Monetization Playbook: Mastering Monetization Strategy 1

In this playbook
03 Meet the experts
41 Understanding monetization models

04 Why should you read this playbook?

44 Transactional models

06 Why should you care about monetization?

49 Subscription and SaaS models

12 What is a monetization strategy?

63 Ad-supported and affiliate models

14 Framework for creating a successful

monetization strategy
69 Best practices to kickstart your company’s
monetization strategy
Four charts to set a monetization baseline with Amplitude

26 Five powerful digital monetization levers 76 Power monetization with Amplitude

Pricing and packaging

Upsell
Cross-sell
Personalization
Experimentation

2
 Meet the experts
Get to know the contributors who graciously shared their monetization expertise for this playbook.
Learn more about these experts.

Kyle Poyar, Operating Partner at Openview and creator of

Alex Simmons, Sr. Customer Success Manager, Amplitude
Growth Unhinged

Brian Cahak, Co-Founder and Managing Partner at Logan Patterson, Global Senior Director of Digital &
Zilker Trail Growth & Innovation MarTech Strategy, Slalom

Derrick Johnson, Enterprise Customer Success Manager, Madhavan Ramanujam, Senior Partner at Simon Kucher,
Amplitude Author of Monetizing Innovation

Elena Verna, Interim Head of Growth, Dropbox, Program Creator Matt Lindsay, CEO of Mather Economics, co-author of How
& Partner, Reforge, and former Head of Growth, Amplitude to Succeed in the Relationship Economy

Heather Roth, Director of Digital Strategy, Slalom Rox Chang, Senior Engagement Manager, Amplitude

Ibrahim Bashir, Vice President of Product Management, Amplitude,

Sam Miller, Lead Strategic Consultant, Braze
and Chief Creative Officer, Run the Business

Monetization Playbook: Mastering Monetization Strategy 3

 Why should you read this playbook?
Chances are your organization focuses a lot on acquiring new customers and keeping existing ones, but what about making money
from—aka monetizing—the users you already have?

Simply put: Monetization is turning what users

ACQUISITION
find valuable about your product into revenue.
Attracting and acquiring
customers
It’s the unloved, oft-avoided third pillar of

ion
growth. Yet, improving how your company
RETENTION

isit
generates revenue from your digital products

qu
is critical. What good is attracting and keeping Keeping customers

Ac
customers if you’re not making money?
MONETIZATION
Though most people think of pricing and Making money from customers
packaging, there’s much more to monetization.
Cross-selling and upselling products, GROWTH
offering new payment methods or structures,

Re
redesigning your checkout experience, and

ten
launching rewards programs are all examples

tio
of monetization initiatives that you might Monetization

n
pursue to grow, retain, or sustain revenue.

Monetization Playbook: Mastering Monetization Strategy 4

 This playbook provides a framework for creating a successful monetization strategy, including:

• How to connect your digital product strategy to revenue outcomes.

• Understanding, measuring, and improving the most common digital product monetization models:

- Transactional

- Subscription and software as a service (SaaS)

- Ad-supported

- Affiliate and referral

• Key strategies and tactics to consider during monetization:

- Pricing and packaging

- Free-to-paid and freemium

- Cross-sell and upsell

- Experimentation

- Personalization

Determining your next steps to prioritize monetization in your organization.

• 

Read on to jumpstart your monetization efforts.

Throughout this playbook, we’ll reference several worksheets that

walk you through activities designed to improve monetization.
GET WORKSHEETS

Monetization Playbook: Mastering Monetization Strategy 5

 CHAPTER 01

Why should you care about

monetization?
The internet is rife with resources related to acquisition and retention, and in talking to customers, it’s clear that most
organizations prioritize these activities over monetization.

Most companies invest heavily in building Leaders expect their digital products to
Monetization is the outcome
digital experiences and getting customers contribute to revenue, and there’s big money
of building enough value in
in the door. Still, many wait too long to to be made. In a 2023 research brief, IDC
understand the most critical aspect of their predicted that “by 2026, 40% of total revenue the minds of your customers
digital product: How it increases revenue. for Global 2000 organizations will come from at the point when they’re
digital experiences, products, and services. in market. It’s built on
If this sounds like you, you might be leaving
Further, 85% of respondents in IDC's 2022
money on the table.
meaningful engagement
Worldwide CEO Survey stated that digital
across the lifecycle—it doesn't
capabilities are a strategic differentiator and
revenue accelerator for their firms.”1 just happen on its own.

Despite this opportunity, many organizations SA M MIL L E R

TERMS TO KNOW
struggle with three common monetization Lead Strategic Consultant, Braze
Acquisition: The process by which challenges.
businesses add new users

Retention: When users return to your

product as a result of activation and
engagement

Monetization: The process of

transforming the value users derive from
your product into revenue 6
 When it comes to the
opportunity for monetization,
I think we’re just scratching
the surface. It’s an extremely
innovative space and should be
treated as such.
LO GA N PAT T E RSO N
Global Senior Director of Digital and
MarTech Strategy, Slalom

Monetization Playbook: Mastering Monetization Strategy 7

CHAPTER 01 Why should you care about monetization?

Common monetization different platforms; revenue or transaction

When I say product teams
challenges data lives in a separate silo from analytics,
need to connect their work to
and product and marketing teams function
1. Product leaders struggle to connect independently with separate technologies. revenue, people get stressed.
their work to revenue
They think that connecting to
Given their roles, product managers tend to The result?
revenue means revenue has
focus more on user experience than revenue.
However, modern B2B product teams are
Monetization decisions are often delayed or to become their goal and that
avoided due to low confidence or incomplete
increasingly close to deal cycles. They’re they have to generate dollars.
data. The good news is that system and data
regularly pulled into customer conversations
silos are typically a result of circumstance
to help drive wins and prevent churn—so it In B2B, revenue is a function
rather than intentional design, and you can
makes sense for them to own a piece of the
bridge them with effective cross-functional of the demand pipeline and
revenue pie.
collaboration and alignment. sales execution, so product
Often, product managers struggle with this teams have little control over
“When it comes to bridging data previously
idea because they think they’re being tasked
siloed,” shares Logan Patterson, Global Senior
it. Understandably, product
with generating net new revenue. However,
Director of Digital and MarTech Strategy at teams desire to disconnect
this playbook will explore two other important
Slalom, “I like to start by defining the potential from revenue and focus on
revenue generation levers that product
value unlocked via breaking down those silos, increasing user value. But
teams can tangibly relate to—preserving and
and really getting to the ‘what’s in it for me’ for
sustaining revenue. product teams do have to
each of the stakeholders.”
2. Siloed data makes it hard to get a
show how their work connects
complete picture
He continues, “Unless we discover a to revenue to ensure they’re
compelling reason to keep data siloed, either
aligned with what the rest of
For leaders measuring their monetization the leaders will agree the new revenue stream
the company is doing.2
initiatives, overcoming data silos is challenging. is more valuable for the company when those
Effective monetization requires a holistic silos are broken down, or we are talking to the
view of your entire customer journey, from wrong level of stakeholders and need to seek IBRA H IM BAS H IR
VP of Product, Amplitude
awareness and acquisition to in-product leaders at a level of the organization seeking to
behavior and customer retention. Still, in create the most value for the enterprise via top
most organizations, this data is spread across and bottom-line growth.”

Monetization Playbook: Mastering Monetization Strategy 8

CHAPTER 01 Why should you care about monetization?

Bridging data silos

Data silos are a surmountable challenge. on the next page). You can easily connect data order value for shoppers buying baby toys?”
Today’s best analytics platforms enable from external sources to Amplitude. Customers using cart analysis or, “What was last month’s
you to integrate data from disparate often integrate other platforms like Salesforce average revenue per user?” with the revenue
sources to get a complete picture and for CRM, RevenueCat for subscription lifetime value (LTV) chart.
prove the ROI of your monetization management, or Snowflake for revenue data
initiatives. stored in the data warehouse. 4. Ensure proper governance and access
controls. Revenue-related data can be quite
Here are some of the best practices 3. Unlock revenue-related analysis. Amplitude sensitive, so collaborating with compliance,
Amplitude Senior Engagement Manager enables you to capture revenue-related legal, and IT is a best practice to ensure you
Rox Chang recommends to customers to data, with a few formatting and property have the right controls. For example, you might
ensure they have the right data to improve requirements detailed in our Help Center. set up a separate project in Amplitude with
and execute their monetization strategy. Once you implement that data, you can get sensitive financial data and restrict the project
insights on questions like, “What’s the average access to a few approved users.
1. Start with business value and align
your taxonomy. When implementing
your digital analytics platform, ensure
your desired monetization outcomes
and business questions align with your
taxonomy. Use case tracking templates,
like this one for media companies, can
help you proactively plan. For example, if
you want to answer the question, “Which
CTAs are most effective for getting users
to sign up for a free trial?” then you can
plan to track events like “CTA clicked”
and“Free trial started.”

2. Understand where your data lives

today. In addition to the behavioral data
you track via digital analytics, you’ll want
to connect the right level of revenue,
sales, and transaction data into your
digital analytics platform (see the table
An example use case tracking template for media companies to align business value to taxonomy.

9
 O data, where art thou?
Vital monetization data often spans multiple platforms and tools. Understanding which data directly informs your monetization strategy and where it resides in your
organization is crucial.

CATEGORY TYPE COMMON SOURCE

Customer data Sociodemographic CRM, CDP, or third-party datasets

Social network and relations Third-party datasets, data warehouse, or data lake

Location CDP, digital analytics, data warehouse, or data lake

Behavioral data Digital product interaction and usage CDP, digital analytics, data warehouse, or data lake

Purchasing behaviors CDP, digital analytics, data warehouse, data lake, or ERP

Platform, device, and channel preferences CDP, digital analytics, data warehouse, or data lake

Company data Company performance, financials ERP, accounting software, or spreadsheets

Transaction, payments data ERP, accounting software, payments platforms

Subscription, recurring revenue data Accounting software, subscription management platforms

Customer base CRM

Competitive position Internal documentation and research

Governance, risk, and compliance GRC tools, internal documentation

Industry data Industry dynamics Internal documentation and research, third-party datasets (often via
data warehouse or data lake)

Supply chain ERP, supply chain management

CRM—customer relationship management CDP—customer data platform ERP—enterprise resource planning GRC—Governance, risk, and compliance

Monetization Playbook: Mastering Monetization Strategy 10

CHAPTER 01 Why should you care about monetization?

3. High perceived risk every bit of margin counts toward achieving

sustainable growth—making now the perfect
Tweaking acquisition and retention strategies
time to focus on monetization.
often feels safer and more straightforward
than making changes to pricing and packaging.
However, as we’ll explore, there are various
levers to pull in your monetization strategy.
It is very difficult to
Our goal is that this playbook helps you better make monetization
understand these monetization levers—beyond model changes
pricing and packaging—to eliminate perceived
risk and increase your confidence.
because there is so
much inertia and
Though “money talks,” talking about money—
internally and especially with customers—can
perceived risk with
feel scary. From initial contract negotiations disrupting what has
to price changes, many companies don’t been working so far.
want to risk upsetting customers. So, instead,
they stick with unoptimized, unsustainable HEAR MORE
monetization models until it’s too late. Then
A N DREA WA N G
they’re forced to make such drastic, do-or-die Partner at Catalyst and former Principal
Product Manager at Amplitude
changes that not upsetting the customer's
apple cart is no longer an option.

Lastly, opinions abound regarding Take action

monetization, especially across organizational Before diving headfirst into monetization, take
functions. The more stakeholders involved, a moment to reflect on your current state.
the more tangled and complicated making Consider the challenges we just explored.
monetization changes becomes. This
• Which resonates the most with your team?
complexity can lead to inertia.
• What small actions can you take to break
However, with an increasingly competitive the cycle of inertia?
digital landscape and volatile markets,

Monetization Playbook: Mastering Monetization Strategy 11

 CHAPTER 02

What is a monetization strategy?

A strategy doesn’t have to be big, complicated, or fancy. Simply put, your monetization strategy defines how your digital product
generates revenue.

But while the goal is to increase revenue, you Experiencing value: Are your users getting real
want to do it the right way—with user value at value from your product?
the heart.
Understanding value: Do your users
understand the value you’re providing?
In the past, many organizations pushed

n
itio
“growth at all costs” to grab a bigger slice Differentiation: Is your product unique enough

is
qu
of the market without worrying about the to charge a premium or valuable enough that

Ac
value those additional users would bring. people will complain if you paywall it?
However, there’s been a shift to value-fueled,
Though this playbook specifically tackles
sustainable growth that creates healthy
monetization strategy, it’s inextricably tied to GROWTH
businesses.
your overall growth strategy, which includes

Re
Monetization comes down to delivering real acquisition and retention. These three together

ten
tio
value that users recognize, and your strategy form a perfect product growth pyramid and Monetization

n
will help you address the following three areas: depend heavily on each other for success.

Monetization Playbook: Mastering Monetization Strategy 12

CHAPTER 02 What is a monetization strategy?

As we said earlier, acquiring and keeping users

is fruitless if you’re not making money—but the
converse is also true.

Without effective acquisition and retention

strategies to ensure you 1) have acquired
enough of the right users and 2) demonstrate
enough value to keep them engaged,
monetization bets will always underperform.

Let’s explore the foundation for a solid

monetization strategy.

PRO TIP
Need to fine-tune your acquisition strategy?
Struggling with customer retention?
Check out these playbooks for in-depth,
actionable guidance to develop the best
strategy for your business.

Mastering Customer Acquisition Strategy

Mastering Customer Retention Strategy

Mastering User Retention Playbook: Customer Retention Strategies 13

CHAPTER 03

Framework for creating a successful

monetization strategy
At Amplitude, we believe a strong monetization strategy should consider three key pillars that correspond to the three main
business outcomes organizations look to improve:

Make revenue—user growth and Growth Retention Margins

1 (making revenue) (preserving revenue) (sustaining revenue)
distribution

2 Preserve revenue—user retention

user
growth and revenue customer revenue product service
growth retention retention pricing costs
3 Sustain revenue—margins distribution

Framework by Ibrahim Bashir, VP of Product and author of the "Run the Business"

14
CHAPTER 03 Framework for creating a successful monetization strategy

• How are you currently distributing your

1. Making revenue—user 3. Sustaining revenue—
product?
growth and distribution margins
For many, the monetization journey begins • Which distributions are most successful Generating and preserving revenue doesn’t
and ends with the most apparent aspects— and why? help if your margins are unsustainable. The two
filling the revenue bucket via tactics like deal • What are you doing today to activate main ways to improve margins are charging
closures or expanding the monetizable user your free or trial user base for eventual more or reducing costs to serve customers
base. However, customers and users vary monetization? more efficiently.
widely, from paying subscribers to those on
Unoptimized pricing, packaging, and
free trials, each representing different values.
Therefore, the focus should not just be on
2. Preserving revenue— discounting are common culprits for

acquisition quantity and method but also on

retention undermining your margins. However, less
Our Mastering User Retention Playbook talks apparent offenders include your free-to-paid
effective activation strategies for revenue
in-depth about the concept of the leaky model. If your free version meets all your
generation.
bucket—it doesn’t matter how many users you customer’s perceived needs and you don’t
Monetization isn't just a strategy; it's often a add to your bucket if they don’t stick around. effectively create demand or showcase the
competitive edge. Tactics like smart pricing, Every customer and user who abandons your value of paid features, they’re less likely to
well-designed trial periods, and leveraging platform, cancels their subscription, or fails to convert to paying customers.
product-led growth (PLG) to showcase paid make a repeat purchase takes their current and
The other way to make money is to save money
features can be pivotal. The goal isn’t just potential revenue with them.
by finding inefficiency in your service costs
attracting new paying customers but elevating
That’s why retention and preserving your or identifying wasteful marketing channels.
overall net revenue.
existing revenue is so necessary. Consider the Analytics tools enable you to track the
Key activation aspects to consider include: following questions: performance of different marketing channels
relative to your expenses to optimize spend. As
• What segments are you currently pursuing? • What is your average customer tenure?
we’ll explore later, experimentation can help
• Are there new audiences you’re overlooking • What are the critical events that increase the you identify which channels and tactics to use
that you should go after? likelihood of retention? with different segments.
• What’s your customer acquisition cost (CAC) • What does your customer lifecycle look like
by acquisition source or campaign? across segments and cohorts?

