5 things Intercom's pricing model can teach SaaS startups

Intercom is a powerhouse when it comes to pricing and packaging.

Starting life as a provider of customer messaging tools, they’ve now grown significantly and offer a huge suite of products to help you better support, engage and convert your customers. They refer to themselves as the “Engagement OS” — nothing too ambitious then!

Although they offer a much wider range of products than most startups would — which generally leads to a more complicated pricing model — there is still so much to learn from them for early-stage and growth companies. Let’s dive in!

What is Intercom’s pricing model?

Unlike most products — and others we’ve done a deep dive on — Intercom’s pricing model can’t just be shown on one page.

There are 3 plans catered to “most businesses”, each focused on a different use case and each forcing you to connect with the team before getting started.

For “very small” businesses, they offer one self-serve starter plan that allows customers to use the product immediately with a cheaper cost and the features they’re likely to need to get started.

Finally, they have a plan dedicated for early-stage startups which requires an application to subscribe to.

Plans for most businesses

Plan for very small businesses

Plan for startups or early-stage companies

Two of these base-plans have have a Pro and Premium tier within them, enabling access to more advanced features. And on top of that, they have at least 8 add-ons you can choose from to upgrade further.

Despite the large number of choices new customers have, it’s all structured logically and sensibly based on who the customer is, their business size, and what their job-to-be-done is.

So with that, let’s look at the 5 most important lessons SaaS startups can take away from Intercom’s pricing and packaging.

1) Don’t be afraid to mix and match different pricing model tactics

What has Intercom done?

• Intercom is using almost every pricing and packaging tactic, trick or hack in the book.
• They offer classic 3-tiered plans, self-serve plans, forcing customers to speak with sales teams, upfront pricing, add-ons and upgrades — both pre and post-sale — alongside two metered usage-based limits — seats and the number of end users.
• These different tactics have been carefully woven together and designed with a particular end customer and use case in mind (more on that in #3).
• Their approach leans strongly on getting a demo and talking to sales to maximise value.
• This ensures customers understand how Intercom can work for their use-case, that they have the tools to get setup in the fastest and best way for that use-case, and offers pricing and packaging which is catered to what the customer needs.
• This also speaks to their target audience - enterprise customers - whereby this technique offers benefit.

What can we learn?

• Utilising multiple pricing and packaging tactics is not easy, but sometimes the hardest things are the most worth doing.
• As an early stage startup, the lesson here is not that you should use every available tactic. However, you shouldn’t rule out using multiple tactics simultaneously.
• You need to really put yourself in the frame of mind of your target customer(s). If you only have one or two customer archetypes, they may still need multiple plans to choose from but also have usage pricing and add-ons. And if you have 3+ archetypes, then different customer types may need totally different plan configurations from each other.
• The more tactics you use, the harder your product and enablement teams will have to work to ensure that customers don’t end up getting lost, confused or frustrated.
• Pushing to sales (even to ‘get a demo’) doesn’t work for every customer type and can reduce conversions. Consider if you actually need this - Intercom feels they do based on their target audience, but you could equally push customers to select what they need based on their use-case initially and offer new features and upgrades as usage takes place.

2) Keep your pricing model as simple as it needs to be

What has Intercom done?

• Despite all the praise above around how well Intercom have done to utilise so many different tactics, the result is still a complicated pricing model.
• For instance, it would take you at least 8 minutes to read their knowledge base article explaining their pricing, and even more time to comprehend and calculate. The diagram they provide helps to some degree, but also articulates the complexity.

• Having spoken to many startups who use Intercom, the word “overwhelming” came up a lot. This is not how you want your users to describe your pricing or your product. It’s a powerful and complicated product, so it can only be so simple - but try to avoid that word at all costs.

What can we learn?

• Simplicity is so important for pricing models - you’ll rescue your sales and support teams from answering the same questions and improve your paid conversion rate.
• Where you can’t be simple, be upfront and as transparent as possible. You’ll need to put time and effort into building out an easy-to-navigate flow and understandable resources which makes your pricing seem simple. Offer cost calculators and expressly show people what they’re getting
• Just because your competitor (or another SaaS business you admire) is doing something, don’t assume it’s the right set of tactics.
• Firstly, it may not be working as well as it could be for them.
• Secondly, any differences — and unique aspects — to your product may require a different pricing model.
• Thirdly, don’t be afraid to stand out from the pack. Your competitor doesn’t necessarily have this right. Find where customers get value from in your industry & product, and ensure it aligns with what the customer is paying for.
• Experimenting with different tactics, regularly re-assessing your core model and not ruling anything out, ever, are all key to having the optimal pricing model for your business.

3) Focus your pricing model on your customer’s job-to-be-done and size of their business

What has Intercom done?

