrat:
Market price response

13. Simon-Kucher Capabilities Briefing 13
Source: Simon-Kucher
Best Practice:
Test and refine subscription offering concepts and develop
the tools and process to support the rollout
ImplementationDesignAnalysis
1 32
Customer/Prospect Research
Process Design
Financial Modeling
 Qualitative interviews:
Purchasing process, budgetary
thresholds, metric acceptability
 Quantitative survey/testing:
Simulated purchase,
packaging/pricing optimization,
market share impact
Org Design
 Unit-level modeling:
Deal structure tradeoffs
 Packaging & pricing scenario
modeling
 Deal escalation structure:
Levels of authority, checks &
balances, basis for decisions
 Revised sales incentives:
Monetary and non-monetary value
/ price defense components
 Revised Pricing Organization:
Roles, responsibilities, and
communication touchpoints
 Internal / external skills
requirements

14. Simon-Kucher Capabilities Briefing 14
Price optimization: Capture full value from your product
Source: Simon-Kucher
Goals
Features &
value proposition
Target market &
segmentation
Price structure
Price level
1
2
3
4
5
What are the goals for your product?
 Financial goals: # of users, revenue, ARPU…
 Customer goals: increase usage/engagement, virality, loyalty…
 How to align with brand personality / perception
What are the product’s main value drivers?
 Feature adoption and usage
 Feature value and willingness to pay
 Which features differentiate your product from competition?
Who are the ideal customers? Which segment should we be targeting?
 What drives differences in needs, behaviors, and willingness-to-pay (e.g. Apple
vs. Android, smartphone vs. tablet, US vs. intl)
 Mobile: Migration strategy vs. new customer acquisition strategy
What are the optimal price levels, given our goals…
 Financial goals, customer goals, brand personality
 Aligned with product roadmap and enables portfolio strategy
Positioning within
your portfolio
4 What is the app’s role within your company’s broader portfolio?
 Facilitate penetration/customer acquisition, up-sell/cross-sell, or retention?
 What is the potential for bundling the app with company online offerings?
What price structure will generate the highest mix of adoption and revenue?
 Paid vs. classic freemium vs. in-app purchases
 And if freemium, how should we fence the premium offering?
 If in-app purchases, what should we structure the upsell offers?
 Should we charge a one-time fee or subscription?

15. Simon-Kucher Capabilities Briefing 15
Source: Simon-Kucher
ImplementationDesignAnalysis
1 32
Value Selling Tools & Training
People / Process / Systems Support
Migration Plan & Financial model
 Value Selling Tools:
Deal pricing drivers, value
messaging, deal analytics
 Negotiation strategy & tactics:
Best practices from external
benchmarks and internally from
Deal Reconstructions
Channel Partner Programs
 Migration plan:
Availability and communication
strategy
 Company level modeling:
Migration tradeoffs and revenue
evolution forecasting
 Hire & train new team members
 Pricing Program Office:
Ad hoc support during
transformation process
 System/KPI recommendations
 Channel partner strategy:
Identify optimal channel partner
mix and route-to-market
 Channel partner incentives:
Align partner rewards and pricing
with value-add activities
Best Practice:
Ensure a smooth rollout and maximum value capture
DEAL SUMMARY EQUINIX EXTERNAL KPIs
IBX (1-4): Term (months): Total Draw sold (kVA): # Cross-connects:
IBX (5-8): Billing start date: Allocated capacity (kVA): # Exchange ports:
IBX (9-10): IX MRR (as % of Total MRR):
SPACE & POWER RECOMMENDED PRICING (Full Detail)
EQUINIX COMPETITIVE ADVANTAGES IN THIS DEAL SPACE & POWER RECOMMENDED PRICING (Condensed)
1
2
3
4
5
6
7
8
9
10
CUSTOMER "FIT" WITH EQUINIX
6
-
20%
Network Provider density & low latency solutions
5 / 10 M edium priority to pursue
_NY7 36
01/31/20
Partner ecosystem density
NA footprint (# of sites & desirability of locations)
Global footprint (# of sites & desirability of locations)
_DC10 86
714
_DC4
Deal CriteriaCustomer Criteria
100%
14%
86%
6% 2% 0% 1% 0% 2%
15%
0% 0% 0% 2% 0%
68%
10%
78%
List price
Avg. IBX
discount Baseline price
Vertical
impact
Strategic
importance of
customer
Customer
business
rationale Metered power
Expected
power
evolution
Expected
space & XC
evolution Deal size
Free months /
price
increases
Contract
duration
Annual
escalator
Primary /
redundant
circuit ratio
Payment
terms Target price
Balance of
Power Starting price
100%
14%
86%
6% 2% 0%
10%
68%
10%
78%
List price
Avg. IBX
discount Baseline price Vertical
Strategic
importance of
customer
Customer
business
rationale Deal criteria Target price
Balance of
Power Starting price
SKP Molex Training Materials – June 15, 2010 - 12 -DRAFT – WORKING COPY
Group 1
Buyer Team
Seller
Team A
Seller
Team B
Group 2
Buyer Team:
HAPL2Compete
against
each other
Compete
against
each other
Compete
against
each other
Compete
against
each other
Compete
against
each other
Compete
against
each other
Simulation case study: Annual key account contract negotiation
Seller
Team A
Seller
Team B