• How often do they buy from you?

Monetization Playbook: Mastering Monetization Strategy 15

CHAPTER 03 Framework for creating a successful monetization strategy

When thinking about sustaining revenue, In a very simple company, people will just say, ‘Build a product that
consider the following:
makes money,’ but the reality is that what the product is going to do over
• What is your pricing strategy? Is it based a multi-quarter horizon is drive up one of the three key pillars—make,
on consumption, number of licenses, preserve, or sustain revenue. So if you’re a product team and you’re
outputs, etc.?
tasked with a growth number, translate that to the levers that you can
• How much does your customer spend per actually move.
transaction on average?
IBRA H IM BASH IR
We will dive deep into pricing and packaging Vice President of Product Management, Amplitude, and Chief Creative Officer, Run the Business
strategies later in the playbook.

DO I T I N A MP L IT U D E

With Amplitude, you can track the performance

of different marketing channels in the context
of your traffic’s lifetime value. The result? More
informed, long-term decisions.

For example, you might see that your lower-

cost campaign is driving more revenue than
your high-cost campaign—tempting you to cut
the latter to save money. However, looking at
average order value (AOV), you might see that
your more expensive lead sources are actually
converting and spending more money in the
long run.

This data table compares conversions, total revenue, and average order value across marketing channels.

16
CHAPTER 03 Framework for creating a successful monetization strategy

TERM TO KNOW
North Star metric
Start with a top-level business However, the top-level goal can feel daunting A North Star metric is a single critical

goal and make it tangible and abstract to individual team members. That’s rate, count, or ratio that represents your
product strategy. This metric is a leading
why we recommend breaking the goal down into
The best monetization strategies align with indicator that defines the relationship
discrete levers or North Star metrics each team
between the customer problems the
an organizational goal tied to one of these can own to contribute to that goal.
product team is trying to solve and
three business outcomes—making, preserving,
sustainable, long-term business results.
or sustaining revenue. Doing so helps align In the visual below, the smaller sticky notes
functional groups and promote a common represent key metrics, like user mix, click-
understanding of monetization goals. An through rate (CTR), monthly recurring revenue
GET THE NORTH
example organizational goal might be to (MRR), etc. that contribute to larger business STAR PLAYBOOK
increase revenue by 10%. outcomes.

AU: Active users

Growth Retention Margins NPS: Net promoter score
(making revenue) (preserving revenue) (sustaining revenue)
CTR: Click through rate
ARR: Annual recurring revenue
MRR: Monthly recurring revenue

user NRR: Non-recurring revenue

growth and revenue customer revenue product service
distribution growth retention retention pricing costs LTV: Lifetime value
CSAT: Customer satisfaction
GDR: Gross dollar retention
Contract $ $tizable
*AU NPS ARR MRR LTV GDR NDR CAC CapEx
length Gating accounts
NDR: Net dollar retention

User Page Multi Time to Time to

ACV: Average contract value
NRR ACV Churn Cross sell Up sell OpEx
mix visits SKU deploy value
CAC: Customer acquisition cost
App Partner OpEx: Operating expenditures
CTR CSAT Downsell Downsell Pro serv
installs revenue
CapEx: Capital expenditures

Framework by Ibrahim Bashir, VP of Product and author of the "Run the Business"3

Monetization Playbook: Mastering Monetization Strategy 17

CHAPTER 03 Framework for creating a successful monetization strategy

For example, let’s say your company is a

travel booking site for families, and one
of your organizational goals is to increase
the percentage of revenue from repeat
customers by 30%.

Analyzing and comparing cohorts, the team

has identified the common characteristics of
repeat car renters in particular. Users who
edit their profile, receive price alerts, and
view daily deal recommendations are more
likely to book a car rental two or more times.

With this knowledge, your team can work

backward from the 30% goal and task
individual functions with specific local
metrics.

These discrete goals give your teams

tactical, tangible marching orders. If This personas chart shows clusters of users with similar behaviors who rented cars two or more times.
they positively move these metrics, the
organization should increase revenue from
repeat customers by 30%. BUSINESS OUTCOME Make revenue

GOAL Increase the percentage of revenue from repeat customers

by 30%

NORTH STAR • Increase profile completion—Product team

METRICS AND • Increase price alert signups—Growth team
CORRESPONDING
• Increase customized searches—Product team
TEAMS
• Increase signups for daily deal emails–Growth and marketing teams

Monetization Playbook: Mastering Monetization Strategy 18

CHAPTER 03 Framework for creating a successful monetization strategy

support, a named CSM, customized reporting Each stage of company growth: As

• 
Three business outcomes—
and insights, or an uptime SLA. You’ll want to your company evolves, so should your
all about value measure the breadth of perceived value (i.e., monetization strategy.
When it comes to monetization, particularly What percentage of your customers want to
When developing new products or services:
• 
pricing, the most successful companies start buy it?) as well as the depth of perceived value
Don’t develop a new product or feature and
by understanding the customer value delivered (i.e., Among folks who want it, how much is it
then figure out how to monetize. Best-
and matching it to their willingness to pay. worth to them?).”6
in-class product organizations use their
Growth expert Elena Verna says, “Price has to You can think about friction as anything monetization strategy to guide investment,
be less than perceived value minus friction.” 4 that might act as an obstacle to customer innovation, and roadmap decisions and avoid
conversion. Friction might be tangible, like creating unprofitable products.
budget, or intangible, like time and effort. We’ll
Price < Perceived value - friction When growth stalls or is uncertain: A fresh
• 
explore friction in more depth when discussing
approach to monetization can help breathe
optimizing your conversion funnel and path to
new life into a tired or stagnant category.
A deep understanding of value and friction is purchase.
critical to successful monetization and requires
robust product and customer experience Monetization is the core
analytics. When should you work on component of your growth
monetization? model... [But] we set
According to industry influencer and OpenView
Operating Partner Kyle Poyar, companies The short answer: now and always. and forget monetization
Unfortunately, many product and marketing
should stop guessing at their customers’ strategies. If you have not
preferences and willingness to pay and just ask leaders treat monetization as a single point-
in-time activity at product launch. Though
iterated, explored, and
them.
it’s easy for us to say you should “always evolved your monetization
“You can quantify the perceived value of your be monetizing,” we also understand that strategy in the last year, in
existing and roadmap features through ongoing monetization is just one of your many the last three months,
willingness-to-pay surveys,” he explains. responsibilities. That’s why, at minimum, we you’re falling behind.7
5

recommend evaluating your monetization

“When running these surveys, consider your
strategy at the following times: E L E N A VE RN A
capabilities broadly and include things that Interim Head of Growth, Dropbox,
Program Creator & Partner, Reforge, and
you might already offer as a one-off, like 24x7 former Head of Growth, Amplitude

Monetization Playbook: Mastering Monetization Strategy 19

CHAPTER 03 Framework for creating a successful monetization strategy

Take action INDUSTRY ANECDOTE

How comfortable do you feel with the three pillars of monetization—making, preserving, and retaining Real-life example:
revenue? Challenge your product and go-to-market teams to think through the questions we covered to Michelin tires8
identify strengths and areas of opportunity. This case study is featured in the book Monetizing
Innovation authored by Madhavan Ramanujam
and George Tacke of Simon-Kucher.

MAKING • What segments are you currently pursuing?

Like most consumer hard goods, the tire
REVENUE
• Are there new audiences you’re overlooking that you should go after? industry has long been cut and dry: need

• What’s your customer acquisition cost (CAC) by acquisition source or new tires, buy new tires, don’t think about
campaign? tires again until you need new ones. So,
it’s no surprise that in a price-sensitive,
• How are you currently distributing your product?
commoditized market, tire manufacturers
• Which distributions are most successful and why? have typically struggled to charge premium
• What are we doing today to activate our free or trial user base for prices for safer, more innovative products.
eventual monetization? When Michelin was launching a stronger,
significantly longer-lasting product, they
recognized they couldn’t follow a traditional
pricing approach of charging by the tire—
PRESERVING • What is your average customer tenure?
REVENUE charging a higher price (because the tires
• What are the critical events that increase the likelihood of retention?
would last longer) would likely have been met
• What does your customer lifecycle look like across segments and with resistance, but setting an acceptable
cohorts? price to customers wouldn’t have covered

• How often do they buy from you? their margins and would cannibalize
existing business.

For that reason, Michelin introduced a pay-

as-you-go model in which truck drivers pay
SUSTAINING • What is your pricing strategy? Is it based on consumption, number of
by the miles driven. It’s been a win-win for
REVENUE licenses, outputs, etc.?
drivers and Michelin that’s flipped a tired
• How much does your customer spend per transaction on average? category on its head and challenged other
hard-good manufacturers to think differently
about monetization.9

20
 DO I T I N A MP L IT U D E

Four charts to set a Discover your conversion path with journeys

monetization baseline with The first step in measuring your current monetization is ensuring you have a definitive picture of what
Amplitude your path to purchase—or other revenue-related event—looks like. Depending on your product, this
Because of monetization’s multifaceted path may only have two steps, or it may have many steps.
nature, no single chart or analysis will provide
In this example, we can start with a journey map from Amplitude's journeys chart type and look at
all the insights you need for your company’s
paths between “Main Landing” and “Complete Purchase.”
monetization strategy. But even just a few
analyses in Amplitude will help you capture It becomes apparent that three of the top paths include “Search for Items,” which signals how
and monitor baseline metrics for your current important search functionality is to the online shopping experience in this case.
monetization performance and understand
how your customer journey connects to
revenue outcomes.

Monetization Playbook: Mastering Monetization Strategy 21

DO I T I N AM P LI T U D E

Measure your conversion rate with funnel analysis

Once we know our conversion path, we can measure our conversion rate In this example, we use a funnel analysis chart that shows the conversion
using a funnel analysis chart. Conversion rate is a classic KPI for a reason— rate of ecommerce customers who complete the path from “View Item
it’s essential to understanding how well your business gets customers to Details” to “Add to Cart” to “Compete Purchase” and see that this flow’s
perform a desired action. In the following chapters, we’ll review different total conversion is 16.4%.
monetization conversion rates, such as sales and trial conversion rates.

Monetization Playbook: Mastering Monetization Strategy 22

DO I T I N AM P LI T U D E

Track revenue per user with segmentation charts

You can measure different revenue per user metrics in Amplitude, such In this first example, we can use a segmentation chart to measure AOV
as average order value (AOV), average revenue per paying user (ARPPU), following these steps:

average revenue per user (ARPU), monthly recurring revenue (MRR), or 1. Select the event “Complete Purchase.”
non-recurring revenue (NRR) using basic segmentation charts with custom 2. Select “Average of Property Value” under “Measured as” on the left.
formulas. However, the method for calculating each metric in Amplitude 3. Select “$revenue” as the property to take an average of.
will be unique to your organization and dependent upon the revenue events 4. Select “Average Values” for the takeaway metric.
and properties you have instrumented. 5. View the result: AOV for the last 30 days is $81.70.

Monetization Playbook: Mastering Monetization Strategy 23

DO I T I N AM P LI T U D E

Let’s also look at how to use a segmentation chart to track MRR: 3. Select “$revenue” as the property to take an average of.

1. Select the custom event “Renewal or Upgrade,” which tracks when 4. Select “Overall Value” as the takeaway metric and “30d” as the date
someone starts or renews a paid subscription. range to show the last 30 days.

2. Select “Sum of Property Value” under “Measured as” on the left. 5. View the result: Current MRR is $533K.

Monetization Playbook: Mastering Monetization Strategy 24

DO I T I N AM P LI T U D E

Track new user monetization with

revenue LTV charts

Analyzing new users reveals the latest

monetization trends and measures the
efficiency of converting newly acquired users
into paying customers. The revenue LTV chart in
Amplitude provides an out-of-the-box analysis
to specifically understand monetization for
users new to Amplitude during the timeframe
of your analysis. It can track total revenue, new
paying users, ARPU, and ARPPU.

For this example, let’s use the revenue LTV chart

to look at ARPU for the last 30 days for overall
new users vs. new users that have joined the
loyalty program. We’ve selected the default
“Any Revenue Event” with the “$revenue”
property,” measured as “ARPU.”

We can see that the day 29 ARPU for overall

new users is $59.31. For new loyalty program
members, it’s $223—quite a bit higher—showing
the increased value of customers joining the
loyalty program early on.

Monetization Playbook: Mastering Monetization Strategy 25

 CHAPTER 04

Five powerful digital monetization levers

Before we go in-depth on different monetization models, let’s explore the fundamentals of the levers used across models. We will
also dive deeper into these tactics in the context of each model in their respective chapters.

1. Pricing and packaging 4. Personalization

Pricing can make or
2. Upsell 5. Experimentation
3. Cross-sell
break your business.
Price too low and
1. Pricing and packaging There are various strategies, techniques,
and tactics that you can use to optimize your you’re losing out on
Companies spend countless hours trying to
crack the code on pricing, packaging, and
pricing. In this playbook, we’ll explore three valuable revenue.
key levers companies can tinker with, covering
licensing—and for good reason. Challenges and
missteps related to monetization contribute to
the first two now and the third—licensing Price too high and
the 72% failure rate for innovations.10
techniques—in the chapter on subscription and
customers might
SaaS monetization models.
Whether you’re an ecommerce retailer, a B2B Price-setting strategies to determine what
• 
turn to a cheaper
software company, a consumer mobile app,
or a digital media platform, determining what
you should charge. competitor or build
and how to charge for your product or service
Packaging and bundling techniques to
• 
their own solution.11
determine what to include in your price.
is critical.
Licensing techniques to determine how you
•  KYL E POYA R
Operating Partner at Openview and creator
will charge for your product or service. (see of Growth Unhinged
Chapter 7)

Monetization Playbook: Mastering Monetization Strategy 26

CHAPTER 04 Five powerful digital monetization levers

Pricing strategies
The price point you set for your product or service can impact how quickly you gain market share, how
customers perceive the worth of your product, and how quickly you generate revenue. Below you’ll see
common pricing strategies used by companies across industries.

