Pricing Page Teardown - Monday.com: Does their pricing end or drive their week?

This episode might reference ProfitWell and ProfitWell Recur. Some information may be out of date.

Monday.com is a behemoth in the project management space. They've got probably some of the best YouTube and video advertising I've seen from SaaS companies. You almost don't mind having to watch them—they're just so well put together. They've been using these video platforms as a marketing and re-marketing channel to find success in a huge, competitive area: project management. There are so many different apps out there. It's overwhelming and, frankly, a bit annoying. You're inundated with options, no matter your segment or desired features.

So today, we're doing ourselves a favor by focusing exclusively on the practices of Monday.com. We're going to explore what this company is getting right, especially in such a hardcore space. We'll also examine what they're not doing well, and wrap everything up in a nice little case study for you to apply within your own business and monetization strategy.

Monday.com has managed to differentiate itself in such a saturated market with great branding and marketing. They now have a $1.9B valuation and are on a path to IPO. But is Monday.com’s positioning and pricing good enough to drive them forward?

Below are some valuable takeaways you can implement in your own business.

• Understand value differential in fragmented markets
  When you have a lot of competition and niches, your packaging and positioning is incredibly important. It’s crucial to conduct research to really understand why people buy from you and what they’re really looking for. Identify the value propositions that drive willingness to pay, and which detract from it.
• Know willingness to pay to ensure you don’t under- or over-price
  Here again, understanding your customers’ willingness to pay is key to arriving at the right price point. Each band of users has different values, needs, and budgets. Price your packages accordingly. A little research can go a long way.
• Understand where features change and don’t change based on size 
  When you're in a fragmented market, you're going to build a lot of features. Conduct an audit of your different feature set. There will be features in your core that people aren't using—these could be made differentiable. And there are probably features you're including in tiers that should be add-ons. As more and more product gets shipped, you’ll need to be better about differentiating your products in order to monetize effectively.

A million project and workflow management products exist. Ok, not a million, but there’s Redbooth, Trello, Wrike, Notion, basecamp, clickup, airtable, teamwork, and I’m not going to name them all. So many exist because we all have projects that need managing and tracking whether we’re working solo or together, but we also all work differently. 

This is why it seems kind of wild that Monday.com would enter the ring, especially without any massive funding in their early years. Founded by Roy Mann, he wanted to create something that helped team members be happy and productive. In 2014 he teamed up with Erin Zinman to officially found their team management platform dapulse—a name they’d later regret as many mocked it as sounding like the name of a hip-hop artist.

I don’t know about you, but keeping dapulse of the team sounds pretty good. Yet, not wanting more tweets about the name they switched to Monday.com, a name to take back the first day of the week for a broad market of work. So many apps for this exist though, so what did Monday.com focus on to be successful? 

Well, their mission squarely focused on the collaboration and transparency piece of work and project management. Other apps had these features, but they weren’t the primary focus and Monday.com tapped into these specifically. Monday also used their easy to remember name, as well as really good video and ad creative to bring people into the fun and collaborative nature of the product. When you’re ina  saturated market, proper branding and marketing is an enormous differentiator. These two pieces have lead to Monday.com growing to 100,000 teams in 200 different verticals across the world. They also now have a hefty 1.9B valuation and are on a path to IPO.

Monday.com's success

Success normally breeds more competition, but in Monday.com’s case they’ve been steeped in competition since the beginning, leading some to believe that their success may decline as new apps come into the market like fads. Teamwork.com has focused on being multi-product for different leads within an organization—sales, product, marketing, etc.—to appeal to those who don’t want a bunch of different apps. ClickUp has gone down a similar route but more focused on having everything they could think of in the product. Asana went upmarket with all the upmarket features. 

The question becomes: Does Monday.com have what it takes to sustain their growth or will they end their week because of many products eating at their market share over time? Alternatively, is the market big enough that it doesn’t really matter since they’ll gain enough lock-in? How can they use their positioning and pricing to propel them forward in the context of this market? 

We’ll reveal all the data and answers to these questions, so keep reading.

