Zaponomics at Work: How Zapier Turns Customer Value Into Revenue Growth With Giang Hoang

[00:00:00] PREVIEW: There's probably an area that pricing and packaging leaders often underestimate, and so I think that change management and messaging to customers is really pivotal with all pricing and packaging changes. So even when a pricing change is a clear win for the customer, and you're giving them added value, if it's not clearly communicated, going to cause confusion or resistance.

[00:00:22] So we saw that as an example when we merged our starter and pro plans. And while we gave customers more features at no extra cost, we still saw a spike in support tickets because customers just weren't sure what changed or what it meant for them or how it was a net benefit. And so, you know, part of every pricing and packaging change really requires.

[00:00:44] Really thoughtful messaging, timing, and iteration. And so that's where we lean really heavily on our product marketing teams and our pricing and packaging teams to really build in thoughtful rounds of feedback from customers. Review our messaging multiple times, test different framings, and make sure that all of our news requires or has the right storytelling.

[00:01:03] Welcome to Unpack Pricing, the show that deconstructs the dark arts of SaaS pricing and packaging. I'm your host, Scott Woody, co-founder and CEO of Metronome. In each episode, you'll learn how the best leaders in tech are turning pricing into a key driver for revenue growth. Let's dive in.

[00:01:27] Scott: Giang, thanks for joining us today. We're really great to have you. And for the audience, Giang leads pricing and business operations at Zapier. She's helped guide the company through a bunch of different pricing updates and changes, especially over the past year.

[00:01:43] Zapier's been making a lot of pricing and packaging moves and is one of those companies that in spite of being around for, you know, since the early 2010s is still continuing to innovate in both the AI product space, but also in the pricing and packaging space. So perfect guest for us on our podcast.

[00:02:01] Maybe Giang, you wanna do a quick introduction of yourself?

[00:02:04] Giang: Sure. Thanks for having me, Scott. My name's Giang Hong. I've been in Zapier for four years and really excited to dive in today with pricing and packaging. I have a pretty broad interdisciplinary background in consulting, which has allowed me to have an interesting perspective in PNP and how we think about our strategy and operationalize it.

[00:02:24] Scott: Awesome. Well, the first question I would love to understand is, you know, pricing is one of those very interesting niches in business. How did you come to become focused on pricing and packaging?

[00:02:37] Giang: Sure. So, I think like many other pricing and packaging leaders, my path to this domain was indirect.

[00:02:43] So, I actually started at Zapier focused on business operations, and one of my first special projects or tours of duty was to do a upmarket pricing change with some external consultants. That was supposed to be a three-month project, but it turned into a four-year ordeal with myself now leading pricing and packaging at Zapier.

[00:03:03] Scott: Very cool. Actually, what was the root cause of the expansion? Was it the importance of pricing and packaging? Was it like it was a really hard problem to solve? Like, what took three months into four years and now maybe a permanent career in pricing.

[00:03:16] Giang: Yeah, so maybe to elaborate further, I think, you know, Zapier has always been a PLG-like company, and most of our early customers were individuals or SMBs. And they found and adopted Zapier on their own.

[00:03:30] But over time and over my time at Zapier, we've had to expand to better support teams and enterprises. And so we've ended up building up a workforce and pricing strategy accordingly.

[00:03:41] Scott: That's very cool.

[00:03:43] Giang: And I think maybe to elaborate even further, you know, we've not only just expanded upmarket, but we've also shifted from one product to now many connected offerings as an AI orchestration platform.

[00:03:56] So I think most folks know as for our zaps or our workflow automation product, but our product catalog has multiplied in the last few years. So we now have, for example, interfaces and tables and chatbots. But then we've also integrated AI deeply into our platform and created new products like AI agents and now our MCP product.

[00:04:16] Scott: Okay. Awesome. I'll put a pin in the specific products because I think it's like, that's the interesting part of pricing and packaging, kind of comes at how it interfaces with the product. But maybe just to ground folks in Zapier's kind of pricing evolution. You mentioned that you, you know, the company started in, I think 2012, very focused on a PLG-type of motion.

[00:04:36] Maybe talk about the eras of pricing and packaging at the company , and how they've changed over the past decade plus.

[00:04:43] Giang: Yeah, for sure. So starting at the very beginning, Zapier was a very scrappy, you know, a Y Combinator startup. And you can see that represented in our pricing and packaging.

[00:04:55] I think our three founders even used the Fibonacci sequence as their first pricing plan prices. And I think in the early days our monetization was by task. And so that was our... our pricing lever. But we've kept the pricing page, or they kept the pricing page vague by design. And that allowed Zapier to experiment in the background.

[00:05:15] And so if you look at our early pricing pages, for example, you'll see lines like pricing starting at blah, right? And that allowed folks to actually experiment with different price points and messaging while also continuing to monetize the product. Going beyond that, I think, you know, we've seen rapid adoption and growth of our product, particularly around like, you know, 2015 or so.

[00:05:39] And with that we just added on more complexity in offerings to our plans and pricing. And so, you'll see more plans tiers, more feature gates, increased thresholds. We even did start dabble in metered pricing at that point. Maybe one of the most persistent changes that we've done or that we've kept with is we've always had a pretty low entry point.