We recommended using the pricing strategy that best aligns with your overall business goals, market,
and target segment.

PRICING DESCRIPTION EXAMPLE

STRATEGY

Penetration Set a low initial price to gain market Amazon's ecommerce business
pricing share, then increase price

Price Set a high initial price, then lower Apple's new iPhone releases
skimming over time as you release new models

Price Balance between penetration and Microsoft's market approach

maximization skimming, focusing on maximizing
revenue in a short period

Targeted Charge different prices based Usage-based pricing in SaaS

pricing on customer behavior and companies
characteristics

Monetization Playbook: Mastering Monetization Strategy 27

CHAPTER 04 Five powerful digital monetization levers

Packaging and bundling techniques

Packages and bundles determine what to Pricing insights from Madhavan Ramanujum
include in your price or product offer. Like
upsell and cross-sell, packages and bundles Madhavan Ramanujum is a leading expert on pricing for a good
are often mistakenly used interchangeably. reason. As a senior partner at Simon Kucher, he’s led over 200
monetization projects for companies of all sizes, from Fortune 500s
However, while they both enable you to
to startups, helping bring numerous new products to market. As the
combine multiple items, there are nuanced
co-author of Monetizing Innovation, his insights are endless, but
differences. here are some top takeaways from our conversations with him.

Understand customer value and talk to

1.  3. Focus on your pricing model first. The
customers about willingness to pay. “A liter pricing model you choose is critical and
is a measure of volume. Price is a measure of should precede any price-level decisions.
TERMS TO KNOW
value.” Unfortunately, too many companies This approach focuses on how you charge,
A package includes one or more spend years developing innovation without not just how much.
components, like products, specific doing the research to understand if they
product features, or services, with have a product-market-pricing fit or whether 4. Tailor products for different segments.
a single SKU, price, and line item there is a willingness to pay. Madhavan Successful monetization requires
emphasizes the importance of early products tailored for different customer
on an invoice or shopping cart.
discussions about pricing—even before segments from the outset—rather than
A bundle is a collection of building your product— and encourages you adopting a one-size-fits-all approach and
components, like products or to understand customer value perceptions trying to adapt the product to various
even packages, that are priced rather than fixating on initial pricing. segments.
individually but sold together. Each
component has its own line item Build and keep a less expensive alternative
2.  5. Consider at least three non-pricing
but may be priced differently when in your back pocket. Consider creating a actions before reducing price. Before
purchased together in a bundle less expensive alternative of your product considering price reductions to close a
that you can offer customers at risk of deal or respond to competition, explore at
than if they were purchased
churning— especially during economic least three non-pricing strategies you can
separately. For example, Amazon
downturns. This involves strategically take instead. For example, can you give
Prime includes its streaming
reducing features rather than just lowering customers a higher-end product at the
package in its subscription to bring
prices, helping maintain value perception. same price?
visibility to the offering.

Monetization Playbook: Mastering Monetization Strategy 28

CHAPTER 04 Five powerful digital monetization levers

With bundles, customers can typically choose coffee—they just sell it as a stand-alone add-on TERMS TO KNOW
between different components to get an offering or in an Egg McMuffin bundle.
People often talk about upsell and
that makes the most sense for them at a lower
cross-sell in the same breath, so
cost. According to Madhavan, every bundle has it’s no surprise that many confuse
a lead or anchor product and filler or secondary 2. & 3. Upsell and cross-sell and blur the lines between them.
products. 12 We often talk about how retaining existing They are, however, different.
customers is easier and more cost-effective
Upsell: Encourages customers to
B2B and B2C companies across all industries than attracting new ones, and this extends
purchase a higher-value version
use packaging and bundling to sell more to upselling and cross-selling as well. Most of what they're already buying.
products that customers might not otherwise successful growth companies generate 80% Example: A cable provider offers
immediately buy. They present the opportunity of their value by unlocking new revenue from a premium package with more
to highlight new or underused features or existing customers in their core business.14 channels to a basic package
products by combining them with more popular subscriber.
Both techniques boil down to one key concept:
offerings. If a certain feature is unavailable
understanding the key behaviors that make Cross-sell: Involves promoting
outside the bundle, a customer could be complementary products to
customers good candidates for upselling and
motivated to spend more than anticipated. customers. Example: Selling
cross-selling. This framework, coupled with
toothpaste or mouthwash
However, effective bundling requires a good analytics, can help you identify those behaviors alongside a toothbrush purchase.
understanding of customer preferences and target customers accordingly:
and needs. Leading companies ensure that
customers see the value of the additional Framework for upselling
bundled features. Without a clear understanding and cross-selling
of your customer preferences, it’s also possible
1. Analyze your customers and their behavior 2. Analyze your most valuable product
to inadvertently add something to the offering
to identify upsell opportunities. combinations across audience segments to
that effectively kills the bundle.
• What behaviors correlate to customers discover new cross-sell opportunities.
In a podcast episode with Lenny Rachitsky, who’ve upgraded to a higher-tier product? • Which categories go well together?
Madhavan uses McDonald’s Big Mac meal Which lower-tier customers also have
• Which items are customers organically
as a classic bundle.13 The Big Mac is your those behaviors?
buying together?
lead, with soda and fries as your fillers. But if •  Which customers are running into
• Which items go well together?
McDonald’s were to bundle a coffee alongside consumption limits on their current plans?
the burger and fries, that might kill the bundle. • Which categories correspond to the
• Can customers discover and
That doesn’t mean McDonald’s shouldn’t sell highest average order value (AOV)?
understand the value of features gated for
higher-tier plans?

Monetization Playbook: Mastering Monetization Strategy 29

CHAPTER 04 Five powerful digital monetization levers

3. Experiment to uncover and capture

Successful cross-selling and upselling is about recognizing
urgency around moments when item
recommendations are the most desirable— the signals when customers are in market, making it more
and avoid times when they’re the most compelling at that moment, and triggering messaging and
off-putting.
delivering purchase campaigns. We shouldn’t be thinking
4. Use these insights to scale personalization.
Personalization is the ability to tailor about it on our schedule but on their schedule. Not just when
customer content, experiences, and pricing it’s right for us, but when it’s right for the customer.
to the user's exact needs, as opposed to
SA M MILLER
taking a generic approach where you treat
Lead Strategic Consultant, Braze
every customer the same. In practice,
companies leverage personalization to
increase average order volumes, as well as
repeat purchases in a variety of ways:
4. Personalization Effective personalization at scale demands
collaboration between product, marketing,
Personalization is key to acquisition, retention,
Offering rewards and exclusive deals
•  and engineering teams, utilizing data from
and monetization in all industries, offering
tailored to a user's specific interests the entire customer journey, from marketing
endless opportunities across the customer
using past purchase data.
engagement to in-product behavior.
journey—including marketing, in-product
Making product recommendations
• 
experiences, and even pricing. McKinsey's
relevant to the individual consumer based Logan Patterson points out the challenges
research highlights its importance, noting
on their demographics and history. marketing teams face related to having the
that 71% of consumers expect personalized
right data to understand asset performance
Creating subscriptions tailored to the
•  interactions, and 76% are frustrated when
across media channels—crucial for effective
needs and interests of a unique customer.
it's absent.15 This lack of personalization can
content and message personalization.
Pushing personalized notifications on
•  significantly affect revenue across all customer
mobile apps that speak to the specific stages. “We’re seeing a lot of interconnection
needs of each user, delivered at the most happening now to try and tie more of that
relevant time for the user. Historically, the automation of 1:1 experiences
together via data, even down to the metadata
was challenging due to the need for
you’re tagging your assets with, how you’re
Chapter 7 explores using land and expand
sophisticated identity resolution, machine
strategies to optimize subscription and SaaS activating the asset in your media plan, and
learning for messaging, and real-time delivery.
upsell and cross-sell efforts. then tying that through to every purchase,”
he explains.

Monetization Playbook: Mastering Monetization Strategy 30

CHAPTER 04 Five powerful digital monetization levers

Slalom Director of Digital Strategy Heather

Roth goes on to elaborate further. “I
think especially with the onset of cookie Take the next step in personalization
deprecation, people are being forced to really
think more about their strategy when it comes 1:1
Predictive
to data ownership and use.” predicted behavior, predicted spend,
recommendations
where organizations
Personalization tactics get stuck
1:Few
Effective personalization goes beyond simple

��)
Behavioral

Impact ($ +
demographics, a common misstep for many frequency, purchase history,
affinities

companies seeking quick results. A humorous

1:Many
Medium article highlighted this by comparing
Demographic
Prince Charles and Ozzy Osborne: similar age, title, industry, geo,
No self-selected affinities

demographics, vastly different individuals. Personalization

Evidence that basic targeting based on broad

attributes often fails. Complexity (resources + time)

The personalization maturity curve to the

right illustrates this point. Many companies
So, what can you do to move your organization up the maturity curve? In an Amplitude blog article,
plateau at one-to-many personalization,
Heather identifies key steps you can take to improve your personalization efforts.
using traditional characteristics such as
age or industry. However, more advanced
organizations achieve one-to-few or even By not taking a step back to clearly understand what
one-to-one personalization.
personalization factors will be meaningful to customers,
One-to-few personalization digs deeper companies struggle to show the downstream ROI of their
into behavioral data like visit frequency or
purchase history. The pinnacle, one-to-one
personalization efforts.
personalization, leverages predictive data to
H EATH ER ROTH
anticipate behaviors and preferences, setting
Director, Digital Strategy, Slalom
the stage for truly individualized experiences.

Monetization Playbook: Mastering Monetization Strategy 31

CHAPTER 04 Five powerful digital monetization levers

1. Optimize data collection and management management of the personalization strategy. struggle to grasp the technical requirements
This creates misalignment and internal friction, for effective implementation.
Data poses a significant challenge for
resulting in personalization efforts that don’t
personalization ROI. According to the Braze To overcome these challenges, you can:
deliver the desired ROI.
2023 Global Customer Engagement Review
• Align technical and marketing teams around
report, 36% of marketers ranked collecting, Technical teams sometimes purchase the customer by identifying top challenges
integrating, managing, and accessing data as personalization software without complete holding customers back.
their top challenge associated with customer alignment and collaboration with business
• Define the channels and messages where
engagement.16 teams. The result? A lack of clarity in customer
personalization will have the most impact.
experience requirements, opportunity
Customers’ diminishing trust in data protection • Determine the data necessary for the model
definition processes, and ownership and
has made them hesitant to share personal and ensure it’s complete, reliable, and
service level agreements (SLAs) for strategy
information. For companies relying on third- consistent across teams.
and execution.
party cookies for customer insights, the
• Create a hypothesis, test, and iterate to
upcoming deprecation of these cookies puts As a result of this misalignment, analytical and adjust models, channels, and messages
them at a disadvantage. technology teams become disconnected from based on performance.
the customer experience, may not provide
Even when data is collected, it often resides in • Continuously review and update strategies
essential data to inform the models, and may
various platforms without a unified ID, making as new insights and opportunities emerge.
targeting beyond a few stitched-together
touchpoints challenging.
To set a sound data foundation for
Channeling data into effective execution
personalization efforts, you can:
• Identify gaps in your current processes. Enhanced Data Inputs Activation Channels

• Prioritize consent-driven first-party data Targeted ads tailored to

customer interests
Onsite Behavior Data
collection.
Effective campaigns
• Reduce reliance on third-party cookies. Operational Data
based on behaviors to
maximize engagement

• Ensure data has a consistent structure with

Tailored website
a unified ID across sources. Offline Data
experiences for better
Data Analytics Audiences engagement

Customer Feedback
Relevant product
2. Simplify operations and align teams recommendations based
on customer needs
Often, there’s a separation between the
technology used for personalization and the

Monetization Playbook: Mastering Monetization Strategy 32

 DO I T I N A MP L IT U D E

Amplitude Audiences enables you to personalize

experiences by targeting specific groups of users
based on their behavior, lack of behavior, or other
characteristics. You can create segments using
the visual builder and adopt more advanced
capabilities. For example, using predictions to
create segments for users likely to perform your
desired action. Additionally, you can standardize
audience list integrations and deliver personalized
experiences with profile APIs.

Let’s take this example for a fitness app that

helps users book exercise classes. We want to
understand the behavior of engaged users in
the United States. So, we define the cohort to
target users who performed the “Complete Class
Booking” event in the last 30 days and set the
location user property as “United States.”

We can then use this cohort in analysis or sync it

to various destinations—like Braze, a customer
engagement platform—to send targeted offers via
push notifications, with limited code required.

Then let’s say we want to target users more

precisely based on the specific number of
classes they’ve booked. However, we don’t want
to create endless cohorts for “Complete Class
Booking” with count=1 time, count=2 times,
count=3 times, etc.

Monetization Playbook: Mastering Monetization Strategy 33

DO I T I N AM P LI T U D E

With computations in Audiences, we can

convert behaviors into cohort-able user
properties on the fly—no engineering required.
This is a massive efficiency gain since grouping
users by shared behaviors across multiple
events and sessions is typically extremely
time-intensive using rigid SQL interfaces and
streaming pipelines.

To the right, we’re calculating the total classes

a user has booked in the last 30 days. Like the
example on the previous page, we can sync
this computed property as a user property to
external destinations, like Braze or Facebook.

For example, let’s say we create a campaign

in Braze that is triggered once a user books
more than three classes in the last 30 days.
We could also sync this computation to the
Amplitude Profile API and show users different
pop-up offers in our app based on how many
classes they’ve booked.

Monetization Playbook: Mastering Monetization Strategy 34

CHAPTER 04 Five powerful digital monetization levers

Targeted pricing
In the past, targeted or personalized pricing at scale would have been a pipe dream. However, today’s TERM TO KNOW
digital analytics solutions make it a feasible and increasingly common reality. Price elasticity: Measures the
effect a price change has on the
Like all personalization efforts, doing this well requires an intimate understanding of your audience customer demand for the product
and effective segmentation. But as we just discussed, many companies still only use traditional
demographics and not deeper behavioral or predictive characteristics.

Customer tenure:
A critical predictor of behavior
MAT T LI NDSAY
The team at Mather Economics views
CEO of Mather Economics, co-author of How to Succeed in the
Relationship Economy tenure as one of the most important
predictors of behavior.

