Breaking down Notion's pricing strategy

I recently became a Notion user (I know...I'm way behind the times). It is a great product, and as I was playing around with the settings, this section piqued my interest in its monetization strategy:

Block limit? ???? What is that? So, I dove into the pricing page. and as I dug into the different account tiers, I was fascinated.

Pricing is one of the most interesting challenges for a company, and it is especially challenging when you have a freemium or hybrid B2C/B2B monetization strategy. If your product has some sort of inherent virality, it becomes even trickier to choose the best pricing strategy.

How we thought about monetization at InVision

At InVision, we had lots of debates around how to think about monetization so as to not discourage or hinder our product's ubiquity within in a company. How do you monetize users effectively while avoiding "punishing" them for finding value in the product? What features did users find valuable, and how did that differ by persona, company size, etc.? And how elastic was their willingness to pay?

That last question (elasticity) is very important to understand when gating features and thinking about pricing tiers. Finding the balance between a cluster of users' price sensitivity AND their value ascribed to certain features is the formula to maximizing revenue. As in, which features do users value the most AND would be willing to pay the most for? And how does that differ by demographics (persona, company size, geo, etc.)? Is there a set of users that values inviting team members at a much higher rate than another set of users?

Here is a simple example: someone on a large team that is using the product to collaborate with others will obviously value those collaboration features at a much higher rate than an individual user building projects for personal use. Both of those sets of users likely value unlimited projects highly, but the personal user finds far less value in collaboration features.

Assuming you find clusters of users that ascribe different values to different sets of features, the next thing to figure out is their price sensitivity – how much are they willing to pay for those features? Find the overlap between users finding value out of those features and those willing to pay the most for those features.

The last part of this formula is matching this feature value and willingness to pay with your actual product usage. Finding those users that value certain features the most and are willing to pay for them is great, but it is a lost cause if only .01% of your user base is using those features. This is where you must strike the balance between finding value, willingness to pay, and % of users that this would impact. Maximizing all three is a recipe for success.

Also note that monetization timing is key. If you try to monetize a user before they are actually able to find product value (e.g. you can't invite team members without first upgrading your plan), that might be a recipe for failure. And as much as possible, avoid hindering product-led growth via your pricing strategy. If you monetize your users in a way that makes them think twice about using features that improve the virality of your product (e.g. you only get up to 5 team members, then you start paying), you may limit usage of those features.

There is obviously a balance here...you must monetize users SOMEHOW. So, that is the goal. Find the balance.

Applying this to Notion's pricing structure

With all of that in mind, let's take a look at Notion's pricing scheme. When looking at their Pricing page, one VERY interesting thing stood out to me: the "Personal" tier.

When looking at this tier vs. the Free tier, the number of members goes from "unlimited" to "just you" AND the Free tier only includes 1,000 blocks vs. all other tiers with "Unlimited" blocks.

Why does the number of users go from "unlimited" (on Free) to "just you" (on Personal) then BACK to "unlimited" (on Team)??!! It's brilliant in my opinion! It seems that Notion has a great understanding of its clusters of users.

Breaking down the # of users per plan

Notion is a very versatile tool that can be used by individuals and teams alike. Individuals may use it more as a tool for personal note taking, task management, idea tracking, or god knows how many other uses cases. Those individuals are likely finding value in the simplicity and UX of the tool, the consolidation of so many types of tasks/notes/etc. into a single tool, and ultimately just want to use it to maintain their personal sanity. At some point, that person will pay for the tool for their own personal use because they are finding so much personal value out of the tool.

That is far different than the team that collaborates within Notion. Teams can find value in many different ways – sharing notes, setting up project templates, sharing roadmaps, creating content calendars, creating a company wiki, etc. This cluster of users, is finding value in a far different way: sharing these Notion pages and workspaces and collaborating on them is far more valuable to them. So, unlimited team members is a key feature, and one they would be willing to pay for.

Breaking down the # of blocks per plan

Revisiting the other differentiating feature that stood out to me, # of blocks, it is clear to me that the Free tier is designed to allow either individuals or teams to really "test out" Notion before committing to a plan. They are giving users a chance to find product value before forcing them to pay as either an individual or team.

Limiting the # of blocks on the Free tier (and not the number of users) allows virality to take hold within the product if working on a team. Teams can collaborate and share documents, and users won't be charged until they have reached a threshold of pages/workspaces/etc. (implicitly finding lots of value in the product by then).

Conversely, if someone is using Notion for personal use, they may not have shared anything but will too eventually meet the threshold for # of blocks and will be forced into a Personal plan.

Summarizing Notion's pricing tiers

To summarize, by having a Free tier with "unlimited" users but a # of blocks limit, a Personal plan that only allows "just you" as a user, and a Team plan that allows for "unlimited" of both of those things, Notion achieves the following:

• Built-in product-led growth by not disincentivizing users from inviting other members to collaborate (because Free plans have unlimited users)
• An ability for individuals and teams to find product value before monetizing (Free plan has a built in high # of blocks limit + unlimited users)
• Plans that cater to individuals (I only want to pay for my personal use cases) and teams (I want to pay for collaboration)
• Smart matching of pricing sensitivity to use cases – teams collaborating in Notion will obviously pay more vs. the individual using it for personal reasons

I don't know if a lot of my assumptions are true, but as an outsider, it seems that Notion has done a great job building an effective monetization strategy without compromising its inherent virality.

What did I get wrong?? Would love your feedback and opinions.