Management mash-up: Choosing a software

You might be rightfully wondering, what project management apps do we use at ProfitWell? Quite frankly, which ones we don't use might be a more efficient question. We've dabbled in Trello, Notion, Redbooth, Asana, Basecamp... I think a team is even still using Monday.com. Google Spreadsheets and Reich have made appearances. Just right there, there are eight programs that we have used or are still using. 

I think that shows that 80% of these services are going to be pretty comparable in terms of features and usability. You'll see things like task management, assigning, commenting, and all of those great things. The struggle is, no product can completely dominate that last 20%, which differs for every consumer.

My biggest advice for finding your perfect software match is figuring out your ideal flow. Once you figure out how you best operate, you can find a product that meets your needs. You shouldn't be having to match your project to your software—after all, there's so many options that the one you're looking for is probably out there. 

I think this is a lesson from a business perspective. When you're in a giant, fragmented market, you can make your niche just comically small. I think that right now, Monday.com is targeting more of a mass market. They've gotten a lot of traction, so that's good, but could maybe be missing the opportunity to be the perfect fit for a certain crowd. In the end, project management is destined for a very fragmented market, where a bunch of different players just cover specific niches. The mass market is inevitable, but it's very different to start off in. 

Rome has tried out bi-directional linking, which initially attracted many people to the product. They're doing a lot of interesting things but, in the end, consumers ditch them, saying, "Yeah, but I need these seven features." That's when they turn to something like Notion, which is a bit more of an enterprise solution. 

Long story short, you've got to understand what you're going after and what you're coming up against. If you're in a fragmented market, don't fight it. Lean into it.

Let's take a look at the pricing page and unpack some of the data on their current and prospective customers.

Pricing Page

First up, their user scale is really cool. I like that you're not worried about adding one user at a time. Instead, you get fit into a bucket with a predetermined price. It eliminates a lot of the pushback from potential customers as they're going through their sales conversation. It also gives you the ability to see, at a glance, what the price would be for your team. That's key for an SMB type buyer—they'll want to know the flat rate. 

Here's a critique, though. They have many different bands—20, 25, 30. I don't know if that's the right move. If you force a client into a fifty user group, you can re-contextualize this upsell as a positive: up to 50. That means that agencies with external or infrequent viewers aren't having to shell out cash for users that aren't worth the cost. Many apps neglect to think about that, so offering those "lurkers" for free could be a huge selling point. Offering unlimited, free viewers is huge. 

Another annoying point with that, though, is that every single plan offers these free viewers. That's great, but they waste space placing that feature in the description of every tier. Instead, that information could be represented in saying, "Hey! Everyone gets these things. Everyone gets an awesome product." That's an appealing pitch and frees up space and attention for the truly differentiated pieces. 

As we take a look at the more traditional, enterprise-type features, I would also make some changes. Explaining everything that comes with enterprise takes up a page's worth of information. It could be better anchored by simply prompting visitors to "contact us." Even better would be linking enterprise out to its own landing page. It's a more immersive experience for your potentially big clients without annoying the rest of your viewers. 

We'll end on a positive. I love how they optimize for monthly cost, versus looking at it annually. I would maybe tweak that "18%" figure to what it really means: two months. Human beings understand percentages, but why make us do the conversion? We like physical things—and the data shows that. And speaking of the data, let's check it out.

Where does our data come from? 

Our Price Intelligently software combines proprietary algorithms and methodologies with a team of pricing experts who think about this stuff more than anyone else to help companies optimize their monetization strategy. We do this by going out into the market and collecting data from current and prospective customers, having the ability to collect data from everyone, from a soccer mom or dad in the middle of Kansas, all the way to a fortune 500 CIO in South Africa. We then take that data and run it through our algorithms and analyze it in every direction to determine a company's ideal customer profiles, as well as which segments value, which features and which segments are willing to pay more, all in the spirit of determining how a company can use monetization for growth.

Understand value differential in fragmented markets 

It's important to understand value differential fragmented markets, and what it means for your product. We mentioned earlier how fragmented the project management market is. When you have such competition and many niches, your packaging is incredibly important. Your positioning is perhaps most important of all. When someone comes to Monday.com, there are many reasons why they might want to use a project management tool. But why might they convert, or be ready to defend your product's value? 

