Guide: The importance of nailing your pricing strategy - Paddle

By  Recuro
Mar 22nd 2023
Read time: 
4 minutes
Table of contents
Weekly News Roundup
1. VC firm enters Swedish SaaS company Flowbox – Breakit

Flowbox, a SaaS company helping organizations reuse their customers' social media content, gets new major shareholders when VC company Subvenio and Snow Software founder Jan Gottlander buys stock for 11 MSEK from Flowbox’ founder. Last year, Norwegian VC Viking Venture invested 80 MSEK in the Swedish SaaS company.

“After the merger with Photoslurp, Flowbox has offices in Stockholm, Barcelona and Amsterdam and 65 employees. The company states that they have an ARR (annual recurring revenue) of SEK 85 million. Customers include Björn Borg, Casall and Outnorth.”

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2. Duolingo launches new subscription tier with access to AI tutor powered by GPT-4 – Techcrunch

The same day that OpenAI released GPT-4, language app Duolingo introduced its new, highest subscription tier with features powered by the new AI language model. Duolingo Max, which costs $29.99 per month or $167.99 per year, unlocks two new AI-powered features called “Roleplay” and “Explain My Answer.”

“Duolingo says human experts write the scenarios that users see in Roleplay, and that they make sure the initial prompt is aligned with where the user is in their course. The experts also write the initial message in the chat and tell the AI model where to take the conversation.”

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3. Meta launches its subscription service in the US – Reuters 

Meta Platforms has launched its subscription service in the U.S., which would allow Facebook and Instagram users to pay for verification in the same vein as on Elon Musk-owned Twitter.

“The Meta Verified service will give users a blue badge after they verify their accounts using a government ID and will cost $11.99 per month on the web or $14.99 a month on Apple's iOS system and Google-owned Android, Meta said in a statement.”

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4. Subway's Footlong Pass is back as more restaurants test subscriptions - Axios

More and more restaurants, including big chains and small mom-and-pop shops, are using subscription programs to build loyalty and drive sales. One of  them, Subway, is now bringing back a limited run of its “Footlong Pass” subscription in the US, a move that could bring in $3.75 million if all 250,000 passes are sold.

“Rick Camac, executive director of industry relations at the Institute of Culinary Education, told the AP that he expects many more restaurants will offer subscriptions in the coming years, noting regular monthly income can help restaurants manage their cash flow.”

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5. Adobe launches an enterprise tier with generative AI tools - Techcrunch

Adobe has launched the enterprise tier of its creative application Adobe Express. The enterprise subscription will also let organizations access the company’s newly launched generative AI tools.

“The creative tools company said that this new offering would help businesses build anything ranging from brand content to social media posts without having to master design skills. Essentially, Adobe is offering its Canva competitor to all sizes of enterprises.”

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Weekly Analysis Roundup

1. Guide: The importance of nailing your pricing strategy - Paddle

Choosing a pricing strategy for a SaaS business requires research, calculation, and a good amount of thought, writes Paddle, while noting that most businesses nevertheless spend less than 10 hours per year thinking about pricing, and are thus missing out on a lot of untapped growth potential. 

“Many companies focus on acquisition to grow their business, but studies have shown that small variations in pricing can raise or lower revenue by 20-50%. Despite that, even among Fortune 500 companies, fewer than 5% have functions dedicated to setting the best price possible.”

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2. Researcher: Media companies have not reached their subscriptions peak - INMA

Greg Piechota, researcher-in-residence at INMA shared the findings from his original research earlier in March at Media Subscriptions Summit in Stockholm. The gist of it: media subscriptions have not reached a peak – they are actually probably still far away from the peak.

“Piechota doesn’t think the recession is going to affect subscriptions in any noticeable way, as news readers are a part of a privileged group and the cost for newspapers is too low to be problematic for them. As he sees it, the industry is in the middle of a growth spurt of news subscriptions.”

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3. Analysis: Is the Morning Brew model crumbling? – Simon Owens

The success of the ad-funded newsletter Morning Brew has inspired a series of similar ventures. In 2020, Morning Brew had profits of 6 million dollars on a turnover of 20 million dollars. But recently, Morning Brew has been forced to implement two rounds of layoffs. According to media analyst Simon Owens, this highlights the importance of investing in reader revenue if you are aggregating content instead of doing original reporting.

“[...] reader revenue is incredibly important in terms of shielding outlets from advertising downturns. Companies largely built around aggregation struggle to introduce subscription offerings, mostly because they trained their audiences to expect free content. It’s not a coincidence that the institutions that built the best subscription models — The New York Times, The New Yorker, The Information, etc… — did so on a strong foundation of original reporting.”

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