🚀 How to monetize effectively

3 tactics to monetize effectively

🤝 Tie monetization directly to feature value

• If it drives virality → Give it away

• If it drives activation to long term retention → Give it away until activated, then charge

• If it drives lifetime value → Charge if willingness to pay is higher than lifetime value gains

• If it doesn’t drive virality, activation, or lifetime value, but people are willing to pay → charge for it

• If the value of the feature does not cover the cost to support → don’t build it or sunset it

🔥 Bundle features into simple, value-driven packages

• High usage + High willingness to pay → Higher tier

• High usage + Low willingness to pay → Core tier

• Low usage + High willingness to pay → Add-on

• Low usage + Low willingness to pay → Don’t build

• Bundling sacrifices some individual feature willingness to pay but prevent overwhelming customers

⏰ Design monetization with long term growth in mind

• Monitor churn closely after pricing changes; rising churn can offset revenue gains.

• Track second-order effects on acquisition—especially when users drive growth and distribution

• Measure revenue-per-customer improvements against volume changes; avoid sacrificing scale for short-term gains

2 traps to avoid

🚨Avoid shipping new features across all pricing plans

• Adding features to every plan dilutes premium value and crushes upgrade incentives

• It squeezes margins with more maintenance but same revenue—and blurs value between plans

• Don’t fall for “keeping up with competitors”—innovate where it counts instead

• Focus on building differentiated features that justify higher-tier prices and drive upgrades

🚨Avoid misaligning revenue model to value created

• Charging in ways that discourage usage (Eg. charging per tracked event) limits engagement, hurts retention and kills product value

• Tie pricing model to usage that scales with value—make it easier for customers to get more value over time instead.

1 tool to leverage

📖 Best practice on monetization strategy

• Monetization = how, when, and what to charge—not just price

• Evaluate holistically using these 4 metrics: revenue creation, payback period, revenue retention, and 1-year average revenue per paying user—don’t rely solely on lifetime value

• Leverage tools like Orb to implement flexible and dynamic pricing

Bonus: 1 trend to spark startup ideas

🔨 Digital commerce is accelerating with huge growth potential

• E-commerce represents only ~20% of total commerce, with digital spend growing 8.4% in 2024 (vs 4.9% in 2023) and outpacing inflation

• Consumer spend remains strong despite inflation—Shopify’s GMV has grown 5x in 5 years and nearing $300B (over a third of Amazon's)

• Spend is shifting from the physical world to the digital

• New categories emerging: sneaker bots, IP proxies, community memberships and virtual stores (Eg. IKEA in Roblox)