An innovative monetization strategy requires much more than meets the eye. While many organizations focus their efforts on acquiring new customers and filling the funnel, the most successful companies focus instead on retention.

1. Uncovering an Innovative Monetization Strategy
to Keep Your Organization Relevant
An innovative monetization strategy requires much
more than meets the eye. While many organizations
focus their efforts on acquiring new customers and
filling the funnel, the most successful companies
focus instead on retention.
Today’s experience economy requires that you either
innovate on old revenue models or introduce new
pricing strategies that better align with the modern
consumer’s journey.

2. Finding Micro Moments of Opportunity for
Monetization Strategy Innovation by Analyzing the
Customer’s Journey.
Customer
Acquisition Lifecycle
Retention
Experience
Customer
Retention Lifecycle
Evaluation
Consideration
Research
Emotional
Trigger
Engagement
Inform
Conversion Purchase
Inform
Evaluation
Consideration
Research
Emotional
Trigger
Engagement
Exit
Acquisition
Experience
Acquisition is a flashy nuance of
growth that earns a lot of press.
Revenue models, pricing
optimization and adjusting pricing
strategy must all be intertwined
with an interconnected customer
journey funnel and customer
journey mapping that extends
from acquisition to retention.

3. ”Innovation in pricing brings
new-to-the-industry approaches
to pricing strategies, to pricing
tactics, and to the organization of
pricing with the objective of
increasing customer satisfaction
and company profits.”
- Harvard Business Review
Innovating on Revenue Models
via StoryVesting.
The Base
Components
Needed
3I’s
Key Strategic, Tactical, & Growth Levers
StoryVesting
3P’s
Bow Tie Funnel
INVENT INNOVATE IMPROVE

4. The Customer Insights Map focuses on
both the EX and CX using what we call
Convergence/Divergence bands. These
bands show how all the people directly
involved in the journey are feeling at
every single touchpoint.
Specifically, when it comes to revenue
model innovation, I look squarely at the
point between the first and second
concentric circles. If I see a massive
divergence, I know that there’s a
problem.
A Customer Insights Map Fine Tunes the
Experience in Your Monetization Strategy.
The divergence between the
customer experience and the
employee experience at this stage of
the journey signals there’s friction
when shifting from emotional to
logical reasoning.

5. “Amazon has pursued a growth
trajectory rather than a profit one. I
think everyone would agree that
their strategy has been to please
customers and, in doing so, grow
their market share.”
- Anne Goodchild
Is Your Monetization
Strategy Still Relevant?
Amazon’s Long
History of Innovating
Monetization
Strategy to
Continuously Spur
Growth

6. Alphabet / FB $ Ads
Apple $ Hardware
Microsoft $ Software
Amazon $ Products
The Monetization Strategy Found in the Big 5 Tech
Companies.
AlphabetApple Microsoft
FacebookAmazon

7. Tweaking and raising prices is
necessary over time. The way to
innovate a transactional price
increase is to adjust prices
across the customer journey
and funnel. In doing so, you not
only acquire more customers,
but also retain more.
The Dangers of Blindly
Raising Prices. What Do Your Customers Value the Most?
When increasing prices, honor what your
customers value the most, then add value
that meets those needs.

8. Innovative price optimization
requires leveraging data and
even deploying complex
algorithms to evaluate
nuanced changes in the
market, while simultaneously
matching those results with
costs and inventory levels to
laser in on optimal price
points and maximize profits.
Price Optimization Puts the
Customer First.
PriceLabs is helping
Airbnb innovate through
dynamic pricing
strategies.
Beds/Listing Price
Bathrooms/Listing Price
Bedrooms/Listing Price
Fitted Values vs. Residuals

9. Monetization Strategy Starts with Empathy.
When an organization
shows empathy toward
their employees and their
customers, shifts in
monetization strategies
are better received. This
empathy can reduce
employee churn and
increase the lifetime value
(LTV) of the customer.
EMPLOYEE CUSTOMER

10. Hard disk manufacturers
invested $6.5 billion in research
and development. As a result of
that investment, storage
capacity improved 1,000%. Still,
those manufacturers failed to
eventually price their
innovations correctly, resulting
in a net loss of $800M.
Innovative Monetization Strategy
Drills Down to the Bottom Line.
The Importance of Bottom Line Growth Across a Long-
Term Monetization Strategy.
1,000 70% -$800m
$6.5b Invested in R&D Over 4 Years

