Pricing & Monetization: the secret engine for growth

Spinning Dream
Photo by Christophe Hautier / Unsplash

Monetization isn’t the most appealing topic.

Most product people squirm when they hear this word, but it is an absolutely core lever for any business to thrive in the long run. Learning how to optimize monetization and pricing is the most powerful, yet overlooked path to maximizing value capture for your business while creating ongoing value for your customers.

We recently had the chance to discuss this with Stephane Lebas, CPO at Qare (HealthHero) and  Ex-CPO at Malt, Meetic (Match Group) and Betclic.

One thing to know about Stephane is that he’s the one who worked on Meetic’s adaptive pricing strategy, based on segmentation, value and propensity to pay. So successful in fact that other dating apps soon followed to adopt the same pricing strategy as their own.

Here's Stephane's view on why monetization matters.

#1  Your product is either core business, or a hobby

It’s a very common mistake to believe your product has self-contained purpose other than driving revenue. I’ve seen too many people in my career look down on sales, consider that commercialization is someone else’s job, and focus on grooming their onboarding funnel instead.

While most people get excited over creating great products, too few actually are interested in the basic mechanisms of business and revenue.

Ask yourself truthfully: are you clear on how your product eventually contributes to paying the bills, gaining market share, getting more return for the value it delivers to customers?

If not, then you’re probably just entertaining yourself. Or your company is so well-funded it can afford to lose money, and maybe that’s OK.

#2  Monetization is the most powerful tool in a PM's hands

If you are a problem solver type of person (and I think many product people are), then honestly, monetization is a beauty of a challenge. Why? Because it looks deceptively simple on paper: raise prices, then LTV will go up and conversion goes down. Win, lose.

But the reality is much more sophisticated and rewarding than that.

Think of it as an optimum state, where all these seemingly interdependent value metrics like LTV, Margin and Conversion can be maximized. Using different Offer management  tactics and pricing levers, to always deliver just enough value for customers to be happy to pay, but also leave them just frustrated enough to consider upgrading to the best they’re able to pay.

Stephane Lebas's Optimal Monetization framework

So the whole challenge is to figure out what this optimum state looks like for your product and your customers.

Running experiments to package that optimum value for any virtual segment you can think of. The possibilities are almost infinite. And that is why monetization is the most powerful weapon a PM can leverage to drive ongoing revenue, profit and conversion in my opinion.

Like this topic? This is the first article of a new series about Pricing & Monetization. Follow to make sure you don't miss any.

#3  Growth, yes. Profitability, better.

Do we foresee any evolution in the tech scene?

Interestingly, monetization has always been that untapped lever. Especially in the B2B SaaS space, there was always a lag I would say, compared to earlier B2C players who thrived on value-based pricing from the start.

But of course, now that the entire tech scene is facing funding cuts and has to refocus on profitability and maximizing return per customer, rather than limitless growth through acquisition…

I think it is perfect timing for every product folk to get their pricing and monetization capabilities up to speed.

Want to know more? Join the next “Ask Me Anything” event with Stéphane Lebas on Wednesday 16 November.

Ready to up your game? Check out the Pricing & Monetization Training Program led by Stéphane Lebas.

Subscribe to Panash

Don’t miss out on the latest issues. Sign up now to get access to the library of members-only issues.