According to industry expert Matt Lindsay, "We have a metric called Path to Conversion. “Earlier in the relationship, customers
even companies that think they have So if somebody buys a subscription, we look tend to be more price sensitive and more
segmentation down still find new insights back at everything they consumed on the site likely to churn. Once you get past that
upon further analysis. As the CEO of Mather for the prior 30 days, and we attribute some first year, that risk and price elasticity
Economics, a global leader in subscription of that conversion credit to each piece of tends to decline.”
management and customer data analytics, content—so it's not just last-click attribution.
and the co-author of How to Succeed in We found that if somebody lived in New York,
the Relationship Economy, Matt and his the things that were likely to convert them to
team work daily to help companies around subscribers were much different than those
the globe implement and fine-tune their who lived outside of New York."
monetization strategies. "One of the
interesting things about digital products is Though the team suspected this, behavioral
that you can see what content resonates analysis gave them the complex data they
with certain audience segments. And there's needed to turn their gut instinct into action.
normally valuable insights when you dig into
"The way you would apply that is if you have
the data."
a paywall and you know the reader isn't in
He shared a recent example of insights one New York, you could give them some content
of their digital newspaper clients recently for free while trying to close off their free
uncovered via behavioral cohorts. access to other content so that they'd be
more likely to subscribe."
35
CHAPTER 04 Five powerful digital monetization levers

Matt and his team are particularly adept at helping companies develop targeted pricing at subscription Transparency in data stewardship
renewals. A subscriber relationship has three big pricing events:
News abounds related to data privacy
and increasing consumer desire to
know how their data is being used by
Acquisition price, which companies. So it’s increasingly important
The transition to a Annual increases or
usually involves a discount that organizations—across all industry
regular price renewal increases
or introductory offer
and monetization models—be transparent
related to data stewardship and how they
will use customer data in personalization
Your ability to personalize pricing increases For example, you can personalize offers,
and monetization efforts.
with each event. At acquisition, you have less messaging, recommended content, how
information about that person than you’ll ever much content the customer can access for “Nobody wants to be part of an initiative
have, so your propensity modeling won’t do as free, and more. that’s going to use their data in an improper
well as in later stages. or potentially illegal way,” shares Logan.
Matt explains that you can use a combination “So to gain traction across the organization,
“You can still do targeted pricing,” Matt of experiential personalization and targeted transparency is key.”
says, “but we recommend investing more in pricing to acquire and retain customers.
targeted pricing between those later phases. He goes on to explain how transparency—
Using the newspaper example, you might look along with continual updates—go a long
Once you've migrated them from the base
at your data and see that a particular person is way toward breaking down those data
promotional offer to the regular rate or on
outside the New York market and likes sports. silos and promoting the longevity of your
an annual increase, you can add additional
So, you could personalize an offer focusing monetization efforts.
data to their customer profile and use all that
on sports content and also personalize their
information to help optimize that relationship.” Ready to learn more about data privacy?
subscription price. Get your copy of the Ultimate Guide to
Regarding personalization in monetization, Global Customer Data Privacy.
there are more tactics to play with than just
pricing. Targeted pricing is a category within
personalization, but there’s also experiential
personalization to drive revenue.

Monetization Playbook: Mastering Monetization Strategy 36

CHAPTER 04 Five powerful digital monetization levers

5. Experimentation The way I describe experimentation to people is that

Experimentation can help you make successful you’re already in the business of making bets—you’re
monetization decisions, from testing your
deploying functionality, deploying customer experiences,
pricing and packaging to experimenting with
product features to optimize your freemium and you’re learning against those. With experimentation,
conversions and more. it’s the leanest, meanest, fastest path to learning
Brian Cahak, co-founder and managing and helps you find the ‘best’ way to win. Not just at a
partner of growth agency Zilker Trail, has
macroeconomic level, but at a cohort level.
specialized expertise in experimentation. He’s
helped hundreds of customers successfully
BRIA N CA H A K
experiment with their customer experiences
Zilker Trail
across direct to consumer (DTC) and software
industries.

“Experimentation is a means to learn and pivot

to what’s working even faster—what’s the right
offer, how do you interrupt people at the right
moment in the right way, how do you move it
around, etc. There’s a lot you can do, but it’s an
underpinning mindset.”

Most companies recognize the value of

experimentation, but many take an ad hoc
approach or don’t align efforts to a growth
lever—making experiments unsustainable
and ineffective. To make your experiments
worthwhile, predictable, and sustainable,
you should consider a framework that aligns
your tests around business growth and
customer problems.

Monetization Playbook: Mastering Monetization Strategy 37

 7-step experimentation framework17
7-STEP
Follow EXPERIMENT
these ATION
steps to make your FRAMEWORK
experiments sustainable. It will help keep your experimentation aligned around business strategy and customer problems.

Solution 1 | KPI

Growth Lever Problem Hypothesis

Solution 2 | KPI Prioritization Test Learnings
Metric to impact In customer’s words Proposed explanation

Solution 3 | KPI
Acquisition Impact

Retention Cost

Monetization Confidence

1. Define a growth lever 2. Define the customer problem You will iterate on the customer problem based
For an experiment to be meaningful, it needs Before you go any further, it’s best to define the on your experiment results. Start by defining
to matter to the business. Choose an area for problem the experiment is trying to address an initial customer problem by stating what
your experiment that aligns with the growth from the customer’s perspective. you think the problem is. For our homepage
lever your organization is focused on, such as example, that might be:
You found product-market fit by identifying
acquisition, retention, or monetization.
the customer problem that your product 
Customers are confused about our value
Let’s say we’re a new online booking app for solves for the mime community. Yet when proposition.

professional mimes focusing on acquisition, many organizations move to distributing and

and we notice drop-off on our homepage is scaling their product, they switch their focus 3. Develop a hypothesis
high. To frame our experiment, we can say: to business problems. To be effective, you Now, define your interpretation of why
need to continuously evolve and learn about the problem exists. As with the customer
Accelerating acquisition is our priority, your product-market fit by anchoring your problem, you’ll iterate on your hypothesis
and our highest-trafficked landing page distribution and scaling in customer problems. as you learn more. The first version of your
(the homepage) is underperforming.

Monetization Playbook: Mastering Monetization Strategy 38

CHAPTER 04 Five powerful digital monetization levers

customer problem and hypothesis gives you • Low cost, high impact, lower confidence one through five to create a statement to frame
a starting point for experimentation. Potential • Low cost, lower impact, high confidence your experiment. For our homepage example,
hypotheses for our homepage example that statement looks like:
include: Then you can move on to high-cost solutions,
but only if their impact is also high. For Accelerating acquisition is our priority,
• Customers are confused due to poor our homepage example, prioritized solutions and our highest trafficked landing page—
messaging. the homepage—is underperforming
might be:
• Our page has too many action buttons. (growth lever) because our customers
• Our copy is too vague. • Rewrite the copy on the entire homepage. are confused about our value proposition
• Rewrite the body copy above the fold on (customer problem) due to poor messaging
the homepage. (hypothesis), so we will iterate on the copy
4. Ideate possible solutions with KPIs
(solution) to improve the free trial sign-up
Come up with all the possible solutions • Rewrite the main headline and call to
rate (KPI).
that could resolve the customer problem. action on the homepage.
Create a way of measuring the success of Define a baseline for the metric you’re trying to
Different companies may attach different
each solution by indicating which KPI each influence, get lift, and test away.
weights to these factors. For instance, a well-
solution addresses. A solution and KPI for our
established organization with a large budget
homepage example might be:
will be less cautious about testing high-cost 7. Learn from the results and iterate
Solution: Iterate on the copy.
 solutions than a startup with few resources. Based on your test results, return to step two,
However, you should always consider the update your customer problem and hypothesis,
KPI: Improve the free trial sign-up rate.
three factors—cost, impact, and confidence and continue running through this loop. Stop
of impact. iterating when the business priority—the
5. Prioritize solutions
growth lever—changes. For instance, when
Decide which solutions you should test first Another benefit of experimentation is that it
your acquisition has improved and you
by considering three factors: the cost to will help you hone your ability to assess your
want to focus on monetization. Set up your
implement the solution, its impact on the confidence in solutions. After experimenting,
experiments aligned to the new lever.
business, and your confidence that it will have check if the solution had the expected impact

an impact. and learn from the result. You should also stop iterating when you see
diminishing returns. For example, when you
To weed out low-impact and high-cost can’t come up with any more solutions, or
6. Create an experiment statement and run
solutions, prioritize in the following order: you don’t have the proper infrastructure or
your tests
• Low cost, high impact, high confidence enough resources to solve your customer
Collect the information you gathered in steps
problems effectively.

Monetization Playbook: Mastering Monetization Strategy 39

 DO I T I N A MP L IT U D E

Amplitude Experiment offers feature outperform the control by 24%. Because Amplitude also has enterprise-grade feature management
management, experimentation, and as part of its platform, our engineering team can easily and safely click “rollout” to roll out the winning
analytics in one platform. Teams can scale variant to our users.
experimentation to drive growth by delivering
personalized experiences across the
customer journey. Teams often struggle to Learn how to use Amplitude Experiment to scale product-led experimentation in this
realize the promise of personalization using step-by-step Amplitude Academy learning path.
disparate point solutions, leading to common
blockers like inconsistent metrics definitions,
inconsistent tracking, and the burden of
managing yet another duplicative data set
across tools.

On the right, we can see a “hypothesis

test” experiment that reached statistical
significance. In this example, a B2B SaaS
company wants to convert more free users to
paid plans, a monetization tactic we’ll cover in
Chapter 7.

This A/B test has two variants: the control

group representing our current experience
and a variant that uses a new layout and more
descriptive copy highlighting the subscription’s
value proposition. The hypothesis is that with
better messaging, more free users will request
to talk to sales to purchase the subscription.

After running the test, we can see the

experiment reached statistical significance. In
this case, the variant was found to conclusively

Monetization Playbook: Mastering Monetization Strategy 40

 CHAPTER 05

Understanding monetization models

Now that we have a framework based on business outcomes to guide our thinking, let’s talk about the most common
monetization models. The following chapters will cover four of the most common monetization models and the key metrics
associated with each:

1. Transactional 3. Ad-supported
2. Subscription and SaaS 4. Affiliate

TERMS TO KNOW

Customer lifetime value: A metric for any model

Customer lifetime value (CLTV or sometimes LTV or CLV) is the cumulative total of all revenue a customer contributes to your business over their entire
lifetime of using your product or service. The higher the LTV, the higher the value of that customer to your business.

Regardless of your monetization model, LTV is an important and relevant metric to track.

For SaaS products, a good target LTV to CAC ratio is 3:1. If it’s higher, then you’re underspending on marketing, and if it’s lower, then you’re probably
not able to retain your customers over a long time, or you’re spending too much on customer acquisition.

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CHAPTER 05 Understanding monetization models

Depending on your industry and how your company generates revenue, you will likely adopt one or more of these models.

TRANSACTIONAL SUBSCRIPTION/SAAS AD-SUPPORTED AFFILIATE/REFERRAL

How do digital When customers buy goods When customers pay a When companies pay money When a merchant pays a
products make or services through their recurring fee to use their to advertise to the users commission to a digital
money? websites or apps digital platforms or software consuming content on the platform for referring new
digital platform customers

Typical industries • Ecommerce/retail • B2B SaaS • B2B SaaS • Media

• Travel and hospitality • Media • Media • Retail
• Marketplaces • Gaming • Gaming
• Gaming
• Financial Services

Common product • Sales conversion rate • Average revenue per unit • Daily active users (DAU) or • DAU or MAU
metrics (in addition • Average order value (AOV) (ARPU), monthly active users (MAU) • Retention
to LTV) • Trial conversion rate • Retention
• Repeat purchase rate • Pageviews
• Annual recurring revenue • Pageviews or minutes • Click-through rate
(ARR) or monthly recurring watched
revenue (MRR) • Ad revenue per session
• Net revenue retention
• Attach Rate

Common digital • Optimize conversion rates • Free-to-paid conversion • Engagement/personalization • Engagement/personalization

monetization • Upsell and cross-sell optimization • Loyalty/retention • Loyalty/retention
levers • Pricing, packaging, licensing
• Loyalty/ repeat purchases • Hybrid with a subscription
• Upsell / cross-sell model

Example Rappi B2B: Atlassian, Miro NBC Universal Nerdwallet

companies Burger King B2C: Calm, Canal+ Rakuten Rewards
Rakuten

Monetization Playbook: Mastering Monetization Strategy 42

CHAPTER 05 Understanding monetization models

When in doubt, keep There is some complexity in an effective monetization strategy

it simple no matter what. But just because you have different pricing
In the following sections, we’ll dive deep into
models for different segments doesn’t make it inherently
four monetization models—transactional,
subscription/SaaS, ad-supported, and complex. But the key here is that what you present to your
advertising and affiliate. Depending on your customers needs to be simple.
business and product, it might make sense to
adopt and combine multiple models. MA DH AVA N RA MA N UJA M
Senior Partner at Simon Kucher, co-author of Monetizing Innovation

Take a company like Peloton. They use a

transactional monetization model for one part
of the business—the ecommerce site where
customers buy stationary bikes or treadmills—
and then a subscription model for the app
side of the business through which customers
stream workouts.

However, a word of caution: Don’t

overcomplicate things. Your go-to-market
teams need to be able to articulate your
monetization model, and more importantly,
your customers need to be able to
understand it.

Monetization Playbook: Mastering Monetization Strategy 43

 CHAPTER 06

Transactional monetization model

A transactional model focuses on getting people to buy goods and services through your digital platforms. It’s arguably the most
obvious and tangible of the four models we’ll explore—but don’t mistake that for easy. Like all the monetization models, there are
various aspects you can tinker with and optimize.

Perfect your checkout flow

TRANSACTIONAL MODEL OVERVIEW and increase conversion
Industries Today’s customer journey is incredibly
complex—often occurring asynchronously
Many of the companies you interact with as a consumer use a transactional monetization
across multiple devices and platforms
model, including omnichannel retail, ecommerce, marketplaces, quick service restaurants
simultaneously. According to Raydiant’s
(QSR), travel and hospitality, and even financial services and gaming.
State of Consumer Behavior 2022, 56.6% of
Metrics Repeat purchase rate—the number of new consumers prefer shopping online over in-
customers compared to repeat customers, store, and the vast majority complete at least
The top metrics include:
calculated by dividing the number of one online purchase per month.18
Sales conversion rate—measures the returning customers by the total number of
percentage of people who visit your site customers during a set time. This cross-device nature, coupled with the
or app and make a purchase. sheer volume of digital transactions, can
See our complete Ecommerce
make it challenging for companies to create
Average order value—represents the Ecommerce Conversion Metrics Guide
typical dollar value of a given customer’s for more. consistent, smooth experiences that drive
total order for a time period. conversions.

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CHAPTER 06 Transactional monetization model

However, you can use this framework to find

and fix friction in the path to purchase.

Path to purchase optimization

framework
1. Identify the major steps in your funnel by
understanding the common paths your
customers take to complete a transaction.
2. Dig into what accelerates or prevents
conversion.
3. Investigate the following business
questions:
• What types of journeys lead to first-time
purchases or multiple transactions? What
are the key steps of those funnels? How do
REAL LIFE EXAMPLE:
the fastest conversion paths compare to
the slowest? Fender improves their path to purchase to
• How do customers who completed their help users become players
purchases compare to users who did
Fender’s goal is to create more music in the world—and to make it personal. The more than 70-year-old
not? Do drop-off customers get stuck at a
company specializes in guitars, amplifiers, accessories, home recording, and more to help people create
payment page or a sign-in step?
music at any stage of their journey. However, many beginner guitarists are intimidated by visiting retail
• How does merchandising affect stores, so Fender wanted their ecommerce site to be a welcoming space for everyone.
conversion? What are people searching for
but not finding? What products do people Fender used Amplitude’s funnel analysis chart and uncovered that customers were experiencing
want that are out of stock? friction during the checkout process. Five percent of people dropped off right after they provided all

• How are behaviors changing day to day their information during a redundant review of their cart information. After removing the cart review

or season to season? Cohorting step, they increased their “order started” to “order completed” conversion by 7% and boosted overall

customers enables you to see patterns conversions by 27%. This small but impactful change equates to more than $3 million in additional

over different periods—how last month’s sales and improved the customer experience.

shoppers transact won’t be the same as

next month's.