[00:06:01] And so $19.99 was always like our low barrier to a paid plan. Maybe the next era after that is when I joined in about, you know, 2021, when I think that's when we started to see growth slow down a little bit off of that self-serve engine. And so this is again, coming off of the pandemic, coming off of the COVID driven surge.

[00:06:20] You can see that, you know, customers are really adopting automation. But again, by the time 2021 rolled around, you can see that budgets had started to tighten and the SaaS consolidation, as many of us are familiar with, started to kick in. And so that was a bit of a turning point for us to really think about how we can scale differently, and use pricing as more of a strategic lever for growth.

[00:06:45] Scott: Okay. Very cool. Maybe talk a little bit about the concept of pricing as a strategic lever. How does pricing fit into the kind of current Zapier strategy and how are you using pricing in order to drive growth?

[00:06:59] Giang: Yeah, so what I mean by making pricing more of a strategic lever is perhaps operationalizing it as such.

[00:07:06] And so that means you need to organize internally. And prioritize that. And so one of the first things that we did was create a cross-functional pricing and packaging team with a dedicated steerco committee. We also made sure that we defined a set of pricing principles that would guide the steerco in making all of our decisions.

[00:07:27] And then lastly, we need to treat pricing and packaging as a product. So clarify the ownership, make sure that we iterate often, and learn from our pricing changes and really incorporate customer feedback into our changes as well.

[00:07:41] Scott: Okay. You said a bunch of things that I would love to dive into. So the first is, you know, pricing council is one of those concepts that, I think, almost all companies have in some form, but they vary in their effectiveness. Maybe talk a little bit about how you all have constructed the pricing council and kind of designed it in order to make sure that it's like continuously able to actually drive change in the business.

[00:08:03] Giang: Yeah, so I think one of the core things is making sure that our pricing council is inclusive.

[00:08:09] So, when we think about the core players that are involved in pricing and packaging, it includes everyone from build to go-to-market to ops. And so there's clear representation from each of those different segments, and then as part of that, there's those clear set of principles with which to guide our decisions. That way we can make sure that we are aligned and working in the right direction for our pricing and packaging decision.

[00:08:34] Scott: Awesome. Would you be willing to share some of the principles that your pricing council has?

[00:08:38] Giang: Yes. So there are five core principles that we follow in our decision making. These help us stay consistent and focus on the customers. And again, make sure that we're all aligned because so many people are involved and everyone has an opinion about PNP.

[00:08:55] But our first principle is around maximizing trust. So, we know when there is a usage-based model or consumption-based model that's going to introduce uncertainty for customers. It's gonna be hard for customers sometimes to predict how much they use. And so, we want to make sure that we minimize surprises and gotchas.

[00:09:14] And that can mean like making sure that folks are aware of how much they're using and when they're going to hit their limits. Making sure that they have advanced notice of changes and can react to it. And so as part of that maximized trust principle, our efforts need to make sure that customers always know what they're paying for and why.

[00:09:33] Our second principle is around bias to adoption and usage over near term ARR. So, what we mean by that is, really, in support of our mission to make automation work for everyone, we want to prioritize access and growth over extracting the maximum revenue right away. And so, that's where we can make some bold trade-offs to improve adoption and make sure that we are getting the usage and retention gains that we hope for over time.

[00:10:02] Scott: Any example of that principle in action, like, a time where, you know, maybe a different company without that principle would've made a different decision?

[00:10:10] Giang: Yeah, I think, you know, aggressively monetizing at the beginning is really challenging. And so, being able to provide, for example, a generous free tier, and a lower barrier to entry to a paid plan could be the right way to capture early adoption and make the product sticky.

[00:10:28] And then over time, as you get more customer data and you see that customers are really getting value from your product, that could be the right mechanism or the right point in time to more deeply consider monetization.

[00:10:40] Scott: Yeah. Any other principles or you mentioned five, I think we're at two. So, what are the remaining principles?

[00:10:46] Giang: Yeah, our third principle is default to simple and straightforward pricing. So clarity drives confidence. And so part of this effort is to make sure that you can simplify your plan offerings and make it easier for customers to upgrade or cancel and just really improve how pricing is communicated.

[00:11:05] And so where there's, you know, a lot of complexity, try to supplement as much as possible with examples or guidance, and just make sure that, you know, customers understand what they're getting with your packaging.

[00:11:16] Maybe the other principles to just quickly go off of our fourth and fifth- encourage commitment is our fourth one where again, we want to meet customers where they are, but also reward commitment.

[00:11:28] And so part of that looks like, for example, providing an annual discount so that customers can commit to a longer time period and be rewarded for that while the company can increase their NRR.

[00:11:40] Scott: And what's the fifth pricing principle at Zapier?

[00:11:43] Giang: Yeah, our fifth pricing principle is about regularly reassessing pricing to ensure maximum value. So pricing and packaging is dynamic and the market is dynamic, and so making sure that you're constantly reevaluating your pricing and packaging to make sure that it meets the customer at where they're at is important.

[00:12:01] So we're constantly reflecting and making changes. It's never static.

[00:12:05] Scott: Very cool. Okay, that last one is extremely near and dear to my heart, but.. Like one thing you said, you mentioned you have a pricing committee or pricing council. You have these principles, and then I think you said that you have a dedicated team for pricing and packaging.