11. Price Elasticity of Demand (E)
=
(% Change in Quantity Demanded)
*
(% Change in Price)
Price Elasticity of Demand and
Your Monetization Strategies.
Innovating on Your Monetization
Strategy with a Forward Thinking
Approach
Perfectly
Inelastic
Perfectly
Elastic
Relatively
Elastic
Unit
ElasticityRelatively
Inelastic

12. Yes, pricing is a process.
If you’re not familiar with price
elasticity, the 30,000 foot definition is
this — price elasticity is the
incremental change that can affect
demand in a product. It’s the
following equation, which tells you
how likely a person is to buy based on
fluctuations in the price.
Optimizing Monetization Strategy
via Pricing Elasticity Data Loops.
Factors That
Determine Demand &
Price Elasticity
Demand Curve Shift
Movement Along
Demand Curve

13. By surfacing new pricing loops,
analyzing buyer behavior via complex
price elasticity equations (like the one
represented here, which features
numerous interconnected factors),
utilizing the Customer Insights Map,
and closing data loops with reliable
statistics, we’re able to start creating
and testing pricing strategies.
Determining Price Elasticity of Demand via a
Sophisticated Data Loop.
Theory
Theory in Practice
Our Approach
Price Elasticity of
Demand

14. Determining Your Value Metric as the Foundation for
Price-to-Value Propositions.
Your value metric is how you charge for
what you sell.
The Hotjar team has clearly determined
that pageviews are the biggest value
metric to their audience. Potential
Hotjar customers make the decision to
buy based on whether or not they’re
getting enough traffic to their site. How
much they’ll pay is dependent on how
many visitors they see each day.

15. Determining a Monetization Strategy
Value Metric.
Determining a value metric isn’t
quite as easy as one might think.
When your pricing strategy makes
it difficult for customers to predict
how much they’ll actually pay,
they’ll struggle with the logic
behind whether your product is
right for them. Mixpanel found this
out the hard way last year as they
shifted to a new pricing model.
Mixpanel’s Pricing Strategy Shift to
More Predictability

16. Conjoint Analysis in Monetization
Strategy.
Choice-based conjoint analysis (CBC), in
its most simple form, is when an
organization presents several features or
attributes and asks the respondent to
choose between them. Hierarchical-
Bayes conjoint analysis offers a variety of
options and factors.
The goal with both is to determine which
points make or break a specific price in
their mind while simulating an actual
buying experience.
What
Hierarchical
-Bayes
Conjoint
Analysis
Looks Like
in Qualtrics

17. Analyzing the Purchase Decision Process Along
the Customer Journey to Find the Best
Monetization Path.
Putting together revenue models
and pricing strategies that sync
across the user’s experience in that
micromoment move from
emotional to logical reasoning is
one of the hardest things to get
right because purchase decisions
are so dang complex...
Cognitive Bias Codex, 2016

18. A data loop encompasses the
entire data collection process,
from gathering data to
gleaning insights. The goal of
any data loop is to
continually keep a pulse on
what’s happening in all
aspects of the market — with
customers, employees or just
about anything else you want
to track.
The Importance of a Data-Driven Pricing Process.
Experimental Design
Data Collection &
Segmentation Analysis & Decision
Basic
Statistical
Model

19. In a SaaS pricing strategy study by Price
Intelligently, you can see that companies that
conducted an annual pricing review saw a
blip in bottom line growth. However,
companies that approached price
optimization on a continual basis saw
significant increases in bottom line growth by
boosting their LTV:CAC ratios.
In addition, the time it takes to pay back CAC
happens almost immediately when price
optimization is taken into account.
Continual Price
Optimization Drives Bottom
Line Growth.
Payback Periods for Different Pricing Commitments
Impact on Efficiency
LTV/CAC vs Pricing Commitment
No Pricing
Function
Yearly
Pricing
Review
Continual Price
Optimization
No Pricing
Function
Yearly Pricing
Review
Continual Price
Optimization

20. Tracking the right metrics across
the customer journey will shed light
on how well you’re paying back your
CAC and what your LTV:CAC ratio
looks like. If it doesn’t match your
expectations, that probably means
that what you’re doing is focused
more on the acquisition side of the
funnel, leaving massive opportunity
on the retention side of the funnel.
Conversion Metrics to Monitor When Analyzing
a Monetization Strategy.