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CHAPTER 06 Transactional monetization model

Upsell and cross-sell to increase average

order volumes REAL LIFE EXAMPLE:
We explored the fundamentals of upsell and cross-selling chapter ManoMano drives successful cross-sell
Chapter 4. For companies using a transactional monetization model— and experienced 15% increase in sales
and for ecommerce companies specifically—margins are incredibly
ManoMano is the largest European marketplace for products and
thin and acquisition costs are high. It’s standard to use personalized
services in DIY, gardening, and home improvement. In a workshop,
recommendations and offers to increase average order value (AOV), which
Simon Berthet-Bondet, ManoMano’s Head of Product, shared their
will increase return on ad spend (ROAS). Let’s explore an example. perspective on cross-selling:

“In ecommerce, profitability often hinges on the ability to

recommend and sell complementary products: If we can increase
the number of products they buy, we can increase the profitability
of our business.

Cross-selling also allows us to become a provider for your entire

DIY project, not just a one-off product sale. Our goal is to ensure
customers have everything they need for their entire project. This
makes cross-selling key.”

So, with cross-selling a strategic priority, ManoMano created a

power team focused on the initiative. Their primary KPI was the
number of items per basket, knowing that if they could increase the
number of items per basket, they could directly impact revenue.
They also looked at secondary KPIs, like the type of items added
to the basket and whether customers reached their free delivery
threshold.

They then segmented their KPIs by countries, B2C vs. B2B

businesses, etc., and then even more granularly by audience types,
like electricians vs. plumbers vs. carpenters, and so on.

With these insights from Amplitude, they’ve discovered areas to

improve their cross-selling efforts that truly impact their business
and profitability.

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CHAPTER 06 Transactional monetization model

Focus on repeat sales and 1. Create cohorts. You can create and D O IT IN AMPLITUD E
customer loyalty save groups of users based on their behavior
or properties. For example, membership in Amplitude’s cart analysis feature helps you unlock
No amount of marketing or product
a loyalty program, the number of purchases new customer transaction insights to better
enhancements can take the place of a loyal,
during a set time frame, repeat purchasers, understand purchase behavior so you can better
engaged customer. In fact, to recover the value
the size of their cart, etc. upsell and cross-sell and improve the customer
of a single churned customer, businesses need
experience. It enables you to analyze search
to acquire three new ones.19 2. Analyze and compare cohorts. Then, you
results or cart events in the aggregate (e.g.,
can explore how loyal customers behave in
Companies already know loyalty is important, total order volume or co-occurrence), or you can
your funnel vs. the rest of your customers.
but they often overlook that their digital segment your analyses by dimensions such as
This enables you to explore conversion
product itself can be a valuable and unique brand, category, price, or SKU, among others.
drivers and see where prospects encounter
way to understand and drive loyalty.
friction points in your funnel. Likely use cases can help you understand:

At its core, customer loyalty is about • Product performance (volume) by attribute

Once you can accurately identify the behaviors (SKU, category, brand)
engagement, retention, and—ultimately—more
most likely to drive loyalty—like favoriting • Conversion rates by product type (or another
revenue. Additionally, it's important to look
an item or “liking” a brand—you can begin attribute)
at loyalty through the lens of what customers
experimenting by adjusting your app or website • Top-performing product combinations that
are doing in your apps, not just their purchase
to encourage more users to complete those reveal opportunities for cross-selling
behavior or whether they join your formal
actions. • Revenue and business outcomes performance
loyalty program. by item or product
In this way, you can grow your loyal customer • Average basket size or item count
The key to understanding these behaviors is
base without severely adjusting your business
behavioral analytics. Using data, you can see
model or product strategy. And you’ll be able
what behaviors separate your loyal customers
to tailor experiences and messaging to loyal
from the rest and then work to nurture those
customers in real-time.
relationships through the digital experiences
you build.

To extract the most value from your loyalty

analytics, leading teams create and analyze
cohorts.
See Amplitude’s cart analysis capabilities in action in
this demo video.

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CHAPTER 06 Transactional monetization model

Take action
REAL LIFE EXAMPLE: We’ve covered the transactional monetization
model in depth. Are you feeling ready to take
Jersey Mikes improves insights and increases customer loyalty
action to optimize your conversion funnel,
The American sandwich chain, Jersey Mike’s, launched a new version of its online ordering app increase upsells and cross-sells, and increase
in 2019, and by early 2021, introduced delivery and curbside pickup features enabling them to customer loyalty as a means of increasing
thrive during pandemic store closures and lockdown periods. With a full campaign to promote revenue? If so, take some time to complete
app downloads, the team was eager to understand both app performance metrics and UX the following:
improvements to boost customers’ digital experiences.
• Fill out the Diagnose Friction in Your Path
Using Amplitude to measure the impact of various campaigns, they could compare the number to Purchase worksheet.
of people who placed an order to how many placed it with a specific promo code. They could
• See how it works in Amplitude in the
also see the number of new app downloads and the number of users who joined MyMike’s™—
Ecommerce Path to Purchase example
their customer loyalty program—using that promo code.
dashboard.
MyMike’s™ customers comprise a big percentage of their everyday sales so they planned
• Check out this Amplitude ecommerce
different marketing campaigns to promote it and convert more users into loyal, long-term
industry notebook to see how a grocery
customers. With the insights gleaned from Amplitude, they’ve taken actions that have increased
delivery company can look at user journey
the number of campaigns targeting loyalty program signups.
data, derive insights, and take action by
running campaigns and A/B tests to
increase revenue.

Monetization Playbook: Mastering Monetization Strategy 48

 CHAPTER 07

Subscription and SaaS models

Subscriptions and SaaS models, in which customers pay a recurring fee for services or software, are rapidly growing sectors.20

These models are integrated into both However, this can lead to customers
personal and professional lives, evident inadvertently continuing payments, as a 2022
in everything from gym memberships to poll revealed 51% of US subscribers have
corporate software solutions. Innovative experienced unwanted charges.23
subscription applications are emerging every
While seemingly straightforward, the
day, like Michelin's unique approach or BMW's
subscription model involves various strategies
(in)famous heated seat subscription.21
and tactics for enhanced profitability, requiring
Both customers and investors are drawn more than just routine billing to maximize its
to subscriptions. 2023 research indicates potential.
convenience as the top reason for consumer
Three levers to improve profitability in
adoption, followed by financial benefits.22
subscription models:
Investors and businesses value subscriptions
for their 'stickiness' and reliable recurring • Free-to-paid optimization
revenue. • Optimizing pricing, packaging, and licensing

• Upsell and cross-sell

We’ll explore these in the following sections.

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CHAPTER 07 Subscription and SaaS models

Free-to-paid optimization
The main goal: Give users a taste of the paid
SUBSCRIPTION AND SAAS MODEL OVERVIEW
plan’s value before committing. It’s a delicate
Industries balance between giving free users access to
Typical industries that use subscription or SaaS monetization models include B2B SaaS, enough that they recognize the value of your
media and entertainment (M&E), gaming, wellness apps, and even ecommerce and food paid product to become hooked—and not
and beverage companies.
giving away the farm for free.

Metrics Attach rate: Also known as an attach

Free trials, freemium models, and reverse trials
ratio, this measures the number of add-on
The top metrics include: are three strategies to optimize free-to-paid
units or products sold in relation to the
Average revenue per user (ARPU): This is primary product or unit. conversion. Although their approaches vary,
a user cohort's cumulative total revenue as they all offer users a chance to experience the
of the hour/day/week/month you're looking See our complete Amplitude Guide to product before committing, a must-have in
at, divided by the number of users in the Product Metrics for more information
today’s market.
cohort. and how to calculate.

Trial conversion rate: The percentage Which of these models is best for increasing
of free trial users who convert to paid conversions and sales? The industry
customers.
benchmarks for freemium model conversion
Monthly recurring revenue (MRR) and rates are under 10%, while for opt-in free
annual recurring revenue (ARR): MRR
trials, they are up to 25%, and for opt-out free
measures your predictable, regularly
recurring revenue each month. ARR is the trials, up to 50%.
same measure but calculated for the year.
However, knowing which of these approaches
Net revenue retention: This is the revenue
to use depends on your customers, their user
you retain over a given period. It’s usually
measured monthly, quarterly, or annually. behavior, your product’s value drivers, and your
market segment.

To get there, consider the following factors

when optimizing your free-to-paid model.

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CHAPTER 07 Subscription and SaaS models

Gauge the amount of upfront friction

to add
TERMS TO KNOW Depending on how much friction you add
Trial-based: Offers a version of your paid product for a limited time. After the trial ends, the to your free product upfront—whether it’s
customer pays or must stop using the product. There are two kinds of trials: collecting payment or limiting exposure to
premium features—you could be trading
• Credit card trials require a credit card number upfront that’s automatically charged when
the trial ends.
initial user growth for higher conversion.

• Free trials allow customers to use your product without providing payment information. If you optimize for market share gain, free

Freemium: Offers a limited version of your product for free forever. Users will never have to
trials are often the preferred model. Free trials
pay for the limited version but must upgrade to a paid plan to access additional features, more offer a low-cost and low-friction experience
usage, or special benefits like priority support. for potential users to test a product and instill
confidence in a purchasing decision, ultimately
Reverse trial: Combines the free and freemium strategies to drive paid conversions and
product usage simultaneously by giving customers access to paid features and putting them driving user growth and product adoption.
on a freemium plan when the trial ends.
Conversely, paid trials might be better for
companies that prioritize direct monetization,
Trial Freemium Reverse Trial where a paid trial is the industry norm, or
doesn’t create as much perceived friction.
Paid trials might also be better if the customer
Trial-End Trial Reverse Trial End
Opt-in
25% acquisition cost (CAC) is too high to offer the
15% 25% 15% trial for free. For example, if the product is not
5%
fully self-service and the company offers some
Pay No Pay Continue Continue Pay
Access Freemium Freemium human services with the trial.

Consider the time frame and metric

The time frame and metric you use to
Usage Usage Usage evaluate the success of your free product
strategy will also impact the model you
Trial choose. We recommend you think about your
Restart growth strategy on a longer time horizon
rather than optimizing your free trials for short-
term revenue.

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CHAPTER 07 Subscription and SaaS models

Figure out the ideal length of time for users to Consider ease of trial onboarding
build a habit around your product’s core use
The model you select should ensure that
case and offer the trial for that amount of time.
users can get to their aha moment and form
REAL LIFE EXAMPLE:
If the trial is too long, you unnecessarily delay
a habit without relying on non-product levers File-sharing and
monetization. If the free trial is too short, users
like customer support and customer success collaboration platform
may not get a chance to experience the aha
resources. optimizes free
moment fully.
trial duration
Some steps to optimizing the product
You can determine the timing distribution for An Amplitude customer that sells a
experience could include:
habit formation using product usage data from suite of productivity and collaboration
• Use product analytics tools like Amplitude
your paying customers. However, it’s crucial to tools, including cloud storage, file
Analytics to understand product usage and
experiment with different trial lengths to find synchronization, and more, figured out
adoption and see what your most successful the ideal length of time for a free trial
your product’s optimal time frame.
customers look like. is 30 days for its business products.
• Watch screen recordings and session replays Its rationale behind offering it for 30
to learn where users are getting stuck. Take days is:
steps to smooth out those points of friction. • It has a monthly subscription model
TERM TO KNOW
for its paid plan, so offering a
• Educate your audience with lifecycle
Aha moment: The moment when a 30-day trial period makes sense for
new user decides—consciously or marketing, educational videos, or guided
users to have time to use the core
unconsciously—to become an active product tours to show them the value of features more than once.
user of your product. using your product while marketing the • The core use case around file
Learn more about aha moments. value of paid features. storage takes more than one week
to form a habit.
• It makes the trial term consistent
across products so that it’s easier
to bundle. It can bundle two of its
products into a 30-day trial.
• It tested many different versions
(15, 30, or more days) and found
30 days performed the best.

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CHAPTER 07 Subscription and SaaS models

REAL LIFE EXAMPLE:

Amplitude reduces friction to aha

moment

Amplitude's growth team worked on improving one of the

highest-friction steps in our onboarding flow: sending data
into Amplitude. We fixed this by introducing a redesigned data
sources page.

After, call outs for additional resources help users get data into Amplitude faster.

Previously, during our onboarding flow, users landed on a blank settings page
and needed to find an external link to the developer docs. The new data source
page clearly lays out all the ways customers can send data through Amplitude’s
software development kits (SDKs) or third-party integrations.

Our users can now quickly figure out which source applies to them and collaborate
with their team members to set up Amplitude on day one. This change significantly
reduced user friction and made it easier to use our product.
Before, the data sources page didn’t offer guidance, creating friction.

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CHAPTER 07 Subscription and SaaS models

Evaluate user response to free trial Experiment exposed to its value before they even see the
models In Chapter 4 we discussed how to effectively
pricing page.