We took a bunch of different value propositions and asked participants, "Is this the number one reason you're buying this product?" Then, we compared and contrasted their individual willingness to pay with the overall median. What we found is that things like keeping clients in the loop and enabling collaboration boosted willingness to pay, or at least value perception, by about 10-15%. 

On the flip side, the stereotypical "project management" tools—like gain visibility and timeline management—actually detracted about 15%. Ultimately, these value props can change how conversions look, as well as what willingness to pay looks like. We don't do enough experimentation with that. Advertising these "table stakes" features doesn't do much for clients - it's something that they're already expecting from everyone. Cross-team sharing and strong communication is where the big competition and value comes in. 

If you're taking notes for your business, you'll want to make sure you test your value propositions from a willingness to pay perspective. It's a much cleaner environment than trying to A-B test, which is hard to do without high levels of traffic. Take the time to truly understand what is going to boost willingness to pay, then lean into those segments and value props. 

Know willingness to pay to ensure you don’t under-or over-price 

An awareness of willingness to pay can also help make sure you're not under- or over-pricing. This is critical. Understand where those drop-offs are and make sure you know exactly how that willingness varies within each group. Monday.com absolutely nailed their downmarket price points. I want to give them all the credit in the world. Unfortunately, their higher tiers, which are marketed towards other groups, follow the same downmarket trend. On their price page, the middle level was about $200. But we learned their willingness to pay for that group was closer to $300. That's $100 a month, lost. By the time you get to the highest levels, they might be $200 below their ideal price. 

Now, you might be thinking, "Oh great, then they'll get more volume." Unfortunately, that's not how it works with software. It doesn't have a natural, perfect demand curve. It's one of those things where, as the price goes down, some people may question the quality of the product or its efficacy in solving their problems. If prospective customers look at Wrike or even Asana, you're suddenly in an environment where Monday.com seemed very underpriced. Visitors have developed a willingness to pay $300-$400. If Monday is sitting at $200, people might get in the door... but you might not pass the sniff test. 

It's even more extreme as the groups get bigger. For 40-50 users, the willingness to pay shoots up to $500-$750. Monday is only pricing these folks at about $400. It's not terrible, but there are clearly some quick wins here. Adjust those bands or adjust the price point, and they're making a lot more. I really doubt their conversions would suffer at all.

Value Matrix

You're about to see something called a value matrix. We collected data from the group comparing feature preferences and plotted those on the horizontal axis, more valued features on the right, less valued on the left. We then collected willingness to pay for the overall product and plotted that based on their number-one feature preference on the y-axis. Analyzing data in this manner allows us to determine which features are differentiable add-ons, core, or commoditized for each segment.

Understand where features change and don’t change based on size

I think that one thing Monday.com does fairly well is separating out their tiers based on features. However, the one thing you'll find here is that, when we compare clients who have 5-50 users to 51+ users, there's a big shift. Things like customer branding, integrations, time-tracking become a lot more important. For those 5-50 user groups, there's some willingness to pay, but they're within that +/-20%. Nothing's beating the bank here. When you make the jump to 51+, people are willing to pay for these things and they become truly differentiable. 

Here's the key: When you're in a fragmented market, you're going to build a ton of features. You'll have a ton of product. When you do that, you have to make sure you understand where different things should be placed in terms of your tiers. Monday.com actually did a pretty good job with this. There are some little modifications I would suggest, but it's nothing to cry over. 

• Understand value differential in fragmented markets. In a fragmented market like the project management space, every inch of your design, positioning, and price are incredibly important.
  It’s crucial to conduct research to really understand why people buy from you and what they’re really looking for. Identify the value propositions that drive willingness to pay, and which detract from it. Many businesses think about this internally, but most under-test it.
• Understand your audience's willingness to pay. We talk about this a lot, but it's critical to ensure that you're not under- or over-pricing. Each band of users has different values, needs, and budgets. Price your packages accordingly. A little research can go a long way.
• Know where features change and stay the same in terms of value, based on the size of your customer. As we saw with Monday.com's user base, the game changed as soon as they got over 50 users. It's something they can take advantage of by differentiating their tiers. Your company needs to understand what your upgrade paths look like, and the only way to do that is research.

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