21. Data visualization is key to helping executives and organizations gain
additional buy-in on just about any initiative. Strategies for monetization
are no different.
This simple data visualization audit shows exactly what individual users or
specific cohorts are doing – and how often they’re doing it.
Innovating on Data Visualization to Guide
Monetization Strategy.
Visualizing and
Recognizing Patterns in
Consumer Behaviors

22. This analytics dashboard showcases
total user engagement across an
entire year on a specific channel.
It says a lot about time periods versus
specific consumer behaviors and
allows you to measure various
elements such as engagement, time
on app, number of times logged in, or
other options.
What We’re Doing at Platstack.

23. Innovation requires a lot more
than a bump in price or a flashy
sale.
Here are several examples and
ideas to help inspire your next
steps as you approach
innovating your revenue models
to stay relevant.
An Innovative Monetization Strategy With a
Forward Thinking Approach.
Freemium Value-Based Value-Add
Subscription-Based Scaling Services Pay-Per Whatever
Tiered Pricing Virtual Goods A Blended Approach

24. It’s safe to say that the freemium
model has taken over the B2B world.
A freemium model is fairly
straightforward. You, as a business,
offer a forever-free option, allowing
customers to experience your brand
before making a purchase or
upgrading to premium status.
The Freemium Model.
A Non-Negotiable.
Companies Using This Strategy

25. In April 2016, the company was
humming along just fine without
a freemium model.
To build a better customer
experience, they decided to give
away the core product for free.
This constituted a radical shift in
their revenue model, and it paid
off.
Mealime’s Monetization Strategy Shift to a
Freemium Model.
Mealime has over 1 million all-time users with approximately 15% paying for
premium services

26. When you get down to the bones of monetizing anything, it’s really just
about exchanging value for dollars, right? That’s the concept behind
Value-based pricing, which anchors the amount you’re charging in the
customer’s perceived value of what they’re receiving. This concept goes
straight to the heart of our StoryVesting framework because it’s all
about aligning the customer’s emotional and logical needs with their
brand experience.
Value-Based Monetization.
Companies Using This Strategy

27. Drift’s Approach to Value-Based Pricing.
Drift meets buyers where
they are in their journey,
meaning that an individual
just starting out will pay less
for their conversations with
prospects, whereas
enterprises with more
volume will be charged more
for the increased number of
conversations they’re having.

28. Pulsemotiv Walking a
Similar Path.
This is another project underway at
the RocketSource Labs division.
Instead of taking the traditional
route of applying surface-level
metrics to our pricing, we dug deep
into the type of value our users need
– impacts. Here’s what Pulsemotiv’s
value-based pricing approach looks
like.

29. Value-added pricing is exactly what it
sounds like — a value-added pricing
strategy adds value above and
beyond what you’re already
delivering.
Amazon +$ with Prime Membership
Zappos +$ with Free Returns
Costco +$ with Customer Service
Value-Added Monetization Strategy.
Companies Using This Strategy

30. As you can see, these companies
traverse B2B and B2C markets. From
Dollar Shave Club, a company well-
known for providing razors via a
subscription service, to digital
software companies such as Slack, to
which users pay a monthly fee to
access the platform, these businesses
have instilled loyalty into their
revenue model.
Recurring or Subscription-
Based Pricing.
Companies Using This Strategy
Microsoft Stock Prices

31. Here’s the problem. This model
has become so popular that it’s
no longer innovative and, in fact,
might even be reaching
exhaustion. Deloitte found that
47% of consumers polled were
actually frustrated by how many
services and subscriptions they
had signed up for.
Subscription Fatigue Leads to
Higher Cancellation Rates.
Overwhelmed by
Subscriptions
Intent to Cut
Subscriptions
Millennials Gen XGen ZTotal
Across the board, subscription-
based businesses are seeing
fatigue set in and cancellations
start to rise. Now is the time for
companies to innovate on the
recurring revenue model approach
to drive retention.
24%
28% 28%
30%
40%
43%
29%
33%

32. Tiered pricing strategies allow users
to upgrade to various levels, leaving a
lot of wiggle room to innovate on the
“unlimited” approach.
For example, a tiered approach
means your subscription fee could be
a baseline price and you could offer
the potential to add-on four to five
features. Spotify is a great example of
a company with room to innovate in
this area.
Saying Goodbye to Unlimited
Subscription-Based Models.
Overall Price Sensitivity
Price Sensitivity by Age
Price Sensitivity by Feature
Spotify has missed
out on revenue
potential by charging
a single price for their
music streaming
service.