There are several reasons why free trials experiment using our 7-step experimentation The work you end up doing and the learnings
may not actually drive incremental sales. For framework. There are many opportunities you gain are completely different if you start
example: to experiment with different features and your experiments with the business problem—
marketing messaging to drive free-to-paid “there is a conversion rate that we need to
• The users you acquire may not be the target
conversions. increase”—versus starting with the customer
customers for your product.
problem—“they are not ready to think about
But here’s an example of what not to do. Let’s
• A poor onboarding experience fails to buying yet.”
say a team focused on product monetization
demonstrate value or bring customers to
is tasked with improving their free-to-paid To frame the customer problem, answer the
your aha moment.
conversion rate. following questions:
• Customers don’t see the return on
The company says: “We have a low pricing- 1. Who are you trying to attract with a trial
investment (ROI) during the trial and find
to-checkout conversion rate, so let’s optimize strategy? Understand your customers’
the price for the paid plan too high for the willingness to pay in your target segment,
the pricing page.” The team decides to test
value (or lack thereof) they received. different colors and layouts to improve the then pick the right strategy.
page’s conversion rate. 2. How much growth are you hoping a
Select a model well suited for your
However, they haven’t framed the experiment trial will unlock for your business? If you
growth strategy
to optimize the pricing page around the have aggressive user growth targets,
Whether free trials actually increase sales
customer problem. If the team had talked maybe offering a paid-only trial doesn’t
depends on the design and execution of the make sense.
to customers, they might have found that
free trial, as well as the user’s needs. We can’t it’s not the pricing page’s UX stopping them
One thing to note is these free-to-paid
make a blanket statement about whether it will from upgrading. Rather, customers don’t feel
models are not mutually exclusive. In some
work for every business, but as a prerequisite, ready to buy or don’t understand why they
companies, you could use a combination
your company should first have a product-led should buy.
of trial-based, freemium, and reverse trials
growth strategy.
In this case, optimizing the pricing page alone and target different customer segments with
wouldn’t yield any results.
Without that high-level strategy alignment and different needs (e.g., small and medium-sized
buy-in, your efforts will be misaligned with Conversely, let’s imagine the team focuses businesses versus enterprises)—depending on
your organization’s short-term goals, resulting their experimentation on the customer how they want to trial your product.
in suboptimal design and execution. problem. They might try running trials of
the premium product so that customers are

Monetization Playbook: Mastering Monetization Strategy 54

 Freemium or free trial
is a false trade-off. The
reality is that you can
have your cake and eat
it, too. Enter the ‘reverse
trial.’ You put your best
foot forward with new
users, giving them access
to your most advanced
features for a limited
time. From a behavioral
psychology standpoint,
you start to benefit from
loss aversion where the
pain of losing something
is twice as powerful of a
motivator as the pleasure
of gaining.24

KYL E POYAR

Operating Partner at Openview and creator

of Growth Unhinged

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CHAPTER 07 Subscription and SaaS models

Optimize pricing, packaging, Licensing techniques

REAL LIFE EXAMPLE: and licensing Licensing is all about determining how you
charge for your product or service—will you
Rappi optimizes trials In Chapter 4, we covered techniques related to
charge a set price? Or will the price vary
of Prime optimizing pricing and packaging. Subscription
based on the number of users or how much a
and SaaS companies have the unique
Columbian delivery company Rappi company uses your product?
opportunity to also tinker with how they charge
wanted to create a subscription
program called Prime, offering their customers—aka how they license.
subscribers unlimited deliveries for a
monthly fee. Using Amplitude’s A/B
test view, engagement matrix, and
cohort comparison to understand LICENSING DESCRIPTION EXAMPLE
TECHNIQUE
test performance, they ran several
experiments to encourage users to
become Prime members.
Flat-rate A single price for full functionality. Paid iOS or Android mobile game
One key experiment compared the pricing and Simple, but less common in SaaS
effectiveness of offering a one-month licensing due to inflexibility.
free trial versus a low-cost trial.
Amplitude's real-time segmentation
chart and funnel A/B test view helped Usage-based Charges based on service usage. Data warehouses and data lakes
Rappi ensure a statistically significant pricing Flexible, with costs reflecting actual
use. Metric determination is key.
test sample. Their findings were
revealing: users paying a nominal fee
for the first month placed 2-3 times
Seat-based Charges based on team size, ideal Microsoft Office
more orders in the initial 30 days.
pricing when user numbers reflect value.
Further analysis in Amplitude showed
that these low-cost trial users were
25% more likely to purchase a Prime Tiered pricing Offers increasing value and features Drift's package options
membership than those with a free at higher price points. Flexible tiers,
trial. Armed with this insight, Rappi with options for monthly or yearly
decided to extend the low-cost payments.
trial option to a broader user base,
capitalizing on the strategy's success.

Monetization Playbook: Mastering Monetization Strategy 56

 DO I T I N A MP L IT U D E

Using data to create a successful pricing, packaging, and licensing strategy

Now you know about the different ways to

price, package, bundle, and charge for your
product. But how do you know what’s best for
your business?

Successful pricing, packaging, and licensing

start with reverse-engineering from your
different buyer personas’ needs and factoring
that in alongside your business finances and
growth goals. As stated earlier, all successful
monetization strategies ultimately reflect an
understanding of your customers and how they
perceive pain points and value.

Different segments may not behave as you

expect, and analytics can help product teams
identify the highest-impact features and
prioritize feature requests, which you can use to
inform and support different pricing tiers.

For example, measuring feature engagement

using Amplitude’s engagement matrix might Predictive analytics can also inform your pricing strategy. Using Amplitude’s predictions, you can predict
show that a relatively small group of users customer behavior and answer pricing questions like:
access a particular feature but with high
• Which customers are likely to convert at • What marketing promotions or discount offers
frequency. This could inspire a differently
this price? will customers use?
bundled package or customized pricing, as well
as product iterations that expand the awareness • At what price will customers abandon their • Which features are customers willing to pay
and relevance of those features. shopping carts? more for?

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CHAPTER 07 Subscription and SaaS models

Experimenting with pricing, packaging, AMPLITUDE CASE STUDY:

and licensing Self-serve checkout volume
Pricing, packaging, and licensing adjustments
In early 2023, Amplitude launched a self-serve checkout. There wasn’t enough volume to run standard
are often viewed as daunting tasks by product
A/B tests, so we opted to test with a pilot targeted at a segment of customers.
and marketing teams, necessitating careful
analysis and experimentation. We then vigorously analyzed the impact pre versus post release.

While experimenting near revenue conversion And since there’s more volume in other areas—like the pricing page, upgrade triggers, and dashboard
view—we also prioritized A/B testing these learning opportunities. Our focused experimentation led to
points carries risks, avoiding these crucial
the successful public launch of the Plus plan, making Amplitude the first company to launch a full data
tests means missing out on optimizing the
analytics platform: Analytics, CDP, Experimentation, and Session Replay, that's available self-serve.
monetization model. The key is to experiment
on smaller traffic segments, allowing for quick
adjustments if KPIs decline.

Sufficient traffic volume is essential for

PRICING EXPERIMENTATION
effective pricing strategy experiments, and
insufficient traffic can delay result visibility. Amplitude is a huge proponent of experimentation—that’s why we make it easy and
accurate for our customers to do so! There are some situations, however, when A/B testing
So we recommend mapping your customer
may not be appropriate or even possible. Pricing is a prime example of an area where
journey to identify high-traffic areas for testing
experimentation may be ethically untenable. It can also cause customers to complain—
and focusing on those with enough traffic to
potentially very publicly—that they are being charged more for the same goods or services
impact the minimum detectable effect (MDE) than other customers.
desired.
Fortunately, there are alternatives for these scenarios, with analytics playing a key role in
In product-led growth models, traffic patterns each approach. For pricing, one option is a geographic-based study of customers in two
often resemble those of B2C companies, similar markets. Observing the effect higher pricing has in one market can indicate the
with higher volumes at the funnel's top. This impact of higher prices across the board. Estimating the causal impact using regression

makes homepages and landing pages ideal for modeling is another useful approach—it looks at how an input affects a particular metric
and how a change in that input affects the metric. Pre-post analysis also avoids classical
initiating A/B tests, capitalizing on their high-
testing by comparing data gathered before and after a change.
traffic nature.

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CHAPTER 07 Subscription and SaaS models

Want to get started with product-led experimentation? Learn from industry experts to win big and
drive ROI with product-led experimentation.

G E T YO UR COPY

Optimizing subscription and

SaaS upsell and cross-sell REAL LIFE EXAMPLE:
We covered upsell and cross-sell in the context Slate uses data to effectively launch a new monetization model
of transactional monetization models, and
While paywalls have become a favored business model for news outlets, asking loyal readers to
although the fundamentals are the same, become paying members can still be a risky move.
there are nuances to consider when using
But when Slate launched its own paywall to continue to diversify its revenue stream, it turned to
subscription and SaaS monetization models.
Amplitude to prepare. They used Analytics to understand questions such as:

According to research from the Subscribed • How many users would be eligible for a variety of different paywall scenarios?

Institute, Zuora’s dedicated subscription • How much traffic might be lost—and how that varied from platform to platform?
economy think tank, “70-80% of the revenue of • What kind of conversion rates could they expect based on the strength of its legacy premium
a successful high-growth subscription business product?

should come from existing customers.”25 So Slate’s editorial team also used Amplitude to consider the implications of a paywall on its content
the proliferation of land and expand strategies strategy. For example, the team used Amplitude’s cohorts and engagement matrix to understand
how various types of users might run into the wall. One significant finding: they discovered Slate’s
in SaaS and subscription businesses is no
loyal, advice-column readers were the readers most likely to encounter the paywall.
surprise. There are practical tactics you can use
In a few months of launching their paywall, Slate saw subscriptions shoot up by 500%,
to optimize for upsell and cross-selling within
outstripping the magazine’s expectations.
your product.
Within months of launching its new paywall, Slate saw "phenomenal
growth" in its memberships
MA RK MORG ION I
Senior Director of Research and Data at Slate

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CHAPTER 07 Subscription and SaaS models

1. Show gated features from higher tiers Companies frequently use this technique with days, customers can either upgrade to the paid
or add-ons both freemium and paid plans to increase plan or revert to the free plan. If they return
customer awareness of additional capabilities. to the free plan, however, customers can still
This technique is built on the old adage, “You
Amplitude customer Dropbox exemplifies see the features they used and loved in those
can look, but you can’t touch.” Within your
this concept in action, using persistent upsell first 30 days but can’t access them—making
product, you can show users paid, higher-tier,
prompts to remind users of limitations to their it even more tempting to upgrade to the
or add-on features that they don’t—but could—
free accounts and making them aware of the premium plan.
have access to.
additional capabilities they’d get with a more
If you’ve seen grayed-out feature names or robust plan.
tabs within software or subscription services
Land-and-expand
2. Use reverse trials of the only works if your best
you use, then you’ve been on the user end of
next-level plan
this technique. Another tactic is to display pop-
As discussed, a reverse trial combines the free
customers decide to
ups or take-over messages when a customer
and freemium strategies by giving customers grow with you rather
performs an action within the product that
could be easier or better using one of these
access to paid features and putting them on than graduate to a
a freemium plan when the trial ends. This
higher-tiered or add-on features. more ‘enterprise-grade’
technique can be very effective at driving
paid conversions because it gives users a product that appears to
taste of the good life—aka valuable, premium be purpose-built for their
features—before putting them on a more requirements. Design
basic freemium plan. And who wants to eat
TERM TO canned tuna once they’ve eaten sushi-grade
your packaging and
KNOW
tuna tataki? pricing to make it as
Land and expand: A classic sales-led frictionless as possible for
motion built on securing more customers Graphic design software and Amplitude
with cheaper entry-level or trial plans customer Canva uses reverse trials and shows high-value customers to
and encouraging customers to upgrade features from higher tiers or add-ons. A new stick around.26
to higher-value plans as they use the
user has free 30-day access to premium
product. KYL E POYA R
content with their Canva Pro plan, including
Operating Partner at Openview and creator
templates, 100+ million stock photos, videos, of Growth Unhinged

graphics, brand kits, and much more. After 30

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CHAPTER 07 Subscription and SaaS models

3. U
 se product signals for product qualified leads and accounts
You’re likely familiar with the terms sales qualified lead and marketing
qualified lead, but what about product qualified lead or account? Is product-led growth (PLG) right for
Associated with product-led sales, this involves using analytics to identify your company?
in-product behaviors related to upsell and cross-sell to create product
Product-led growth has become a hot topic—especially for
qualified accounts (PQAs) for marketing and sales engagement.
B2B SaaS companies—since “growth at any cost” is out
and “sustainable growth” is in. PLG is a growth motion that
Product qualified accounts (PQAs) combine product signals and
leverages the product, rather than marketing or sales, to drive
firmographic information such as team and company size, customer’s role
acquisition, retention, and monetization.
in the org, etc.
Regarding monetization, PLG focuses on using many of the
Let’s say you want to upsell your annual subscription. Your analysis shows techniques covered in this playbook to glean revenue from the
that characteristics of accounts with the higher propensity to convert to value users find in your product. With PLG, users self-serve by
that plan include accounts: purchasing the product without help from sales.

• With 50-100 team members All of the strategies covered here—free-to-paid optimization,
• On a monthly billing cycle upsell and cross-sell, evolving pricing, packaging,
and licensing—are key elements of how many companies
• That hit over 80% of their product usage quota with more than one week
leverage PLG.
remaining

Ready to start your PLG

You can use this to identify PQAs and trigger an internal alert to your sales
journey to build a product
team when all the criteria are met. You can simultaneously use this PQA for users love—and that grows
marketing purposes to automate upsell and cross-sell emails. your business? Learn PLG
fundamentals from industry
By focusing on the most promising accounts, sales can turn them into experts in this guide.
expansion opportunities or enterprise plays. A benefit of using your product G ET YO U R CO PY
signals to upsell and cross-sell is that it allows sales to cultivate product
evangelists that help them expand into enterprise-scale solutions.

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REAL LIFE EXAMPLE:

Productivity software company increases
upsells to premium plans

After a decade of business, an Amplitude customer in the productivity

software space needed to evolve their product to further their
mission. They were particularly focused on building new features for
their higher-tier premium plan.

With speed to insights, the team built out new views and measured
how to optimize the features using Amplitude. As a result, they built
a new premium product feature that has driven a significant increase
in customers upgrading to the higher paid tier and increasing trial
customers for their top two tiers by 2–3x. On top of this, their
data team achieved 4–10x time savings by running the analysis in
Amplitude versus SQL.

Take action
Subscription and SaaS companies have a lot of exciting and interesting
monetization strategies and techniques at their disposal—from free-to-paid
optimization to perfecting pricing, packaging, and licensing and using their
own product to upsell and cross-sell.

If you’re ready to start:

• Map your product-led growth strategy this Product Strategy Template.

• Check out this Amplitude media industry notebook that shows how a
music streaming app can drive monetization, along with acquisition and
retention.

Monetization Playbook: Mastering Monetization Strategy 62

 CHAPTER 08

Ad-supported and affiliate

monetization models
Like all the monetization models in this playbook, there is a sophisticated science behind generating revenue through ad-
supported and affiliate models, and there are multiple techniques and levers companies can use.