[00:12:19] Is that right? Like a, basically like an operational team to make sure that these pricing is actually able to get into the world. Maybe talk a little bit about that team. I think Maybe talk a little bit about that team. I think that's not something we see in every company. I think it's like, you know, sometimes pricing and packaging is a coalition of the willing, and it's like, everyone is kind of implicitly involved, but it sounds like actually at Zapier you're taking this pretty seriously and having a dedicated focus on it.

[00:12:35] Giang: Absolutely. So pricing and packaging is a bit of a horizontal function at Zapier, and so we have leaders from across the organization that are part of this team that are contributing to the pricing and packaging strategy, as well as the execution and governance of it, and so on my team, we have representatives from product marketing, engineering, design and product. And we're also supported by folks in data and finance, and operations as well. And so by having this broad group that is focused on this, you know, horizontal strategic area, we can make sure that we are developing the right strategies as well as making sure that we can implement them successfully as well.

[00:13:20] Scott: Okay. This is so cool to me because this is what we see in companies that are actually able to kind of move quickly, as they kind of take the job of generating value and getting it into customer's hands and helping them understand it.

[00:13:33] They take it really seriously and they, and in order to do that, you have to think of it like cross-functionally. Given that there's like at least four or five disciplines that kind of roll into this team, how do you make sure that the team functions well, like

[00:13:48] is there ever any friction with kind of like trying to get things done? Or is it more like we're all kind of on, in this together? I just, it sounds like almost like a, a matrix team in a way that is like very interesting to me and I'm really curious how you're making it work in practice.

[00:14:01] Giang: Yeah, I think, you know, part of that is really thinking about our decision making and making sure that we're clear on the principles for decision making.

[00:14:11] And I think a lot of it also. Is, you know, credit to our Zapier ways of working and culture. So, for example, we are an incredibly transparent company in terms of how we work. And so part of that is making sure that we document our decisions out in the open and surface everything in, in our Slack messages and our channels and our calendars, and allow folks to participate and weigh in because everyone, again, has an opinion on pricing and packaging.

[00:14:41] With that, we then, based upon our pricing and packaging principles, reach alignment. And that can be painful and that can be debatable, but at least we have this moment of transparent debate and reach alignment through agreeing and, and committing. And then, you know, the, the execution part is also, you know

[00:15:03] really interesting as well, right. I think as much as you want to invest in your pricing and packaging strategy, a lot of it is based on execution. And so part of that is, again, that cross-functional team that is working in lockstep for each of these launch moments to make sure that we are delivering on time with clarity and quality.

[00:15:22] Scott: Awesome. And. If I am not mistaken, last year you had a big launch moment like a large pricing and packaging change across the Zapier product suite. Maybe talk about what the launch was and like kind of what was the change, like how long were you planning for it and how did those different members of this cross-functional team work together in order to make sure that it was successful?

[00:15:41] Giang: Yeah, for sure. So. Maybe the impetus for some of the changes for 2024. So, as I noted earlier, we had internally saw that growth had started to plateau a bit. So in Zapier's history we had scaled really quickly. But again, our, our self-serve engine alone, was not compounding like it used to.

[00:16:00] We had also, you know, realized that there is some friction that was building in our support and sales motion. And so if customers, for example, were hitting their task limit. Their critical workflows were getting disrupted. And so we wanted to, and again, give customers more choices outside of that binary choice to either upgrade or allow their zaps to stop.

[00:16:21] So with all of those, you know, particular reasons, we realized that we needed to make some big changes, and that came from that cross-functional team recognizing that trend through, you know, data and analysis, and then working with our product leaders, our p and p leaders, to really think about the solutions that would put that in place.

[00:16:41] So that led us to all of the changes that we introduced in 2024. So we expanded what we call pay per task pricing to all of our paid plans so customers could then scale up to three x of their limit without having to upgrade to the next tier. We also at the same time, took that opportunity to simplify our plan packaging.

[00:17:01] So we removed some of our feature gates and gave everyone unlimited zap, and we also allowed for free access to 11 of our Zapier built-in apps. And that way customers weren't limited by the automations that they ran and would be encouraged to build even more and get more value out of the product. That was our first launch.

[00:17:23] We had three more launches as well of that, but soon after that we started launching our next add-on product, so tables and interfaces that went to ga. And then we used our Zap connect moment to launch a more simplified plan package as well. So then we went to three paid plans, including our new enterprise plan.

[00:17:44] Introduced our first bundle, so bringing in tables, interfaces and workflows together with a discount.

[00:17:51] Scott: Very cool. Well, I would love to hear a little bit more, so it sounds like, in the new world, you have this task limit per month, and then if they go over, it kind of rolls into almost like, not PayGo, but it's like you basically get another... for like, an add-on or an additional fee, you can kind of go and generate more tasks. What were the other models that you considered there? Obviously understood that hitting a limit and then having the integrations break is not the best customer experience. Did you consider going pure PayGo? Did you consider doing other things and how did you ultimately land on this like additional kind of limit?

[00:18:28] Giang: Yeah, so maybe to give some quick context, Zapier does use like a tiered subscription model and is anchored around two points. There's usage, which again is based off of tasks. Then there's feature access.