33. Brands have an opportunity to
monetize more strategically by
differentiating based on features
and moving to a tiered pricing
strategy.
It’s critical to avoid fall in the trap
of overcomplicating the offerings,
but rather lean into what the
market is willing to pay for and
then meet customers there with
a pricing option that feels
customized for them.
Price Sensitivity and Pricing
Strategy.
Insights Into Your Monetization Strategy via
Customer’s Willingness to Pay
Product Discount per Customer
(One Dot Represents One Customer)
Cluster of Homogenous
Customers
Discount%
Product Sales, € Thousands

34. Tiered Pricing Strategies Win in a Subscription
Market. Proposify’s Pricing Page is a Prime Example of a Company
Doing Tiered Pricing Well
In StoryVesting, analyzing price is
predominantly part of the logical
side of the brain — the neocortex.
Still, how you position logical
attributes on the page using visual
elements and callouts has more of
an impact on the user than a
lengthy, data-driven, heavy page.
You can see that tiers like this could
get complicated quickly if not
presented in a way that adds to the
experience rather than confuses it.

35. In the pay-per-whatever model, your
customers only pay when they use
your service. Consumers can attach a
usage figure to the price they’re
paying for products or services.
Within the StoryVesting framework,
the ability to attach a usage metric
eases the friction between an
emotional need and logical
reasoning about whether the offer is
relevant to their lifestyle.
The Modern Pay-Per-
Whatever Model.
Companies Using This Strategy

36. Mention, a social monitoring SaaS company, employed a pay-per-whatever
pricing strategy which increased average revenue per account (ARPA) by 296%.
Innovative Pay-Per-Whatever
Monetization Strategy.
Mention
Without overly complicating their
pricing page, Mention has whittled it
down to exactly what they’ve
determined their customers will pay
for, hitting those logical triggers
square on to make the decision
process easier.

37. Understanding the buyer’s
journey is so critical for e-
commerce. Rather than
constantly ebbing and flowing
with discounts, understanding
those emotional and logical
triggers will get an audience to
take action and buy, and also
retain those customers to come
back for another purchase when
they’re ready.
Leveraging an Innovative Monetization
Strategy for E-Commerce.
Companies Using This Strategy
U.S. Click-&-Collect Sales
Retail Ecommerce Sales Worldwide

38. There’s a huge market for selling
virtual goods, such as gems to buy
accessories within a video game or
gift cards to pay for virtual currency,
which can then be used to buy
custom emoticons.
Not a gaming company? There are
still lessons here for you as you
analyze your own pricing strategies
and revenue models.
Selling Virtual Goods as a Monetization
Strategy.
Companies Using This Strategy
2020 Global Games Market
Mobile
$77.2B
Tablet Games
$13.7B
Smartphones
$63.6B
PC
$36.9B
Browser Games
$3.08B
Boxed/Downloaded
Games
$33.9B
Console
$45.2B

39. In addition to in-app, virtual
currencies – coins & gems – Tennis
Clash users are presented with an
opportunity to acquire extra virtual
goods, including limited-time
upgrade opportunities for things
like virtual apparel and equipment
using real money from a bank
account. Those timed pop-up
modals spark a fear of missing out,
driving the player to take action
quickly.
Tennis Clash’s Compelling Virtual Goods
Pricing Strategy.
Tennis Clash’s Innovative Monetization Strategy
700k Downloads $1M Estimated MRR
Limited Time
Specials

40. A hybrid pricing strategy starts with
retention and showing how to keep the
customers on board, but then drives that
data back to the acquisition side of the
funnel to continually fuel growth.
We’re living in a time where digital
transformation doesn’t merely allow us
to get more creative, it encourages it.
Hybrid Pricing Strategies and Revenue Models.
Companies Using This Strategy
Brand Experience (BX)
Framework
Customer Experience (CX)
Framework

41. One company who did this well was
Meet Edgar.
After launching in 2014, Meet Edgar
grew to $150K MRR with 2,922 paying
users in only 13 months. By 2018, Meet
Edgar hit the Inc. 5,000 list and had
an estimated annual run rate of $3m.
Scaling Services Via Unique
Revenue Models.

42. Innovating on a monetization strategy isn’t about shifting things around to drop
more people into a funnel. Today’s fastest-growing companies focus more on
strengthening critical metrics such as CTA:LTV ratios, LTV:ARPU, and AOV:LTV. No
matter which scenario is right for your business, the end goal is the same. By
constantly trying to understand and showcase pricing adjustments and large
scale revenue model shifts, you’re able to drive retention and build your bottom
line rather than simply adding top line revenue.
We’re Helping Organizations Stay Relevant
Through an Innovative Monetization Strategy

43. Insulate your business
from disruption.
Learn more at
RocketSource.co/Blog/Monetization-Strategy