The Teardown

Popular SaaS pricing models include tiered pricing, seat-based pricing, flat-rate pricing, usage-based pricing, feature-based pricing, etc.

In the standard model, PLG invites a freemium or free trial motion that is designed for the end-user to extract as much value as possible, for free, and then create a feature or usage-based barrier for upgrading to different plans.

I believe the future of monetization involves a strategic combination of PLG pricing models for ultimate growth.

Hotjar has UBP (usage-based pricing) and FBP (feature-based pricing) growth loops that work together in their upgrade motion.

What I love about this strategy is that you don't need to pick one growth loop to move users through your monetization flow, you just need to make sure each loop is optimized so that the end-user experience is unique. With Hotjar, you can upgrade through a feature-based lever (segmentation filters) or a usage-based lever (heatmaps).

First, break down the user psychology of why users love the product, deep-dive into the key problems you are solving, and then make those problem-solving features and usage FREE. Rely on product retention to create stickier usage and premium features behind a paywall.

The teardown growth dual loop may be for those SaaS companies who don't want to fully go UBP or FBP. There is a space for you to take up.

Next time you are thinking about how your pricing strategy enforces the PLG monetization motion, see if you can accommodate both strategies without constraining one use case over another.