[00:18:42] So we have these four subscription plans today that would have different capabilities and access to new features like app integrations, permissions, more complex automations. And so, you know, that model has served us really well for a long time, but you know, I think we again, heard feedback that we wanted to change that for customers that had, you know, seasonal or unpredictable usage. And again, there's a lot of friction in that.

[00:19:07] And so, based upon what we had already rolled out in the past and experimented with metered pricing, we decided to make that option available to all paid plans. And so giving customers the control and the flexibility to do just that.

[00:19:22] I think in terms of other models, yes you could do pay-as-you-go, right, and move completely and remove your subscription tiers, but there's certainly a lot of risk with that, not only for customers, who again may not have predictable usage and may not know what they're gonna be paying month over month.

[00:19:37] But again, that's also a impact to the business. How are you going to predict your ARR reliably? I think we also wanted to stick to a model that had been in existence for years that customers were familiar with, but then, introduce this lever for that flexibility for customers.

[00:19:54] Scott: And how did customers react to this new lever?

[00:19:58] I think one of the questions we get a lot is subscriptions, in this case, it's like a tiered subscription concept. It's like nice because it's simple, it's predictable, customers kind of know what to get. And then when you add this flexible component, sometimes companies worry, oh is it gonna be too complex for customers? How did the market react and like what are some things that you did in the product or in the marketing or in the communication to kind of, I guess, like acclimate customers to this change?

[00:20:27] Giang: Yeah, certainly so, it's about a year out since we've made a lot of those changes and as we reflect back, we've seen a lot of really positive signs.

[00:20:36] So customers are really readily adopted, pay-per-task billing, and we actually exceeded our projections for metered revenue. So, I'd love to show you a chart and so you can see us up into the right, you know, starting from that moment. Additionally, you know, churn and contraction has actually decreased.

[00:20:55] And so customers are using the product. They're staying longer because they have more flexibility and control. And so really exciting, you know, to see the changes and the adoption by the customers, which shows again, by reducing the friction to usage, customers are taking advantage of it and actually using the product more.

[00:21:17] Scott: That's awesome. And remind the audience like who are at these lower tiers, the non-enterprise tiers? Are these individuals, are these small businesses? Like what's the typical like kind of customer profile?

[00:21:29] Giang: Yeah, so we have our pro plan which caters to individuals and small businesses, and that has been, historically, the base for Zapier,. But again, you know, over time, we've noticed that customers are expanding into teams and enterprises. And so part of that is also expanding our product to meet them with collaboration and control and building out plans accordingly to meet those specific needs.

[00:21:53] Scott: Very cool. You also talked about launching some, I think, add-on products. Were these like truly optional add-ons where a customer can turn it on and off at will or maybe every month? And how did you get, like I think one of the questions I get a lot when people are thinking about add-ons is that it does add some complexity to the, purchasing experience.

[00:22:18] And so I'm like really curious how you guys got to that decision and how the reaction has been to add-ons. 'cause again, I think add-ons is one of those things where it's like, there are certain, you find some businesses where they're like, it just doesn't work for us and some businesses where it works really well.

[00:22:25] And so I'm curious how, how it's been at Zapier.

[00:22:25] Giang: Yeah. So last year we went GA with our first two products or additional products outside of workflows. That was our Zapier interfaces product which essentially allows users to build simple, no-code front ends, like their own mini app. We also launched Zapier tables, which is like a spreadsheet meets database type of function that allows, you know, different teams to structure their data for workflows.

[00:22:51] So, we launched those add-ons with the idea of, you know, let's get it out there and really optimize for learning and adoption. And then over time, we can always iterate and learn and change our pricing and packaging model.

[00:23:03] We released those products and we carefully observed how customers were using it and how they were using it together or separately, and that helped us influence our decision on bundling. And making sure that customers actually got value out of our three products together.

[00:23:18] So we again made that concerted choice to bundle tables, interfaces, and Zaps together and encouraged them even further with a discount.

[00:23:28] Scott: Okay. And in that bundle, I'm curious how much internal product work went to kind of drive cross-product utilization.

[00:23:38] Was that a big focus or was it pretty natural that customers that were using the core product would kind of adopt tables and interfaces?

[00:23:45] Giang: Yeah, more at the latter. I think, you know, as we noticed, as we were releasing other products as well customers were naturally using all three together.

[00:23:53] And so with that trend, it made sense to package it together. And even, you know, blow out the use cases and scenarios to encourage that growth.

[00:24:01] Scott: Very cool. How, actually, I'm curious now. You've talked a bit about, I think the original kind of impetus for you starting to work on pricing was enterprise.

[00:24:08] Talk to me about in 2024, how does enterprise interface with these self-serve plans? Is enterprise like the same kind of rough structure? It's just you get more, or is it like a fundamentally different commercial monetization structure?

[00:24:22] Giang: Yeah, so with our enterprise plans, we do include the same products that are part of our, you know, self-serve lineup. But again, there's feature differentiation, right?

[00:24:32] So, we do find that enterprises are looking for more admin and control capabilities. They're also looking for a higher degree of service. And so you can see that as part of our specific and tailored enterprise packaging.