• Intercom thrives on jobs-to-be-done, and structures their pricing model around 3 core use-cases accordingly: Support, Engage, and Convert. Pricing is therefore framed around a customer’s business goals and what they want from Intercom.

• Intercom’s pricing plan organised by jobs-to-be-done.
• Intercom has grouped the most relevant features, add-ons, and upgrades based on the job-to-be-done to align and cater value to a customers use-case.
• Intercom also has 4 top level groupings based on a business’ size alone - (ie. Enterprise, “most businesses”, “very small businesses” and early-stage startups). From this they can infer what features customers will want and how much they’re willing to pay.

What can we learn?

• The framing — copy, hierarchy, structure, everything — should be laser focused on your customer’s job-to-done and their segment/size.
• Think about why customers want to use your product and the goals they have in doing so. Take those jobs and frame your entire pricing model and pricing page around these.
• Even if you’re super early-stage and don’t have an array of use cases within your product, you can cater around the one use-case with starting features, upgraded tiers, and add-ons that help achieve particular jobs within this.
• Centre copy around what your customers are trying to achieve, the problems they face, and how they can be solved. Your pricing model suddenly becomes much more human. It’s also a great opportunity to showcase your brand’s tone of voice and personality - most SaaS pricing pages are a bit stiff and functional so stand out from the crowd!
• By organising your plans and pricing around your customer’s size, you quickly signpost where customers need to go so that navigating your pricing model is suddenly much easier.

4) Never stop experimenting

What has Intercom done?

• When exploring Intercom’s pricing plans, those with a keen eye will notice traces of experiments being run on various pricing pages.

• These A/B tests (or multivariate tests) allow Intercom to serve different versions of the same page to users to continue optimising their pricing model. These tests could be for the smallest (ie. copy variations) or the largest (ie. new package variations) of changes.

What can we learn?

• Experiments are critical to optimising your pricing and packaging. The big stuff and the small stuff - and it’s never finished.
• A/B testing allows you to try different pricing models and see which drives better metrics - conversion rates, higher average revenue per account (ARPA), etc.
• Testing the big stuff (like the price charged or the entire pricing model structure) won’t be easy. But again, this hard work will pay off and put you ahead of your competitors who aren’t able — or aren’t bothered — to optimise through experimentation.
• A common theme in all our deep dives is that your pricing model should be bespoke to your business, your product and your customers. You can’t figure that out without running experiments.
• As the product and pricing model matures, you can then start to experiment with smaller pricing and copy changes to continue driving up conversion and ARPA.
• Your pricing model needs to adapt with your product as it evolves and grows. And - you guessed it - experiments will help you find the right path to do so.

5) Showcase upgrades and add-ons throughout your product experience

What has Intercom done?

• Intercom has littered their product with paid upgrades and add-ons — in the best way possible. It’s just incredible how many different ways they promote paid features within the product.
• Customers can freely explore the entire product and get an understanding of everything Intercom has to offer, prominently showing off certain features as a paid extra, while exposing the limitations of what their current package allows.

• The UX utilises upgrade modals that appear directly in the product, without pushing to sales or pricing pages. You can upgrade instantly to get access, with no confirmation dialogue or external flow necessary — slick, but dangerous!

What can we learn?

• Selling to your users or customers doesn’t end once they’ve chosen their plan. Without creating friction or being pushy, continually promote your paid upgrades and add-ons.
• Customers will use your product and discover the features they need to solve their jobs over time - so contextually position upgrades and add-ons as and when customers need them. In this situation, customers are coming to you, not the other way around.
• Any upgrade experience should be slick, instant and easy, especially as you already have your customer’s payment details. Adding — and removing — upgrades should always be a click or two away, and access should be direct without need for external flows where possible.
• Don’t be that company that makes it impossible to downgrade. Ensure customers are aware of the features they don’t use, and allow them to swap and select to get the most value out of your product - it will benefit you in the long run!
• There’s obviously a fine balance here with paywalling too many features — especially when customers expected them to be included. Experiment with your packages and offer features to customers where they’ll need to achieve particular jobs without damaging limitations.
• Remember: Abusing emails, notifications and popups to push customers to pay for more and more will cause more harm than good.

Phew - that was a lot! Despite the size and breadth of Intercom’s product, I’m sure you’ll agree that there are loads of important takeaways for early-stage SaaS companies.

You’ll need the tools to be able to quickly build-out and iterate pricing and packaging models and flows. You’ll also need to try multiple tactics and combinations before you uncover what truly works for your product and your audience.

Sounds like hard work? Leveraging multiple pricing and packaging tactics is, but nothing worth doing was ever easy. Although - it could be easier with Kana:

• Effortless package and pricing models and flows, tested and built in minutes - not days
• Fast optimisation of conversion and revenue per customer metrics for your product
• Instant experimentation with little engineering effort required

The days of painful packaging and pricing for SaaS businesses are a thing of the past. Get in touch if you’d like to know more!