Both models harken back to the adage, “If Let’s take a look at each model individually For example, Amplitude customer and
you’re not paying for a product, you are the before diving in. entertainment and media juggernaut
product.” Translation—if the product or service NBCUniversal generates revenue from ads sold
is free, the company likely uses access to the on their cable and other digital channels, as well
What is ad-supported
customer’s eyeballs and time to make money. as from subscriptions to their Peacock streaming
revenue? service. While this oversimplifies NBCUniversal’s
Although they are different in how they Ad-supported revenue is derived from
sophisticated monetization strategy, it
generate revenue, they share common selling advertising space on your digital
represents how media companies have evolved
monetization levers and techniques—so we’ve platform to other companies looking to get
to meet changing consumer consumption
combined them into one chapter. their brand, product, or content in front of your
preferences and increase revenue.
visitors and users. The most familiar examples
Three levers we will explore in this chapter are in media—think commercials and magazine Even Netflix, long-known for its ad-free
include: ads—social media, and gaming. However, as streaming, finally introduced a low-cost ad tier in
• 
Improving content engagement via digital media has evolved, fewer companies 2022.27 Many media platforms offer stand-alone
personalization rely exclusively on ad-supported revenue freemium subscription apps, selling channel
• Boosting loyalty and retention and more on a hybrid of ad-supported and subscriptions through other platforms, like Roku
subscription models. and Amazon, and still keeping on-demand.
• 
Optimizing your hybrid monetization model

Monetization Playbook: Mastering Monetization Strategy 63

 Nonetheless, ad-supported income remains
AD-SUPPORTED AND What is an affiliate model?
AFFILIATE MODEL OVERVIEW an important revenue generator for these
In an affiliate model, you earn a commission
industries. In 2021, digital advertising grew
Industries by promoting a service or product made
30% year on year—its fastest rate ever—
Typical industries that use ad-supported by another company or advertiser using an
and accounted for 64% of all ad spend.28
monetization models include digital media, affiliate link.
Additionally, according to research from the
print media, social media, and gaming.
Reuters Institute and the University of Oxford, As an affiliate, you get paid for generating
Metrics “publishers report that digital advertising has sales, leads, or traffic to the other company
The top metrics include: boomed with more people buying online.”29 or advertiser. Most affiliates join an affiliate
Daily active users (DAU) and monthly active network to connect with different brands
users (MAU)—DAU measures the number that are pursuing affiliate marketing as an
Learn how leading streaming
of unique users who engage with a digital
platforms use behavioral data to acquisition channel.
product or service daily. MAU is the aggregate
personalize and differentiate
sum of daily active users over one month.
themselves to increase revenue. Classic examples are media and content sites
Retention—Retention calculates the G ET YO U R CO PY
that provide reviews or “top lists” related
percentage of users who continue using your to different product types or services. For
product or service over a given period.
example, let’s say a consumer is interested in
Pageviews or minutes watched—A page view a new credit card and searches for “best travel
is an instance of a user visiting a particular
credit cards.”
page, and minutes watched measures the
time a user spends watching a piece of
Voila! They find a site—an affiliate—that goes
content.
in-depth on the pros and cons of the top
Ad revenue per session—This measures the
credit cards available, including links to apply
average revenue generated by each unique
for each on their respective company sites.
page visit or session and is calculated by
dividing total revenue by the total number of Depending on the model, that affiliate will get
unique visits. paid something when the consumer clicks one
of the links or makes a purchase.

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CHAPTER 08 Ad-supported and affiliate monetization models

From an advertiser perspective, affiliate programs are an appealing

acquisition channel because they require low upfront marketing costs, and
using diverse affiliates enables you to expand to new customer bases. Are you selling ads or buying ads? Either way, you
should be fueling growth.
For affiliates, this model can be a low-risk, scalable way to generate
additional revenue. You likely interact with affiliates regularly and This playbook focuses on monetization models and techniques

potentially in places you didn’t even expect. Some may be obvious, like you can use to generate more revenue and fuel growth.

The Points Guy and Rakuten, whereas others—like the shopping segment Transactional and subscription models are straightforward in

on NBC’s Today Show—may be less so. terms of “who” is generating the revenue, but things can get
more fuzzy when it comes to ad-supported and affiliate models.

That’s because whether you’re the digital platform selling the

ads or the company paying for them, the goal is to generate
more revenue—and understanding performance is equally
important to both parties.

For example, if you’re selling ads on your site, pay per lead
(PPL) will be an important metric because the more leads you
generate, the more money you collect from the advertiser.
Similarly, PPL is an important metric to the advertiser because
they want to ensure cost efficiency and need to evaluate the
effectiveness of these ads as a lead generation tactic.

Both sides of the fence are equally invested in making the ads
and product placements successful—creating a unique and
hopefully profitable partnership. It’s a win-win.

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CHAPTER 08 Ad-supported and affiliate monetization models

In Chapter 4, we covered a framework for Pay per lead (PPL): This is the big payday
• 
Content engagement and
improving personalization efforts and how but the hardest to execute. Advertisers pay
personalization to do it in Amplitude. For companies using you when a visitor takes a specific action that
The concept is easy: Keep users engaged and ad-supported and affiliate monetization reflects a genuine interest in their business.
get them the right content. Netflix or Amazon- models, there is a direct line between content
style personalization is every company’s Personalization is important across the board,
engagement and revenue generated. The more
dream—optimizing the digital experience for but increasingly so for pay-per-click and pay-
users that visit and engage with your digital
each user so it feels like it’s built just for them. per-lead models. Suppose you’re only getting
platform, the more exposure they’ll have to ads
paid when a user clicks on or buys something
and product placements on your site and the
But without the right tools and insights, it’s due to the ad or mention on your site. In that
more money those advertisers and companies
easier said than done. According to research, case, you want to ensure that the right ads
will need to pay you.
companies can generate as much as 40% more show for the right customers at the right times
revenue from personalization,31 Yet providing Different ad types: Which is based on their characteristics, preferences,
tailored experiences to customers is still a top best for you? and behaviors and that you’re attracting the
challenge for over 63% of digital marketing right personas to your affiliate site.
There are different ways to generate revenue
executives.32
with ad-supported and affiliate models. The
For affiliate or lead generation companies,
type you choose depends on your target
understanding what customers are engaging
audience, the types of advertisers you work
with can help you prioritize different merchants
with, and the norms for your industry. Many ad
or categories to feature in campaigns or
and affiliate platforms offer multiple methods.
recommendations. For example, if you have a
Pay per view (PPV) or cost per view (CPV):
•  shopping rewards site and you see that power
You charge advertisers based on the number users suddenly start searching for “mom
of times the ad is displayed on your site, and jeans” or “Levis vintage,” then you might
you get paid regardless of whether a user promote a new “top mom jeans” category to
clicks on or engages with the ad. those users, curated with products and brands

• Pay per click (PPC): Advertisers pay in that category.

you when a user clicks on the ad on

your platform.

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CHAPTER 08 Ad-supported and affiliate monetization models

For example, when users search for content

Boosting loyalty and retention
or game categories, how often do they get
REAL LIFE EXAMPLE: If your goal is to get more users engaging zero results?
WeMoney with your content and clicking on ads and • Are there trends in favorites, playlists, or
sponsored links, improving loyalty and goals set amongst loyal customers?
The Australian social and economic
retention will go a long way. The first step
wellness company, WeMoney, • How is new content discoverable in your
to driving loyalty is understanding different
helps customers manage their money app? In your game catalog, do users engage
segments of users and the behaviors and
and track and crush debt for free. That with a preview and then successfully pick
actions correlated with retention.
means they don’t get revenue from something to play?
subscriptions but rather by partnering For example, let’s say you’re a free mobile
gaming app whose primary revenue is derived
with some of Australia and New
Optimizing your hybrid
from in-app advertising. Every user session
Zealand’s largest financial companies.
monetization model
represents another opportunity to get them to
WeMoney needed to narrow its
engage not only with your games but also with Most platforms monetizing via ad-supported
focus to what would make the
the advertised content placed strategically or affiliate models also use subscription or other
most difference to monetization—
throughout. models. Product-led experimentation
increasing retention and lowering
is a powerful way to determine the
acquisition costs. Within Amplitude, To increase brand loyalty and player retention,
right mix of monetization models and
the WeMoney team noticed that users you can use analytics to understand:
distribution channels.
who set money goals within the first • What are the common behaviors across your
three days of onboarding had a higher most loyal users? The 7-step experimentation framework
retention rate at the 12-month mark we covered in Chapter 4 provides a great
• Which user segments are most likely to
than those who didn’t. foundation. You can apply that framework
become loyal?
to experiment and analyze behavior across
Using this insight, they built goal-
• What factors have helped retain loyal users?
touchpoints to tell you how your monetization
setting into their initial onboarding
• What experiences maximize the value of mix is working, in addition to revenue numbers.
process, which led to a 20% increase
loyal customers?
in retention—and after creating When your experimentation and iteration are
lookalike audiences and personalized Once you understand what behaviors correlate natively integrated with analytics, you can get
messages, they reduced customer to loyalty, you can dig into what is helping or an instant idea of what matters to your shoppers
acquisition costs by 2x. preventing users from those behaviors: and what is limiting your company’s growth. A
cross-portfolio view of your digital experiences
• Is there any friction in common journeys?
enables you to see how factors like device

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CHAPTER 08 Ad-supported and affiliate monetization models

platform, channel, and monetization type impact KPIs and customer behaviors, facilitating strategic You've invested time and money into
experimentation for optimizations. acquiring new users—but are you
keeping them? Learn more about
We recommend experimenting any time you introduce new models or make tweaks to your monetization
better understanding your customers
mix. Whether you’re incorporating ads into your subscription business or adding subscriptions to your
and improving retention and loyalty in
ad-supported business. our playbook.
Measure how downstream metrics, from engagement to click-through rates, are affected by changes. You
GE T YO UR CO PY
can also experiment with different content and formats to understand:
• Which content should you offer for free or only to subscribers?
• How does the availability of back episodes or archived articles affect downstream metrics like
retention or paid upgrades?

Additionally, you can experiment with your ads to test formats, frequency, and placement to understand
how they affect engagement. Doing so will enable you to find the balance between ad revenue and
engagement.

REAL LIFE EXAMPLE:

Major media company enhances customer retention and
conversion rates
A leading media conglomerate with a diverse portfolio utilizes experimentation in Amplitude to Take action
enhance retention and conversions. With its easy-to-access, real-time insights into user behavior,
If you’re ready to get started:
Amplitude has enabled this organization to build what their Senior Vice President for Product and
Technology, calls a “scalable framework for experimentation.” With Amplitude, the company can • Use these retention worksheets to
immediately understand test performance and identify opportunities for additional tests using understand and enhance engagement for
cohorts, conversion drivers, and engagement matrix. your digital product.

The SVP pointed to a test around a segmented homepage experience for one of their products. • Check out this Amplitude media industry
When Amplitude’s funnels and A/B test view showed the changes boosted viewership by 10%, notebook that shows how a music streaming
the company rolled them out to all its viewers. Testing also yielded a video preview feature that app with a hybrid monetization model can
boosted video start conversions by 36%. reduce churn.

Monetization Playbook: Mastering Monetization Strategy 68

 CHAPTER 09

Best practices to kickstart your company’s

monetization strategy
Monetization is intrinsically linked to acquisition and retention, so many of your initiatives may already be helping
monetization—but if you do not own the revenue impact, you’re likely leaving money on the table.

So, how can you improve your monetization In a 2008 letter to Berkshire Hathaway’s
Everything that you do
strategy? As you’ve learned in this playbook, it shareholders, Warren Buffett wrote, “Price is
depends on your monetization model. However, what you pay; value is what you get.”33 The related to monetization
there are some best practices applicable across most successful companies recognize that has to have the customer
the board. understanding, prioritizing, and optimizing for at the core. How do we
what the customer values reap benefits for
the business.
make decisions based
1. Understand what brings on what we know will
In Chapter 4, we covered Madhavan’s
value to your customer— provide them value, and
perspective on understanding your customers’
and your business perceived value and willingness to pay early.
how do we align teams
We opened this playbook talking about how Ideally, you should also have a North Star around the experiences
user value should be at the heart of your metric as your leading indicator of customer that we’re trying to create
value. As you see it change, you can expect
monetization strategy, and we hope this point for our customers?
came through across every monetization model, your business results to change accordingly.

strategy, and lever we’ve covered. H E ATH E R ROTH

Don’t fall into the trap of pricing based on Director of Digital Strategy, Slalom
business needs versus customer value.

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CHAPTER 09 Best practices to kickstart your company’s monetization strategy

REAL LIFE EXAMPLE:

Burger King’s digital team used the North

Star Framework to define a metric called
Digital Transactions Per User with three
inputs: new user activation, registration,
and frequency. They then mobilized
teams to drive these inputs, as illustrated
in the following figure.

These teams were able to trace the

feature work that they prioritized through
their development processes first to
these inputs, and then to their Digital
Transactions Per User North Star metric.
For example, one team prioritized a
“mobile order only coupons” initiative to
drive the “frequency” input—a factor in
the metric.

A customer isn’t a static profile, so how do we ensure we’re always bringing them
value? Maybe they’re not in the market for your product right now, but how do we
connect them to your brand?
SAM MI LLE R
Lead Strategic Consultant, Braze

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CHAPTER 09 Best practices to kickstart your company’s monetization strategy

2. Design a seamless 3. Get leadership buy-in The Golden Rule: Be

customer experience Like all successful organizational initiatives, customer centric, not
optimized for getting success starts with support from the top.
business centric. Your
customers to value faster Chapter 3 discussed anchoring your consumers don’t care
You understand what your customers value, monetization strategy in a top-level business about your internal
and you’ve validated that they’re willing to pay goal that teams understand and own a discrete
structure, so don’t impose
something to get it from your product. Now, you and tangible piece of. Heeding this advice will
need to ensure they experience that value as ensure your monetization approach aligns
it on them. They care
quickly as possible. with the top-level priorities set by corporate about having a joined
leadership and help secure their buy-in. up and coherent and
Keeping your customer experience front and
center of all your monetization decisions can Basing your strategy and recommendations
relevant experience—so
help do that. on data and analytics will also give leadership it doesn’t matter which
the confidence that you’re basing your internal team is sending
In this playbook, we’ve discussed identifying
friction in the context of determining your
recommendations on science, not gut instinct. the message.
pricing, optimizing your path to purchase, and Leadership support will help you break down SA M MIL L E R
Lead Strategic Consultant, Braze
perfecting your free-to-paid conversion. That’s organizational, data, and operational silos and
because high-effort experiences that create align functions behind a common monetization
customer friction can sabotage the success of strategy.
4. Evolve your pricing strategy
even the most value-focused products.
But there is an opportunity to improve in this early and often
Eliminating friction requires a full view of the regard across industries. According to IDC’s By now, you understand that it’s best to talk
customer's journey, from what they value to 2022 global Future Enterprise Resiliency about willingness to pay and define your
what’s getting in their way today, so you can get and Spending (FERS) Survey, “only 41% of monetization strategy early, but you should also
them to value quickly. respondents reported success in reducing data be doing so often.
silos as enabling easier synthesis of information
across domains, while 44% of respondents Though having those conversations with

described success in reducing decision-making your customers and doing the research is

silos and enabling coordination across the important, your digital product provides the

organization.”34 unique opportunity to test what people do, not

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CHAPTER 09 Best practices to kickstart your company’s monetization strategy

just what they say, when they encounter new

Experimentation is a
monetization tactics. For example, you can
run experiments to see how rolling out new
means to learn and
pricing tiers impacts customer engagement or pivot to what’s working
acquisition. even faster: What’s the
In our sections on packaging and licensing, we
right offer and how do
also discussed that how customers pay is just you interrupt customers
as important as what they pay—and this should at the right moment—in
change over time. What payment methods
the right way? There’s a
do you offer? Are you using predictions and
personalization to offer discounts and dynamic
lot of experimentation
pricing to entice those least likely to convert? you can do to figure out
the right monetization
Evolving your strategy involves having a solid
understanding of the tactics and levers we
tactics.
covered for each of the monetization models BRIA N CA H A K
and experimenting accordingly. Co-Founder and Managing Partner at Zilker Trail
Growth & Innovation

Leading companies use a single integrated platform for experimentation and analytics. You can use
5. Experiment
data analytics to identify an issue or opportunity and then use experimentation to test and learn which
Making big changes can feel scary. Effective
features, content, or experiences you can implement to resolve or improve.
experimentation and feedback loops can
help mitigate risk and boost confidence as You can also use digital analytics products to identify user cohorts meeting specific criteria and use
you evolve your monetization strategy. Make this segmentation for experimentation. For example, a retailer might build a cohort of users who add
experimentation part of your culture across items to the cart but don’t purchase. Then, they might use experimentation to test which offer improves
product and marketing teams, and watch the conversion the most. The synergies between digital analytics and experimentation products are why
results of your monetization efforts soar. many digital analytics products include experimentation as part of the overall solution.