[00:24:46] Enterprise packages are also not one-size-fits-all, right? And so, a lot of the conversations and negotiations that happen with our sales team requires us to really understand the enterprise customer's needs, understand the actual buyer for these products, and make sure that we're tailoring our pricing and packaging for that.

[00:25:04] And so, you can see that in how we, again, not only offer a product, but even how they buy the product differently. There could be a longer sales cycle, there could be different billing terms, there could be different payment methods and currencies. And so, part of our effort in the past few years has been really understanding that enterprise customer and tailoring our pricing and packaging options to that.

[00:25:24] Scott: One of the things I like to ask about is , I worked at Dropbox and we had our enterprise SKU, and the enterprise SKU was more or less, there's like SSO kind of the typical things that you would expect. But there's always a few things that are kind of product specific differences in the enterprise.

[00:25:41] Are there any of those for Zapier, like the enterprise actually fundamentally uses the product differently and therefore this feature set or this packaging is kind of much more attractive for them?

[00:25:50] Giang: You know, you're right that, you know, security is and scale is a big factor for enterprise customers.

[00:25:55] And so, while we do you know, have SSO offered for team plans for free for example, there's a higher degree of control and security features that you would see on an enterprise plan.

[00:26:07] We make sure that, you know, that's essentially table stakes, right? That's just something that all enterprise customers expect coming out of the box.

[00:26:15] But on top of that, yes, enterprise customers are using it differently, and part of that is really having control and visibility into how every user across their company is using the product. And so that might require additional visibility and dashboards and reporting to make sure that, you know, the owners of these accounts can manage it accordingly.

[00:26:34] Scott: Yeah, that's exactly what we see, especially with more consumption-based businesses, is that when you move into the enterprise, there's this like shift between who's the budget-holder and then who's the user. And then actually, the budget-holder starts to have like product needs for kind of understanding, 'okay, I see how much we're spending', but is this the right way to spend money across this entire set of companies? That's like very interesting to kind of hear you reflect that.

[00:26:59] So, basically it sounds like 2024 was a big year for pricing and packaging and it came coupled with new product features. One of the things that's really interesting is it's very common to launch a pricing change alongside new product features so that customers kind of understand they're getting a new set of value. In your mind, is that like a requirement or is it one of those things where it was like a happy coincidence in 2024 that we happen to have these big new features coming online at the same time that we're changing pricing and packaging?

[00:27:30] Like, I guess the question is how coupled are those two things in your mind? In general and in this specific case?

[00:27:36] Giang: Yeah. I'd say that it wasn't necessarily a happy coincidence, right? And I think as further ahead that pricing and packaging can be with product, the better, so that we can be a lot more planful about the important component of how you price and package and position your product to customers.

[00:27:54] So, in this particular instance, we had always knew that we were expanding to multiple products. And that coupled with the impetus for making some broader changes to our packaging as a result of wanting to reaccelerate growth, I think, you know, that all came together.

[00:28:11] But we had always, again, intended to build and scale according to our customer needs, and we saw that our customers needed more features, more products that worked well to improve their automation.

[00:28:22] Scott: Actually, I also think at one point you mentioned that you had worked with external pricing consultants.

[00:28:28] When you went through the 2024 change, did you use consultants or did you have the internal team do the work and like when is the right time to use pricing consultants versus kind of do it internally?

[00:28:39] Giang: Yeah, I'd say that, you know, in our history, we have used pricing consultants, I believe in like 2018 and then again in 2021. And they were incredibly foundational in helping us to set up the right structures and frameworks because we ourselves had not built that.

[00:28:55] But in the past few years, as we built up our coalitions, built up our steercos and pricing team, it made sense for this team who is closest to the product, who is closest to the customer, who knows the roadmap, to really get their hands dirtier with defining the work, defining what needed to get done and the jobs to get done.

[00:29:13] So in 2024, this was a internally-led movement.

[00:29:16] Scott: Very cool. Maybe talk a little bit about that process. I know it's always like a competitive kind of market understanding. There's like an internal cost stuff. Like what are the kind of, maybe, maybe put another way, If you're gonna roll out one of these changes yourself and internally, what are the kind of key work streams that need to be done in order for you to feel like this is a confident correct decision?

[00:29:28] Giang: Good question. I think, in order for us to reach this, we relied upon our coalition or our broad steerco to bring in the right insights and inform this decision-making. So, you know, maybe one of the first things that we did was really evaluate from the customer perspective, what were the true pain points that customers were feeling, you know, on a regular basis?

[00:29:51] Daily, weekly, we review these voice of customer reports and get a trend of how customers are feeling and what changes they would need in place in order to improve their engagement or to stay with Zapier. Those types of voice of customer comments really inform the changes that we would need to the product, and give us insight into the solutions that we need to bake in.

[00:30:12] And I guess, part of that, we then work really closely with our data and finance teams and product teams to really understand, you know, based on the solutions that we've outlined, what are the trade-offs that we'd be making? What types of sacrifices might we be making from a financial or bottom line perspective as we introduce this change?

[00:30:31] And I think what's really interesting about the 2024 changes is that there were incredible risks and calculations that we went into making these things that really required us to get close to the numbers and feel confident in our decision.

