Last March, HubSpot rolled out a new pricing scheme and did something unusual in the process — lowered prices.
We talk a lot about adopting dynamic monetization strategies where businesses adjust offerings based on the current and changing demands of customers. But what if we suggested lowering your prices? Would you dismiss us? Would you stop reading?
Well, that’s the lesson we have today. But, before you click out of this article, give us a minute to explain.
HubSpot eliminated seat minimums for Sales and Service Hubs and added free, unlimited View-Only Seats, making it more affordable for customers to use the platform’s tools and easier to scale their usage. We even celebrated the move when Subscribed Weekly returned that same month.
HubSpot did the unthinkable, some in this community might say. They lowered their prices. That’s bad business, right? Lowering prices diminishes the perceived value of your product or service, erodes profit margins, and risks disrupting the market. What were they thinking?
Au contraire. Instead, something really good happened.
HubSpot’s customer base grew to 238,000, a net increase of 10,000 in Q3 and a 23% boost year-over-year.
“Our pricing strategy is working,” HubSpot CEO Yamini Rangan said during the company’s earnings call in November. “We lowered the seat price to make it easy for customers to get started, and we removed seat minimums to make it easy for customers to upgrade and grow with HubSpot. We made significant progress in driving higher volumes of customers, which is now offsetting expected [average selling price] decline. We’ve also improved our free and Starter tiers to increase conversion rates.”
And this isn’t a fluke. HubSpot projects another net increase of 9,000 to 10,000 customers in Q4. Turns out if you build something that removes friction and makes it easier to use a product or service, the customers will come.
This works for one simple reason: HubSpot is tracking platform activity and paying attention to customer needs and market trends. They’ve adopted a dynamic monetization strategy.
When we talk about dynamic monetization, we’re talking about a strategy that adapts to the full spectrum of market demand. This means following and connecting the dots — understanding the signals from consumers and the market to craft strategies that evolve alongside their changing needs. For businesses to achieve recurring growth, their offerings must align with and continuously adapt to the diverse demands of the market.
Consumers have varying needs, and businesses like HubSpot recognize this. To meet the full spectrum of demand, they offer customers multiple paths to engage, adopt, and grow with their platform. By interpreting the signals from their users and market trends, HubSpot shows us how businesses can effectively tailor their strategies to create value across all segments of demand. This approach is the essence of dynamic monetization — a dynamic, demand-led strategy designed for long-term success.
Hats off, HubSpot!