Monetization Playbook: Mastering Monetization Strategy 72

 REAL LIFE EXAMPLE:

MySwimPro centralizes experimentation

and analytics, boosting ARPU 70%

MySwimPro turned to Amplitude when their existing tools were hindering their ability to grow.

“The main problem we were trying to solve was speed, and by bringing analytics and experiments
into a single system, I was confident we could experiment, iterate, and improve faster,” shares
MySwimPro VP of Engineering Nick Newell.

And Nick’s confidence paid off—in two months, they ran three experiments around monetization and
pricing that led to 70%, 53%, and 39% increases in average revenue per user (ARPU), respectively.

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CHAPTER 09 Best practices to kickstart your company’s monetization strategy

own businesses and have to increase their

6. Clearly communicate 7. Connect behavior to
prices periodically—generates trust and loyalty,
with customers and regardless of price.
retention and revenue
internal teams If you’re not focused on impact, you may wind
Personalize your communication to ensure up working in a dreaded feature factory with a
Few people enjoy telling their customers
you meet your customers on their preferred chaotic culture of one-off features and no way
that they need to pay more money. But
channels. For example, don’t send a rate to understand if you’re moving the needle on
transparency, clarity, and integrity go a long
increase notification via traditional mail if anything.36
way when making monetization changes.
your customer always engages with you via
Before rolling out major changes, ensure your digital channels. Likely, they won’t see it, and A solid data foundation enables you to connect

teams can communicate why the change a contact center agent telling them, “Well, we revenue outcomes to in-app behavior. You can

is happening and how it will bring value to sent a notice in the mail” later will only hurt combine revenue and behavioral data to be

customers. The latter piece here is critical. Lead customer loyalty. able to segment and understand:

your communication with the increased value • Who are your best customers?
Also, remind yourself—and your entire
customers will derive—new features they’ll have • How do they behave differently from
organization—that you didn’t make these
access to, how this streamlined packaging will customers with lower LTV?
changes on a whim. You have a sound strategy
make things easier for them, etc.
based on data and science, and you should all By understanding the behaviors that drive
Be proactive in your communication with be confident and unafraid to communicate the retention and revenue, your monetization
customers. Customers shouldn’t learn about change to customers. strategy will be on the course for success.
a price increase from their bill—this will only
Like most “hard” things, the anticipation is
create more resistance and flood your contact
often much worse than the reality. In our Cohort and segmentation
center with irritated callers.
conversation with industry expert Matt Lindsay analysis is critical to
The leaders at SparkToro, a market and of Mather Economics, he shared that while understanding the behaviors
audience research platform, laid all the many companies he works with often fear that drive revenue. By analyzing
cards on the table for customers to see and backlash from pricing changes, it's usually your healthy and unhealthy users,
understand the what and why of their 2023 unfounded. you can determine common
pricing changes. Taking the mystery and
35 characteristics that you can drive
ambiguity out of the picture and talking to
“We find it doesn't happen as much as people towards to support your goals.
think it does.”
customers like people—who often run their IBRA H IM BAS H IR
Vice President of Product Management, Amplitude,
and Chief Creative Officer, Run the Business

Monetization Playbook: Mastering Monetization Strategy 74

CHAPTER 09 Best practices to kickstart your company’s monetization strategy

Monetization should be treated as a bit of an experiment, with a test and learn approach
and continuous cycle of iteration. Otherwise, it may produce results, but not as strong as it
could be if you were continually investing in advancing it.
LO GA N PAT T E RS O N
Global Senior Director of Digital and MarTech Strategy, Slalom

Take action
These best practices will set you on a course of
monetization success—are you ready to apply
them? Here are actions to do so:

• Learn how to set up and use Amplitude

to baseline your monetization strategy
performance in our Amplitude Academy.

• Work with your team to align your efforts

behind a North Star Metric for streamlined
strategies and enhanced growth.

• Spend hands-on time completing the

monetization worksheets to put your
learnings into action.

Monetization Playbook: Mastering Monetization Strategy 75

 CHAPTER 10

Power monetization with Amplitude

This playbook has given you frameworks, examples, and metrics to improve how your digital product makes money.

It’s your turn to put the playbook into practice. To do that, Amplitude can for everyone, fully connected customer journeys, and fast insights to
help you turn customer data into actionable insights that generate revenue. experiences—Amplitude empowers teams to meet customers in the
moment and rapidly respond to their needs.
With Amplitude, you can see everything customers do, understand
what drives growth, and build better digital products, all in one easy- G ET STA RT ED WI T H A M P L I T UD E TO DAY
to-use platform. Through the platform’s three core principles—access

Amplitude Digital Analytics Platform

Digital
Digital
Experience
Experience
Action
Action
Audience
Audience Web
Web &&Product
Product Feature
Feature
Targeting
Targeting Experimentation
Experimentation Delivery
Delivery

Insights
Insights DigitalAnalytics
Digital Analytics SessionReplay
Session Replay

Data Systems
Data Systems
&
& Sources
Sources
Data
Data Privacy &&
Privacy
Data
Data CDP
CDP Governance
Governance
Warehouse
Warehouse Security
Security

Monetization Playbook: Mastering Monetization Strategy 76

 Acknowledgements
A special thanks to the industry experts who shared their invaluable time, knowledge, and perspectives with us for this playbook.

Alex Simmons, Sr. Customer Success Manager, Amplitude Elena Verna, Interim Head of Growth, Dropbox, Program Creator &
Alex Simmons is a senior customer success manager at Amplitude, Partner, Reforge, and former Head of Growth, Amplitude
working with some of Amplitude’s most strategic and innovative Elena is the former head of growth at Amplitude and growth advisor to
enterprise customers. He currently holds the record for most queries companies including Krisp, MongoDB, and Maze, and a Board Member
by an internal Amplitude employee during his three year tenure at the at Netlify. She is also a former CMO and advisor at Miro, SVP for Product
company. Alex has 15+ years of experience in the analytics space, &amp; growth at Malwarebytes, and SVP at SurveyMonkey. Elena has a
working across various industries and verticals. He is a graduate of breadth of experience in PLG models for B2B companies.
Haverford College with a degree in Political Science and holds an MBA
from IE University in Madrid. Heather Roth, Director of Digital Strategy, Slalom
Heather is a director in Slalom’s Global Digital Strategy team, with over
Brian Cahak, Co-Founder and Managing Partner at Zilker Trail Growth & a decade of experience in customer data strategy, marketing analytics,
Innovation and experience technology transformation.
Brian is the co-founder and managing partner at Zilker Trail Consulting.
He is an entrepreneur, strategist, and business builder at heart and Ibrahim Bashir, Vice President of Product Management, Amplitude,
has spent over 25 years building teams, building customer-centric and Chief Creative Officer, Run the Business
companies, and helping humans achieve their highest potential at work.
Ibrahim Bashir has been building and shipping software for over 20
years. He is currently an executive at Amplitude, where he serves
Derrick Johnson, Enterprise Customer Success Manager, Amplitude as the VP of product for the core analytics offering. Before that, he
Derrick Johnson is a seasoned customer success manager at scaled Box's platform ecosystem, Twitter's service infrastructure, and
Amplitude, specializing in guiding enterprise-level clients towards Amazon's Kindle business. And in past lives, he studied computer
strategic growth and maximizing ROI. With a decade of experience science, taught algorithms courses, wrote radiology software, built
in the tech industry, Derrick’s expertise lies in managing intricate ecommerce platforms, and served as a technology consultant.
global initiatives, earning him recognition as a proficient mentor and Ibrahim is also a prolific creator of content around the discipline of
leader. A Howard University graduate, Derrick is driven by his passion product management and the craft of cross-functional leadership.
for leveraging technology innovatively to empower individuals and You can consume his latest musings via his Substack newsletter, Run
organizations to achieve their objectives. the Business.

Monetization Playbook: Mastering Monetization Strategy 77

 Kyle Poyar, Operating Partner at Openview and creator of Prior to Simon-Kucher, he worked for i2 Technologies for over six years.
Growth Unhinged At i2 Madhavan managed several consulting projects for Fortune 500
Kyle is an operating partner at OpenView where he helps software companies that covered areas of promotions, forecasting, inventory
companies fuel growth and become market leaders. He specializes in management and logistics. Madhavan is an alumni of the Stanford
monetization, product-led growth (PLG) and SaaS metrics. Previously, he Graduate School of Business (GSB), Stanford University and the Indian
was a Director at Simon-Kucher & Partners, the leading consulting firm Institute of Technology (IIT, Chennai).
specializing in pricing and packaging. Kyle writes the popular Growth
Unhinged weekly newsletter, which explores the unexpected behind the Matt Lindsay, CEO of Mather Economics, co-author of How to Succeed
fastest-growing startups and reaches 40,000+ subscribers. in the Relationship Economy
Matt Lindsay is the CEO of Mather Economics, a consulting firm that
Logan Patterson, Global Senior Director of Digital & MarTech Strategy, works with news media companies on revenue growth. Matt is an
Slalom economist with 30 years of experience in Economic analysis and
Logan Patterson is the global senior director leading Slalom’s MarTech business consulting. He worked for Arthur Andersen and United Parcel
& Digital Strategy team. In this role, Logan is responsible for working Service before founding Mather Economics in 2002. Over the past 20
with customers to unlock the next wave of value via unique, strategic years, Matt and Mather Economics have helped hundreds of news
solutions incorporating AI, MarTech, Adtech, Marketing Analytics, media companies increase revenue through applied analytics and price
Digital Commerce and beyond. Logan has over a decade of industry and testing. Matt authored the book The Relationship Economy with co-
consulting experience, holding leadership roles in marketing, sales, and authors from NRC, one of his media clients in Amsterdam. Matt has a
digital strategy & transformation. Ph.D. in Economics from The University of Georgia.

Madhavan Ramanujam, Senior Partner at Simon Kucher, Author of Rox Chang, Senior Engagement Manager, Amplitude
Monetizing Innovation Rox Chang is a senior engagement manager at Amplitude, helping
Madhavan Ramanujam is a senior partner and managing partner of startups and enterprise companies maximize the full potential of
APAC at Simon-Kucher & Partners based in its San Francisco/ Silicon Amplitude to build better digital products. He is a self-proclaimed
Valley office. Advising companies of all sizes from Fortune 500s to Amplitude whiz who finds purpose through coaching and bettering the
startups, Madhavan has led more than 125 monetization projects for lives of others. Rox has 10+ years of experience in enterprise software
Internet, Software and Technology clients, helping bring numerous new consulting and graduated with a degree in Mechanical Engineering from
products to market. the University of Florida.

Madhavan is a co-author of the book “Monetizing Innovation: How Smart

Companies Design the Product Around the Price”, that has been featured Sam Miller, Lead Strategic Consultant, Braze
in leading publications including Harvard Business Review, Entrepreneur Sam Miller is a lead strategic business consultant at Braze. He focuses
and Inc. Madhavan is also a regular speaker in leading conferences on bringing a data-led and consumer-first approach to build incredible
and forums and has extensively spoken on the topic of new product customer engagement strategies, industry insights and thought
monetization. leadership that drive results for Braze customers.

Monetization Playbook: Mastering Monetization Strategy 78

 Endnotes
1.  IDC: “Winning with CX: Product Analytics for Growth and Personalization” (2023) 22. S
 tatista: “Leading reasons to use product/service subscriptions worldwide 2023”
(2023)
2. Amplitude Blog: “From Development to Dollar Signs: How to Connect B2B Products to
Revenue” (2023) 23. Bankrate: “Poll: Majority of subscribers experience unwanted charges” (2022)

3. Run the Business: “Connecting B2B Products to Revenue” 24. Growth Unhinged: “Your guide to reverse trials” (2022)

4. YouTube: “Growth Frameworks for Scale Acquisition, Monetization, and Retention” 25. Subscribed Institute: “How to Nail the ‘Land and Expand’ Model to Drive Subscription
(2022) Growth” (2022)

5. Growth Unhinged: “Your guide to PLG pricing 201” (2023) 26. Growth Unhinged: “Your guide to PLG pricing 201” (2023)

6. Growth Unhinged: “Your guide to PLG pricing 201” (2023) 27. CNET: “Netflix Ads Tier: Pricing Explained and All Your Questions Answered” (2022)

7. YouTube: “Growth Frameworks for Scale Acquisition, Monetization, and Retention” 28. GroupM: “This Year Next Year: U.S. 2021 Mid-Year Forecast” (2021)
(2022)
29. Reuters Institute: “Journalism, media, and technology trends and predictions 2022”
8. Ramanujam, Madhavan and George Tacke. Monetizing Innovation: How Smart (2022)
Companies Design the Product Around the Price (Hoboken: Wiley, 2016), 80-82.
30. Nerdwallet: “14 Best Travel Credit Cards of February 2024” (2024)
9. Lenny’s Podcast: “The art and science of pricing|Madhavan Ramanujam” (2022)
31. McKinsey & Company: “The value of getting personalization right—or wrong—is
10. Simon-Kucher: “Drive Your Growth—Monetize Your Innovations” (2019) multiplying” (2021)

11. OpenView Blog: “The 5 SaaS Pricing Mistakes You’re Probably Making (And How to 32. Gartner: “Gartner Says 63% of Digital Marketing Leaders Still Struggle with
Avoid Them)” (2023) Personalization, Yet Only 17% Use AI and Machine Learning Across the Function”
(2021)
12. Lenny’s Podcast: “The art and science of pricing|Madhavan Ramanujam” (2022)
33. Mint: “Top 5 Warren Buffett quotes on investing” (2021)
13. Lenny’s Podcast: “The art and science of pricing|Madhavan Ramanujam” (2022)
34.  IDC: “Winning with CX: Product Analytics for Growth and Personalization” (2023)
14. McKinsey & Company: “Experience-led growth: A new way to create value” (2023)
35. SparkToro: “SparkToro’s Prices Are Going Up (but not for everyone)” (2023)
15. McKinsey & Company: “The value of getting personalization right—or wrong—is
multiplying” (2021) 36. @johncutlefish’s Blog: “12 Signs You’re Working in a Feature Factory” (2016)

16. Braze: “2023 Global Customer Engagement Review” (2023)

17. Amplitude Blog: “Change the Way You Approach Experiments with This 7-Step
Framework” (2023)

18. Raydiant: “State of Consumer Behavior 2022” (2022)

19. McKinsey & Company: “Experience-led growth: A new way to create value” (2023)

20. Sellcourses Online: “The 27 Must-Know Subscription Economy Statistics in 2023”

(2023)

21. The Verge: “BMW drops plan to charge a monthly fee for heated seats” (2023)

Monetization Playbook: Mastering Monetization Strategy 79

Request a demo

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