[00:30:45] Scott: How much pre-flight testing did you do? I know at Dropbox, every time we did a major pricing change, we would kind of do tests in certain geographies to just see if it affected utilization metrics. Obviously, we had tens of millions of paying customers, so it was like easy to hit stat sig. But I'm curious in your case, like how much testing or experimentation in the market you did before you felt confident, or was it mostly internal analyses?

[00:31:12] Giang: For this particular change, I'd say that it was mostly internal analyses. There were elements where we would engage some of our, you know, trusted customers for their feedback.

[00:31:22] And we utilize our early access program for that pretty often. But a lot of times, you may not need to experiment if you have true conviction in the change. So, In this particular case for 2024, we knew that we needed to add more value and give more value to our customers, and we felt really strongly about that.

[00:31:41] We didn't necessarily need an experiment to validate that that would be the right move because we believe that getting the customers to use the product more and in giving them more value, would result in the outcomes that we would need.

[00:31:54] And so, we didn't experiment per se with these particular changes or test them out. We certainly modeled them and we understood the risk and the volatility that we'd see in our NRR, and we accepted those risks and, you know, decided to roll with it.

[00:32:09] Scott: Awesome. I would love to kind of talk a little bit about when and how pricing enters the conversation for a new product or a new product launch.

[00:32:22] I think a lot of companies sometimes struggle with how to properly insert the pricing part of a product launch, like when and how early. Some people are like, you gotta do pricing from minute one before you even write the PRFAQ, you gotta be thinking about pricing at that point.

[00:32:42] And some companies are much more like down the line after the product is already kind of like live in some sense. How does that work at Zapier? And what is your recommendation for when pricing and packaging should be brought into the product development process?

[00:32:54] Giang: Yeah, so I think at Zapier, pricing and packaging isn't an afterthought. It's part of our product and go-to-market strategy from the start. And so pricing does engage early because how we price something can directly shape how the customers discover, adopt, and grow with it.

[00:33:12] That said, as we roll out new products, we definitely want to emphasize user adoption and learning, you know, for the customers and for us.

[00:33:21] And so part of that is making sure that we are less aggressive with our pricing and packaging policies with regard to monetization, for example. And really help to encourage commitment so that when we launch something new, it's incredibly accessible, adoption friendly, and there's a low barrier to entry.

[00:33:40] Scott: Very cool. It sounds like in this world that. Almost like individual product managers or product teams are kind of, they're aware of or thinking about the kind of the potential for this new product to kind of contribute to revenue. I guess I. I. Practically, how do you help those product teams understand the kind of existing kind of monetization landscape that they're deploying into?

[00:33:50] Like, I think one just pragmatic question is like, how do you, or how does the pricing team educate the rest of the organization about the way that product monetization works, and in a way that they can actually plug their kind of new product work streams into, or do you rely on the product leaders to kind of do that thinking?

[00:34:06] Giang: Yeah, good question. I think, you know, we have early engagement with our product leaders and provide guidance and consultative efforts to make sure that we're of aligned. You know, I think as you're introducing multiple products, one of the key insights is to also make sure that it's recognizable to our existing base, especially if that's who we think is going to adopt that pricing.

[00:34:29] And so, as much as we can make sure that we're aligned on, again, who the customer is and how they fit in with our existing pricing model, that's super helpful so that we can define a pricing model that isn't straying so far away from that that it's unrecognizable to our customer.

[00:34:46] And so the early days is, again, making sure that we consult with our product leaders, come up with a recommendation together, and make sure that it's aligned closely enough to our existing models.

[00:34:58] Scott: Interesting. Now that I'm thinking about it at the same time that you're launching these new products, you're becoming more of a multi-product company, and that's kind of a famously, I would say, challenging sometimes transition for companies to make, because you've kind of built along this core product and you know how that works. You've gotten it to its logical, maximum, optimal point and now you're introducing new things. Sometimes companies struggle with that transition. Sometimes companies really flourish. How has it gone? And what are some lessons you've learned from that transition that might benefit other folks as they're kind of thinking about becoming more of a multi-product or multi-product family company ?

[00:35:38] Giang: Yeah, so I'd say that, you know, we have launched multiple products in the past year and it's gone great in terms of seeing customers adopt our products and allowing us to learn from their behavior so that we can continue to iterate on, not just our product, but how we price and package it.

[00:35:58] So I think, one of the things that we've done is just really emphasize user adoption and learning in the early days and make sure that our pricing model is fit for that. So, as you can see across, you know, all of our plans in packaging, we encourage freemium. So that allows customers to experience the value early and scale into paid once, you know, they are getting a lot of value from that particular add-on or product.

[00:36:23] I think as we are also in the early days, learning from it, you can see how customers are using the product, whether as a standalone or if it's better together. And in the instances for Zapier tables, interfaces, and Zaps were better together as a trio. And so, selling it as a standalone offering didn't necessarily make sense.

[00:36:43] I think you know, part of this is just making sure that you are building something that encourages user adoption and learning, and then just continuing to iterate and reassess your pricing and packaging over time.

[00:36:55] Scott: Very interesting. The other notable thing, obviously in 2024, most new products are kind of in part enabled by a lot of the work that's happening in AI. Like, basically AI is kind of allowing products to kind of find new ways of providing value for customers.