16. Simon-Kucher Capabilities Briefing 16
Don’t lose in the final mile:
Increase conversion through optimized sales dialog
Facilitate product & needs discovery
Create differentiated free trials: one for consumers with an emphasis on sharing and privacy and one for Pros that
includes full commerce
Introduce a guided product demo (for each type of account) instead of or in addition to the free trial (e.g. interactive tour
through a fully functional, impressively designed site)
Test alternative trial formats, e.g.:
- Extended trial (e.g. 30 days +)
- Negative option trial
Ease product selection
Design distinct and personalized sales dialogs based on entry point and customer segment (e.g. separate landing pages
for Pros and Consumers based on adwords clicks)
Create messaging that communicates the value of each package to the targeted customer segment
Reduce friction throughout the process (e.g. by moving email input form after initial picture upload)
Create call to action
Use scarcity, herding, and limited time offers to generate urgency
Include option to sign-up on initial offer/pricing page (i.e. today's "features page")
Send promotions 7 &/or 14 days after trial period expiration to those who didn't sign up (e.g. discount off 1st year sub,
gift credits)
Utilize consumer psychology
Test a substantially discounted first year (second year reverts to list price)
Change "trial language" to "First 2 weeks free, no commitment" to boost sense of ownership and engagement
Re-design offer/pricing page
#Subscribed14

17. Simon-Kucher Capabilities Briefing 17
Pricing Psychology:
Pricing models often assume the “economic” person…
#Subscribed14

18. Simon-Kucher Capabilities Briefing 18
Source: Simon-Kucher project experience; numbers and client industry anonymized
…but buyer “economics” are heavily perception driven
Respondents were presented with the following breakeven scenarios (all fee calculations come out to be the same):
Fee Structure % Selecting
3.5%
+ $0.15 flat fee
$0.50
Flat $ fee
5%
Flat % fee
Indifferent
Fee Structure % Selecting
3.5% +
$3 flat fee
5%
Flat % fee
$10.00
Flat $ fee
Indifferent
$10 item $200 item
For smaller transactions, consumers preferred simplicity / transparency ($1.00); For
larger transactions, consumers preferred the most complex fee structure
For smaller transactions, consumers preferred simplicity / transparency ($0.50); For
larger transactions, consumers preferred a more complex fee structure
Project Example:
Internet PPU

19. Simon-Kucher Capabilities Briefing 19
Source: SKP project 2012
Approach
 Research showed that the entry
package met large percentage
of customers’ needs
 As a result, we reduced value
of entry package to better align
with existing price point
 New features were added and
existing features shifted to
premium tiers to justify higher
prices
Before re-design:
May 2012
After re-design:
August 2012
Plus (55%) - $39
Plus (24%) - $39
Deluxe (32%) - $79
Deluxe (48%) - $99
(Price increase)
Elite (12%) - $149
Elite (21%) - $199
(Price increase)
Advantage (7%)
$349
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
May August
% of new subscribers
New tier
# of new subs 1,524 1,313 -14%
Average MRR per
new subscriber
$66 $124 88%
MRR from new
subscribers
$100K $162K 62%
Simon-Kucher Capabilities Briefing 12
Case Study: Package & pricing re-design
increased ARPU* by 88% & MRR* by 62%
Project Example:
SaaS

20. Simon-Kucher Capabilities Briefing 20
Anchoring effects: improving offer attractiveness
Source: Dan Ariely, Predictably Irrational, New York: Harper Collins 2008, p. 1-6
Options & results: Group 1
Option
Price in
US-$
% of people
choosing
option
Economist.com
subscription only $59 68%
Print + economist.com
subscription $125 32%
Average revenue per
subscriber $80.12
Options & results: Group 2
Option
Price in
US-$
% of people
choosing
option
Economist.com
subscription only $59 16%
Print only subscription $125 0%
Print + economist.com
subscription $125 84%
Average revenue per
subscriber $114.44
Subscriptions: Pick the type of subscription you want to buy or renew.
68%
32%
16%
0%
84%

21. Simon-Kucher Capabilities Briefing 21
Anchoring effects: another example
Source: SKP project, 2012
Current account €1 21%
Current account
+ Credit card
€2.50 59%
Current account €1 41%
Current account
+ Credit card
€2.50 78%
Credit card €2.50 1%
Group 1 Group 2
no. 140 observations no. 152 observations

22. Simon-Kucher Capabilities Briefing 22
Three Big Takeaways
22
“Power Pricing” = 33% increase in profits
1
2
3
Analysis, Design and Implementation
Leverage customer psychology
#Subscribed14

23. Simon-Kucher Capabilities Briefing 23
Amsterdam
Beijing
Bonn
Boston
Brussels
Cologne
Copenhagen
Dubai
Frankfurt
Istanbul
London
Luxembourg
Madrid
Milan
Munich
New York
Paris
San Francisco
Santiago
de Chile
São Paolo
Singapore
Sydney
Tokyo
Toronto
Vienna
Warsaw
Zurich
100 View Street Mountain
View,
CA 94041
Tel. (650) 641-4300
Fax (650) 641-4317
www.simon-kucher.com
Thank you!

24. Andrew Landrum
Acxiom
1. What does Acxiom do?
2. What is your role?
3. What is your brief pricing
and packaging journey?
Panel Introductions
@Acxiom

25. Joe Sawyer
CareCloud
1. What does CareCloud
do?
2. What is your role?
3. What is your brief pricing
and packaging journey?
Panel Introductions
@JP_Sawyer

26. Eran Shtiegman
Fuze
1. What does Fuze do?
2. What is your role?
3. What is your brief pricing
and packaging journey?
Panel Introductions
@fuze

27. 1:
2:
3:
GROWTH: What are your top growth priorities and how does
pricing and packaging support your growth?
CUSTOMER ACQUISITION: What is your view on free trials vs.
freemium model and what are keys to success with each?
RETENTION & UPSELLS: What levers are you using to
reduce churn and increase customer value?
Driving Pricing and Packaging Innovation
Panel Questions
4: PRICE TESTING / ITERATION: How frequently do you test
and what are you learning?
5: ADVANCED PRICING MODELS: What’s your experience
and/or plans with usage-based, bundling, international, etc?