Chargebee's Krish Subramanian On SaaS and Value Metrics
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“You need to have a very strong purpose for why you need to do freemium,” said Krish Subramanian, co-founder and chief executive officer of Chargebee.
Founded in 2010, the Chennai-based company offers subscription management services through a software-as-a-services (SaaS) model. Chargebee announced a Series D fundraise of $14 million led by Steadview Capital in August last year. The company claims to be processing over $2 billion of the world’s subscription revenue, and works with thousands of customers across the globe.
In conversation with Prathibha Sastry, Subramanian gives a masterclass about the SaaS billing model and value metrics.
The Freemium Model
When the company first started, like most early stage SaaS companies, they had a very low price point, said Subramanian. “One of the difficulties of the $49 price point for a B2B (business to business) solution is that people don’t take you very seriously.”
To acquire their customers in those days, the company started experimenting with a freemium model. Their idea was to offer a service to a customer for free and once they see the benefits, they would move to a paid tier.
But Chargebee observed that it was attracting customers who used it as a replacement of a pure play invoicing system that was free. The company then closed down that model but Subramanian said he had some interesting learnings from that failure.
“The realization of value happens a little later,” he said.
The company then deliberately increased the price of their product to a premium range and introduced new features to add more value. “We said what if we give them value then we are able to charge later,” said Subramanian.
As a bootstrapped start-up, the company had to keep costs down and that meant learning new ways to market the product.
That’s when he came upon the idea of inbound marketing. “The simplest way to go to different forums, solve problems for them in the absence of chargebee...then I used to sign off saying okay by by the way if you are looking for a system, we are also building one feel free to sign up for a beta.”
Syndicated from The PS Show