[00:37:12] Maybe talk a little bit about how AI type of features factor into the pricing part of the equation for you all. How does the fact that these product features are enabled by AI change or augment the way that you're thinking about core product value?

[00:37:27] Giang: Yeah. So really interesting question. And we've, in the short term, taken a very similar approach with our AI features as we have with other new products. And so really thinking about biasing toward adoption over near-term ARR and monetizing off of that.

[00:37:43] And so really with AI products and other products, our goal is to get these tools in the hands of our customers and learn from their real usage. And how that manifests in Zapier is that AI-powered Zaps, for example, are included in all of our paid plans. And then products like AI agents and MCP, Canvas and Chatbots, they all have free and paid tiers.

[00:38:06] And so as we're doing that, we're carefully observing how customers are adopting and valuing these features. And then that data will help us shape future models. I do note that, you know, we are in early days, especially with AI, right? And so we realize that AI is going to fundamentally shift how we define our unit of value, potentially.

[00:38:26] And so we actually do something at Zapier called Zaponomics, where we do a recurring internal exercise to evaluate whether our current pricing metric is still aligned with our goals and principles. And so we'll work with our data, finance and product teams and other teams to really determine if it's time to evolve to something new.

[00:38:47] Scott: That's super interesting and seems like a very healthy exercise, right? Where you're kind of constantly questioning is the value you're providing. What's do you think is the most important primary source on that question, is it like a product opinion? Is it data? Is it customer testimonials? What's the piece of information that you feel like is the most determinative of, like, do the Zaponomics work now?

[00:39:10] Giang: Yeah, great question. I think, you know, Zaponomics is really about finding the right metric that reflects your customer perceived value or outcome. So as you think about all of the different products. How do you also make sure that you're matching , the value metric to the outcome that the customer is perceiving. And additionally, as you're introducing multiple products, how do you also simplify pricing and not make it so complex that they're thinking about different pricing models and metrics as they're making a purchase decision?

[00:39:40] And so that's essentially what we're dealing with as we think about Zaponomics.

[00:39:45] Scott: This is interesting 'cause you're kind of anchoring in how does the customer perceive value? What is the value they're actually getting? At the same time you're adding new products.

[00:39:54] And so those two things feel like, in a sense, they might cause tension within each other. Like, as you have more products, the value equation is now really complex. Do you kind of evaluate the value on a per-product basis? Do you value it on the whole, like what's the value of the bundle?

[00:40:09] Like how are you, especially as you're adding new product lines, how are you keeping the Zaponomics in your head? It seems like it could get complex fast, but I'm curious how you can constrain the complexity.

[00:40:19] Giang: Yeah, I think, you know, part of it is again, really getting close to how the customer is using their product. And, once you understand the specific behaviors on that, that can inform how complex you need to make your model. Or, if you want to have per perhaps a simplified value metric, that can be usable and accommodate multiple products.

[00:40:41] Yeah, I think what's also really interesting, especially for Zapier is that, you know, the outcomes really differ for Zapier products .

[00:40:49] So, you know, I know there's like this market trend of outcome-based pricing for AI products, but that may not necessarily apply so well to Zapier, given the diversity of outcomes possible across our horizontal platform. And so, it's definitely something on our mind as we're producing highly valuable outcomes across our customers.

[00:41:08] But you know, something we haven't necessarily solved for quite yet or need to solve for quite yet, as you know, things are evolving.

[00:41:14] Scott: Super interesting. Yeah, I definitely think with these horizontal platforms, there's like the value can be wildly different across two users that on paper look the same.

[00:41:23] You currently have a good, better, best pricing model, if I understand, like kind of tiered. Have you thought about doing almost like a horizontal skew proliferation where it's different types of users would pay differently because the value they experienced differently? Or is that just too much complexity for the business?

[00:41:41] Giang: Well, I'd say that our tiering model does accommodate particular personas. And a lot of that is based on, you know, if they are a single user or a small business, or if they are a team that is collaborating and working together on automation.

[00:41:55] And so that's naturally how our products are packaged today. That said, I do think, again, as we are evolving our platform, there are other use cases that we may need to solve for, or specific verticals that we may need to solve for. You know, we need to provide some more flexibility there to accommodate those particular scenarios.

[00:42:13] Scott: Very cool. One other theme that like has come through in this conversation is it's very clear that Zapier has an agility or a comfort with trying new things in the pricing and packaging domain. I mean, you have a team that's like really just focused on that, which is awesome.

[00:42:34] What are your recommendations or thoughts on how to run pricing experiments or to think about pricing variation as you're trying to find that optimal place on the energy landscape? What's some advice that you'd have for other companies that maybe aren't as kind of experiment-forward as Zapier?

[00:42:50] Giang: Yeah, I guess I'd say first, don't experiment just for the sake of it. And so every pricing test that we run at Zapier is tied to a clear hypothesis and a defined goal. We're not trying to hit a quota of experiments, but really focus on the ones that matter. And sometimes we'll make decisions without testing if we have enough conviction based on our customer insights, our internal alignment, the data that we have.

[00:43:17] But when we do find that we want to run an experiment. There are, let's say three, you know, best practices that we adhere to. The first is to keep it simple, so really test one clear hypothesis at a time to really make it clear what worked and why, and produce less confusion for the customer with, you know, disjointed experiences.

