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Buy 1 Get 1 Free Or 1/2 Off – Which is better for SaaS Products??

I have been interested in Masterclass e-learning courses for few months, since they added celebrity chefs like Thomas Keller and Gordon Ramsay. The latest targeted ads by google made me aware of the “Buy 1 Gift 1” promotion they were running this week .

I thought $180 (annual all-inclusive pass, currently the only pricing tier available) was a little bit steep for my impulse buy, given the fact my past e-learning experiences weren’t great. The “Buy 1 Gift 1” had brought the price point below my impulse buy $100 threshold if I could split it with a fellow crusader. Unfortunately I did not find a buddy to split the class, so I reached out to Masterclass offering them an opportunity to sell the annual subscription at $90 similar to what I would get if I split it with a buddy.

The customer service was prompt and they politely declined my offer.

As I was thinking about which promotion would be better, I came up with conflicting ideas.

1.      Near Term Revenue- Given that the only pricing option is an annual subscription, it would be hard to argue the “1/2 off” promotion would be better, since we would need twice the number of customer to sign up. Although under $100 might be a good sweet spot for many consumers including the “Gift Giving” segment they are trying to attract.

2.      Devaluing the Product- Masterclass being in the premium e-learning segment, slashing the rate in half may not be the best move. However I would argue the “Great American Marketing Machine” has trained the consumer to expect hefty discounts during these “Black Friday- Christmas” cycles even for premium products from clothing to diamonds to cars.

3.      Customer Lifetime Value –

As my sales Yoda always says, “Selling more product to your existing customer is much easier than getting a new customer.”

I believe the “1/2 off” model would have better probability at customer retention, rather than “Buy 1 Gift 1” because the person being gifted my not be as keen on the service as the paying customer.     

I am pretty sure the smart Product/Marketing people at Masterclass analyzed the data to come to the conclusion but I am conflicted since I do not have the data.

All I know is Thomas Keller style “Pasta to die for” will have to wait till the next promotion.

Would love to hear your thoughts.

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About author

Aniket runs a Product & Technology consulting firm based in Dallas. He has been an Integral part of product teams that have led to successful acquisition combining 150 million. He has over 10 years of product development experience with AGILE teams in the Internet of Things & Wireless space. He has a PhD in Wireless communication and has taken Entrepreneurship courses at Stanford. He loves to teach and mentor through various platforms like Everwise, LinkedIn etc. In his spare time, he enjoys cooking and exploring different cultures around the world.
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