Driving ACV, cross-sell, and simplicity for a risk management platform

The Client

Client is a leader in risk management software with $200M ARR. Their platform supports and connects professionals across audit, risk, ESG, and IT. They primarily serve enterprises with $1B+ in revenue.

The Context

In recent years, the company has undergone two strategic changes.

First, their portfolio expanded from 2 to 7 modules, enabling them to offer a connected platform rather than individual point solutions. With that evolution, their ability to provide a connected platform across risk professionals has become their core value proposition and differentiator in the market. Modules were priced on both the number of users and usage metrics. Each module was packaged using a “good, better, best” tier system.

Second, they’ve begun expanding their customer base to commercial customers with less than $1B in revenue, who have different needs and a lower willingness-to-pay.

Given this, the client wanted to re-evaluate their pricing strategy to achieve three macro-objectives:

• Drive cross-sell with a fully connected risk platform - Due to the number of price metrics used across the portfolio, pricing multiple products in a single deal became complex and confusing for customers.
• Align price to value – The client’s current price metrics had low to moderate correlation to willingness-to-pay. As a result, prices were often too high for their new commercial customers yet too low for their largest enterprise customers.
• Increase upsell at renewal – Each module had a “good, better, best” tier. Each tier was positioned and priced to target a specific customer segment. The “good” tier was for mid-sized customers. The “best” tier was for enterprises. As a result, only the largest customers could afford the higher tiers, and upgrades were limited.

The Monevation

Standardized active users as the primary price metric across modules and developed persona-oriented bundles to reduce friction and enable cross-sell

• Market research showed that over 85% of customers consider active users to be both acceptable and predictable across modules. Adopting core users across modules removed friction in multi-product deals
• Most usage metrics were removed from pricing, further reducing friction during multi-module deals.
• With friction reduced, bundles were created based on buyer persona to drive cross-selling and average contract value (e.g. an InfoSec bundle of 3 modules)

Established a fixed + variable revenue model to balance minimum/predictable spend with upsell potential

• Fixed fees were calibrated to reflect 70% of a typical customer’s total price and establish a meaningful minimum spend.
• Variable fees, measured by the number of users, were calibrated to reflect 30% of a typical customer’s total price, allowing for the opportunity to upsell users over time.

Developed four price books segmented by customer size to align price to value and customer willingness-to-pay.

• Internal data analysis, customer interviews, and pricing survey techniques revealed 1) willingness-to-pay increased 3x as customer size increased from $1B to >$20B, 2) large enterprises were underpriced, and 3) small commercial customers were overpriced.
• Segment-specific price books aligned price levels to willingness-to-pay, making prices attainable for commercial customers and increasing average contract value for large enterprises.
• Price levels for “better” and “best” tiers became affordable for commercial and mid-size customers, making them more accessible and improving upsell rates at renewal.

The Impact

• Expected $20M ARR in year 1