HappyFox offers help desk and live chat software that is used and loved by 12,000+ companies in 70+ countries. We sat down with Shalin Jain, the founder and CEO, to understand how their iterative, data-driven approach to pricing has helped fuel revenue growth.
The conversation was particularly interesting because their pricing methodology was so aligned with our previous blog post where we compiled tips from SaaS pricing experts on how to turn pricing into a growth lever. The three themes from those tips were:
- Give pricing the attention it deserves: On average, companies only spend 15 hours in the history of their business focusing on pricing, which is far less than what is needed.
- Identify the right value metric and build your prices around it: The value metric for each company is different, but utilizing the right value metric in pricing is key to growth.
- Regularly experiment with different offerings: Your pricing should never have been considered written in stone.
Keep reading to learn how HappyFox followed these key principles to evolve their packaging/pricing over the last seven years. But first, a quick overview of how they started their journey by pivoting from on-premise to a SaaS offering.
The Beginning: Recognizing the future of SaaS
Before HappyFox there was Helpdesk Pilot. Their initial offering was on-premise software sold via the traditional, perpetual licensing fee model. Revenue was front-loaded with optional add-ons for ongoing updates and support.
Customers ran the software on their own hardware, which was difficult to support because Helpdesk Pilot had little control over the hardware each customer used.
With the concept of SaaS on the rise, and the subscription-based model offering many obvious benefits over on-premise licensing, Helpdesk Pilot committed to bringing a SaaS offering to market. HappyFox was officially launched in 2011. Jain quickly realized that subscription billing and management in the SaaS world was going to be complicated and that it was more effective to find a best-of-breed provider vs building an in-house solution.
The Million Dollar Question: “How do we price?”
With the move to the subscription model, HappyFox faced a common challenge that most startups encounter—determining how to price a new product offering. They initially set pricing based on the number of help desk staff needing access:
This was a common approach at the time, but HappyFox was ahead of the curve because they knew their initial pricing was temporary and would evolve as they learned more about their buyers and the market at large.
“As soon as we started using Chargify, we realized the options for pricing and billing models were wide open. It is extremely powerful and flexible. With the right tool in place, we could experiment with pricing as a growth lever to grow our new business faster,” explained Jain.
Price Experimentation: A task that is never done
After launching HappyFox, setting baseline packages, and getting customers in the door, they were equipped with insights to begin making smarter, calculated decisions that would align packaging/pricing with key value metrics.
What is their approach?
HappyFox is continuously analyzing their data to determine future pricing experiments. To help you understand the power of accurate metrics, comprehensive reporting, and price experimentation, consider this statistic: Each time HappyFox makes a price change, they typically see sales increase anywhere from 50-100%.
Below are two examples of HappyFox’s data analysis and price changes (out of many) that Jain shared:
In 2014, their pricing had evolved to a seat-based billing model, with monthly and annual offers. They had three public facing plans:
A plan-based segmentation analysis revealed the least expensive plan was only being purchased 5% of the time. Customers buying the most expensive plan were also more engaged and less likely to churn.
They quickly realized that they were underpricing their product. Target customers saw the value in the more expensive plans and were willing to pay. As a result, they removed the lowest pricing tier.
Fast forward to present day, and you see that they have continued to iterate on their entry-level package, which is now comparable to the most expensive package in the 2014 example above.
Using price changes to decrease churn
HappyFox enjoys a very low churn rate overall, but (as with any company) the goal is to continuously optimize for increased retention. “We realized we put a lot of quality onboarding and training resources towards all customers, irrespective of what customers paid us,” explained Jain.
HappyFox decided to analyze their churn data and found the highest churn rate among customers who purchase the product for only one or two help desk agents.
“We wanted to strengthen the foundation of our already healthy customer lifetime value, so we changed our packaging to require a minimum of three agents. It’s been extremely successful for us and decreased our churn considerably.”
Jain pointed out that this decision was about more than just decreasing churn. “We want our customer success and sales teams to always feel empowered to do the best for our customers, without being worried about the deal size or the longevity of the customer.”
These are just a couple examples of the many pricing changes HappyFox makes. Each change is based on deep, data-driven analysis, while the actual price changes are easy to roll out and track with Chargify.
“The number one way Chargify helps us grow and scale our company is by making it so easy to experiment with our packaging and pricing. There’s little to no development effort required.”
The company also does a thorough annual review of pricing in which they look at how the product has evolved and added value for customers over the previous year. “We’re continuously adding new features, so annual changes are often needed and justified.” As mentioned above, their goal is to always align price to the value customers are receiving from the product.
Looking Ahead: Deeper integrations
For a company that has consistently exceeded 100% year-over-year growth, we were excited to ask what the future looks like and how they planned to maintain the momentum.
According to Jain, HappyFox is aggressively working on expanding native integrations. He points out that most customers integrate HappyFox with other tools in their stack, but most are done via Zapier, which can create more work and add friction for new customers getting started.
HappyFox has built an architecture which allows for deep integrations to be developed at a very rapid pace.
Some of the public-facing integrations they’re building also provide internal solutions. HappyFox recently released a native Chargify integration that displays billing information alongside support tickets.
“Our support team regularly needed to access billing information such as current plan, price, and balance while helping out customers. By reducing the need to open multiple tabs and search for information, they are able to serve the customer more efficiently.
With the HappyFox Chargify integration, the support team can now handle the majority of Level 1 billing questions, freeing up internal resources. For the majority of needs, team members don’t have the need to jump into Chargify to access billing information, and they’re able to communicate with the customer without leaving the HappyFox interface. It has proven to be extremely convenient and has drastically reduced our response times.”
The new HappyFox
The team has been iterating on a new and improved HappyFox that has already been rolled out to some customers and shortly will roll out to all existing customers. “It’s beautiful and intuitive, and it’s truly been built from the ground up with a lot of customer feedback,” said Jain.
The team has also been working on new reporting framework which will allow HappyFox customers to really drill down deep—far beyond what is available in many of the tools on the market today.
“The new reporting framework will provide answers to all the questions that a support team and support managers really need and are looking for. We’re going to change the expectation of reports from a help desk software by reaching the new benchmark,” explained Jain.
Want to learn how your business can leverage pricing as a growth lever similar to HappyFox? Set up a call with a Chargify Billing Expert. We would love to understand your business and how Chargify can help you grow faster!