How do you know when it’s time to kill a product? It is certainly not a decision to be taken lightly.
In 2011, Netflix tried to deter customers of mailed DVDs and dropped a 60% price increase in the midst of a recession. That year, the company lost 800,000 customers, its stock price fell nearly 80%, and their management team turned into Saturday night live sketch.
Take the Netflix movement as an example of this do not to do. But what should we do then?
A decade after the Netflix debacle, here’s a prime example of smart product release from GitLab, a hugely popular development platform that’s growing like crazy.
GitLab fascinates me with their extreme transparency, even if they prepare to go public. But what they do on the product side interests me even more – and should serve as a case study for the rest of us.
Here’s what I think their secret boils down to: less is more.
Search Institute’s endorsement in conjunction with McKinsey & Company supports this claim: The revenues of high-growth companies are typically concentrated in a more highly-selected set of products.
Earlier this year, GitLab ditched a paid starter offering, reducing its product catalog from four subscription levels to three: Free, Premium, and Ultimate.
Why? I suspected this was because too many of their subscribers were hosted in the startup tier causing a customer / product mismatch that was costing GitLab money. So I contacted Xiaohe Li, senior pricing manager at GitLab and he was kind enough to answer me.
My suspicions have been confirmed. Here is what Xiaohe told me:
The Starter / Bronze level was originally designed for a single team and did not have any business readiness or support features. However, we had larger clients at the level who didn’t see the value they really needed. One of our more sophisticated clients told me directly that everyone should get Premium at a minimum.
It was a smart move. Of course, the Bronze Plan only costs subscribers $ 4 per month, but that’s exactly the point. If you want to run a successful subscription business, you need to invest real resources and investments in all of your offers, not just some of them. As the old saying goes: feed it or kill it.
But how GitLab proceeded to change the prices, that’s where the masterclass begins. Here are four key lessons I learned from their decision, and you should too:
1. Be generous in your transition offer to help bridge the change
Not only can GitLab customers on the canceled plan choose to stay at the same level until the end of their subscription period, they can also renew at the current price for an additional year or upgrade at a significant discount. .
2. Avoid pushing upselling
GitLab actually encouraged users of the canceled plan to investigate their free plan! It’s a much better way to convert paying customers because it asks users to re-evaluate how they use the product, rather than just making a blind pitch to pay more.
3. Listen to your customers
As they explained in this excellent video, GitLab sought extensive feedback (on a confidential basis) from customers and internal team members prior to launch. GitLab then invited its customers to provide feedback in a special section from their community forum on launch day.
4. Opt for simplicity of pricing, not far from it
GitLab new pricing page is simple, intuitive, and does a great job of communicating value.
And this all brings me back to my original argument: less is more.
Published March 15, 2021 – 10:04 UTC