[00:43:39] Our second best practice is really define the parameters upfront. And so across our experiment teams, we wanna make sure that our stakeholders are aligned on the guardrails, the success metrics, the decision criteria before we launch. And that would make the follow through just so much cleaner.

[00:43:57] And then thirdly, make sure that you're not just looking at a revenue or numbers impact. Really look closely at the customer behavior to understand the why behind the numbers. So those are the three things that we really look for as we frame an experiment. And then once an experiment is in place, document everything.

[00:44:15] So, you know, one practice that we have at Zapier is the result log. And so we track everything that we've tried, what we've learned, and what we would do differently next time. And so that history helps us inform the future decisions that we'd make and save us from repeating dead-end experiments.

[00:44:31] Very cool.

[00:44:33] Scott: Awesome. Well, I want to conclude by talking about my favorite part, which is just the hot takes. So, I'm really curious if you have any pricing and packaging hot takes, maybe opinions that you find you differ with your peers at other companies on, or kind of things that you uniquely believe and or think are like kind of core principles for how to do pricing and packaging?

[00:44:56] Giang: Yeah, you know, there's probably an area that pricing and packaging leaders often underestimate. And so I think that change management and messaging to customers is really pivotal with all pricing and packaging changes.

[00:45:09] So even when a pricing change is a clear win for the customer and you're giving them added value. If it's not clearly communicated, it's going to cause confusion or resistance. So we saw that as an example when we merged our starter and pro plans. And while we gave customers more features at no extra cost, we still saw a spike in support tickets because customers just weren't sure what changed or what it meant for them or how it was a net benefit.

[00:45:36] And so, part of every pricing and packaging change really requires really thoughtful messaging, timing, and iteration. And so that's where we lean really heavily on our product marketing teams, and our pricing and packaging teams to really build in thoughtful rounds of feedback from customers. Review our messaging multiple times, test different framings, and make sure that all of our news requires or has the right storytelling.

[00:46:01] Scott: Because 2024, you kind of brought this concept of like, you're allowed to go over your limit in an additional like pay-per-task way, like, this concept of being very transparent and communicating really well with customers.

[00:46:13] What I find is when you have that variable component in the price, it's even more important to communicate proactively with customers. Did you do anything special in either the product or the rollout to kind of help customers understand, okay, you know, you're used to paying for us at $19.99 a month, now you're still gonna be paying us $19.99 a month, but if you go over, you're gonna pay a variable amount. Like, how did you handle that particular communication 'cause it seems quite nuanced?

[00:46:40] Giang: So I think, you know, part of that effort is to make sure that your messaging is consistent, and repetitive and frequent, right? And so, when we rolled out that change, we allowed customers to understand the implications of that and opt in or opt out of that.

[00:46:57] And then for customers that opted out, making sure that they had enough notification and awareness of their usage was incredibly important.

[00:47:06] And we do that today through many mechanisms, whether it's within the app or through email. And we've also built new tools to supplement that. So one of our efforts in progress is around usage visualization. So, allowing customers to know what they use, or when they're going to be approaching their limits.

[00:47:24] And then what the implications are and the choices are when they exceed so that they have the right calls to actions and the information to make the right decisions for them.

[00:47:33] Scott: Very cool. And actually, one question is that kind of giving customers the ability to almost forecast or give them some amount of predictability, how do you provide that to the internal teams? Because like internal, like a sales or support or success team, like now they need to know kind of where our customer is in their allotment. How do your internal teams get access to that information? Do you have tools for them? Is it living in Salesforce, is it living in some customer dashboard?

[00:47:59] Giang: Yeah, certainly. So we have a really impressive data team and part of the effort is making sure that we enable sales and success and customer support with the right usage data so that they can engage with their customers to provide the right guidance. And so they see everything that the data sees. So the data team sees, and then can have the proactive alerts to have those conversations or to, you know, provide those updates to their customer at the right time, at the right moment.

[00:48:30] Scott: Awesome. And last question is, what is the thing that's happening, the pricing packaging monetization trend in 2025 that you're most excited about and that you're tracking the most closely?

[00:48:43] Giang: Yeah, I think I'm really excited about, you know, the move towards more outcome-based pricing. You know, as I mentioned earlier, Zapier, you know, has multiple outcomes and variability in that. But I'd love to see us get closer there because that really truly equates to how we match value to pricing. And so as I'm thinking about how more companies are doing that, how we think about agent pricing and MCP pricing, how might we get closer to representing the outcome to the customer?

[00:49:12] Scott: Very cool. Any companies in particular that you're watching very closely?

[00:49:15] Giang: All of them.

[00:49:17] Scott: Okay, awesome. Well, I can say for a fact a lot of companies are watching you and so, even though you're watching them there, definitely, I feel like Zapier is leading the trend on a lot of this stuff and really thankful for you jumping on, and I hope you have a great rest of your afternoon and thank you.

[00:49:38] Thanks for tuning into this episode of Unpack Pricing. If you enjoyed it, we really appreciate you sharing it with a friend. We'd also love to hear from you. Feel free to email me at scott@metronome.com with feedback and suggestions for who you'd like to see on our future podcasts..

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