Here at Empiraa, we wear our ‘work in progress’ badge proudly. We believe in transparency, sharing, and embracing growth on our journey. As a startup, having just celebrated our first year since our official launch in June 2022, we’re still on the upward climb with plenty of lessons under our belt.
In the past 12 months, we’ve gained insights that we believe could be invaluable for other startups venturing on a similar path. Today, we want to delve into what we’ve learned about pricing and messaging, offering practical takeaways for those navigating the same challenges.
Our first year has been about getting our product out there and getting feedback from our users. We needed to know the nitty, gritty detail of what people liked and areas that we could improve. That first year we got everything we wanted and more. Our product worked, we got paying customers and some great feedback on areas to grow. The ‘Empiraa Effect’ had taken hold and our brand was getting out there and making noise.
“One of the core values when I created Empiraa…” says Founder Ash Brown, “was to make a platform that was accessible to the everyday business owner.” Our platform was not in the market to serve as a highly detailed, ultra-complex planning tool for strategists. “Small to medium businesses are the ones needing a tool to help them execute their plans. They need a solution that is simple but powerful and relatively inexpensive,” says Ash.
Cracking the pricing code
This brings us to the topic of pricing. It’s the dirty little word that everyone wants to know about, but no one wants to speak candidly to. Many SaaS (software as a service) sites don’t even list their pricing on their website, which can be infuriating for potential customers.
Finding a pricing structure that is affordable for your end user but also allows you to keep your business afloat is an art in itself and takes a little bit of trial and error to find the sweet spot.
What about freemium?
Having a free version of our platform was recommended in the early stages of our business to give an opportunity for people to get to know our product. This was a surefire way to get people signed up to the platform, but the conversion rate from curious users to active participants was less that 10%, which was very low. As a result, we phased out the free version after six months.
The pay per user journey
We launched Empiraa into the market with a ‘pay per user’ model, offering three subscription tiers. Companies would purchase subscriptions based on the number of employees using the platform. As a self-proclaimed “affordable” solution, you could purchase Empiraa for as little as $8.20 AUD per user per month.
This pricing structure took us to June 2023. We have achieved a lot of success with this format, resonating strongly with startups and small to medium businesses.
Recognising the problem
A year down the line, customer feedback led us to a crucial realisation. Empiraa was designed for mass adoption across entire organisations, not limited to isolated teams or managers. Yet, the data showed that customers weren’t implementing Empiraa company-wide.
And so we had a dilemma.
If Empiraa’s full potential lay in granting visibility across the entire plan, businesses that weren’t adopting it across the board were missing out. The ‘pay per seat’ model also added a level of complexity that we didn’t intend: growing businesses would face recurring manual costs each time they expanded. This didn’t align with our purpose of keeping things simple. We needed a new solution.
The new pricing structure
At the start of the financial year, we introduced a new subscription model where we changed from pay per seat to pay per package of seats. In this new structure, businesses can choose from Launchpad (5 seats), Momentum (10 seats), Ascension (20 seats) and Pinnacle (50 seats). This means that a small business with 8 employees can buy the Momentum package and have two seats spare for when they bring on new people. This gives them peace of mind that they know what their cost will be going forward and have space as they grow.
The immediate response we saw: sign-ups slowed down in the first month.
We weren’t alarmed though. At the same time, we were also focusing on adjusting our website messaging to target our four target audiences more strongly than ever.
Tailoring our messaging
In the SaaS (software as a service) space our platform is known as a ‘horizontal product’. This means we serve multiple, distinct audiences. In our case: Startups, SMBs, Franchises and Advisors/Consultants.
In order to speak to all four groups we restructured our website to allow the prospective user to customise their web experience. This allowed us to create content and messaging specifically targeting that audience and the problems they have in business.
It was only after we got the combination of messaging and pricing working correctly that the benefit of the pricing change took effect.
Our signups are now more qualified and engaged than ever and using Empiraa to its full effect across their whole organisations. Our average spend per company has gone from $7.20 to $68.00 per month. A dramatic increase which has compensated for the drop in signups that is also now gaining momentum back.
Mid-journey pivots are no small feat, and there is a level of risk involved. But by staying aligned with our goals, we’ve created a win-win for both our customers and our business.
Lessons for other startups
Reflecting on our journey, we’ve got some key learnings that could help other startups on their journey.
- Purpose is the compass: Having a clear purpose can guide your decisions, including pricing. Make sure your pricing strategy aligns with your core values and target audience’s needs.
- Quality over quantity: Don’t get lured into offering a free version just for the numbers. Focus on attracting users who truly value your product.
- Adaptability is key: The business landscape evolves, and your pricing strategy should too. Don’t hesitate to pivot if customer feedback indicates a better way forward.
- Simplicity matters: Consider pricing models that simplify your customers’ experience and align with your brand’s promise.
- Messaging magic: Tailor your messaging to speak directly to your audience’s pain points. A personalised approach can make all the difference.
- Short-term setbacks, long-term gains: Don’t be discouraged by initial setbacks. Sometimes, making the right long-term decision requires weathering the short-term challenges.