Mix it up: How to implement multiple monetization models

Mixing chocolate batter with peanuts and candy in a glass bowl with a spatula.
Tien Tzuo
Founder and CEO,  

This is the third installment of the Total Monetization Series, in which we’re challenging this community to think beyond subscription pricing models and embrace comprehensive and ever-evolving monetization strategies.

We’ve thrown a lot at this community in the span of one month. First, we called out how subscriber fatigue has triggered a shakeout in saturated segments of the market. Then, we introduced a way forward — Total Monetization, a strategy that continuously aligns and evolves monetization with demand. Most recently, we broke down, with lots of dots, how chasing and meeting demand is the key to survival in this mature market.

Now that you’ve had some time to let it all sink in, I want to shift your focus just a bit. Joining us today is Pete Hirsch, Zuora’s Chief Product and Technology Officer. Pete’s put a lot of time into thinking about Total Monetization. We decided to chat with him about the technology implications of successfully adopting this powerful strategy.

Pete, welcome! What was your first impression when you heard “Total Monetization?”

Thanks for having me, Tien! 

At first, I wasn’t sure what it meant. But the breakthrough for me came when I read PwC’s latest CEO survey. It’s actually top of mind for CEOs across the globe. Almost half of them say their companies won’t be viable in the next decade unless they transform how they do business.

And this isn’t just about making money. It’s about creating stronger, more personal connections with customers; understanding their needs and desires, and responding to them with precision. I’m excited about Total Monetization because it’s about moving beyond rigid revenue models and allowing businesses to offer a dynamic mix of pricing options that cater to customer needs. What allows this to happen, though, is technology, which is critical for enabling that agility and precision.

So where do you start?

You start with relationships. Strong relationships are built on differentiated value – the benefits your customers receive and how well they’re realizing the full potential of your offering. 

You start by creating value for your customer, and you do that by creating a dynamic mix of prices, packages, and models—all informed by market data.  This is how you foster a deeper understanding of and connection with customers, turning every interaction into an opportunity to build trust and loyalty.

Businesses can no longer rely on subscriptions, consumption billing, one-time transactions, and other singular pricing models to have staying power. They need to accommodate a mix of data-driven strategies. This approach necessitates a platform that uses market and customer data to experiment with different pricing models and optimize the structure based on emerging patterns.

This eliminates siloed data and allows businesses to understand their customers’ preferences in real time and craft personalized packages and pricing structures with differentiated value propositions. Consider the impact of offering freemium alongside premium subscriptions. By having the mechanism to understand and respond to consumer needs, a business stands out in this hyper-competitive market.

Think of it as a virtuous cycle: strong relationships lead to a focus on value, which informs your pricing and packaging strategies. Data helps you refine this approach further.

That’s really key. We’ve said it in many ways on this platform: standing out, staying power, surviving the shakeout. How you do that comes down to what you just said. But the exact solution differs for each company, so you need tech that can handle a multitude of approaches. 

Absolutely! That’s where flexible tech comes in. It needs to adapt to however you want to approach monetization.

You need a system that supports the entire journey, from the initial offer all the way to revenue recognition. It should be a conversation with your customers, whose feedback shapes how your offerings evolve. This way, you stay perfectly in sync with what they need and expect.

Here’s where a modern platform gets really powerful: It can analyze customer data and recommend the perfect pricing mix for different groups. This tool can look at a customer’s history and suggest a core subscription plan with add-on features based on what they actually use. Plus, the right platform tailors the offer to each person, making it as appealing as possible.

Smooth transactions are important, too. The right tool should handle everything flawlessly, no matter the pricing model: subscriptions, one-time purchases, usage, consumption. Especially with those consumption models, accurate revenue recognition is key. The platform needs to track usage meticulously and make sure revenue is recognized according to the rules. This not only avoids financial headaches but also builds trust with everyone involved – investors, regulators, the whole crew.

And that will be especially important when you consider how customers are people, and people’s needs and wants change virtually all the time. Your product and how they engage with it changes as well, and you need to be able to adjust for that rather quickly.

That’s right. Businesses need to constantly evaluate and evolve their mix of offerings to capture the full and changing spectrum of market demand. Agility is key. Customer demand is ever-changing, and businesses must regularly shift their monetization strategies to align with that demand. That means they also need the right tools that can evolve and align in concert with that shift without dramatically overhauling their systems and processes. A business’s ability to move quickly and deliver new offerings to the market is what makes it a future-proof enterprise.

This has been great, Pete. To recap: Businesses need to create value by having a dynamic mix of prices, packages, and models driven by data; support that mix from offer to revenue recognition; and be able to constantly track demand and adjust what they offer as it changes. Did I get it all?

Exactly. A truly modern business must be able to do all of that simultaneously, and that is not possible without the right technology and a flexible and robust monetization ecosystem. But we can’t forget the customer. The journey towards Total Monetization is as much about technological transformation as it is about customer-centricity and recurring growth. It’s about understanding what customers need and meeting them where they are, using technology to enhance the value and experience you can provide them.

Thank you, Pete!

My pleasure, Tien! 

In the next installment of Subscribed, we’ll discuss with Pete more about how to make Total Monetization a reality for businesses.