In this detailed analysis from Monetizely's YouTube channel, SaaS pricing experts and co-founders Ajit and Akhil examine Figma's pricing evolution from its early days to its current pre-IPO structure. The video provides a fascinating look at how a successful design tool company has transformed its monetization strategy as it scaled from startup to market leader preparing for public offering.
The Keys to Figma's Initial Success
Figma disrupted the design tool market by understanding exactly what users needed that incumbents weren't providing. As Akhil explains, "First of all, brilliant move launching it as a free online service. So no needing a beefy computer, no need to install anything. And you could collaborate with people. And that is very valuable."
This approach positioned Figma perfectly against established competitors:
- Adobe: Too huge, expensive, and cumbersome
- Balsamiq: Limited collaborative features
The free tier eliminated barriers to adoption, allowing small design teams to start using and collaborating in Figma immediately. As Ajit notes, "I think this is what really worked for them."
Figma's 2020 Pricing: A Case Study in Segmentation
Ajit shares what made Figma's 2020 pricing model particularly impressive. While many might see just a standard "good, better, best" plan structure, he identifies something more sophisticated:
"What I really liked about them is… they have done a very good design to the needs of a professional team and to the needs of an organization. When you look at the functionality that they offer for collaboration, it is quite detailed, right? Private projects, prototype sharing, centralized team on canvas commenting, and then things like design systems, which are very important for organizational collaboration."
This demonstrated Figma's deep understanding of what enterprise customers actually need. Rather than simply adding generic enterprise features like SSO (Single Sign-On) and role-based access control, Figma created value through specialized collaboration tools tailored to design teams within large organizations.
As Ajit emphasizes: "The right way to do pricing is how they did it… always start with segmentation, understand their needs, and then create packages that are a good fit for them. And that may actually mean that you have to build some more features to cater for that."
The Pre-IPO Pricing Transformation
Fast-forward to 2024, and Figma's pricing structure has become markedly more complex. The company now offers eight different products bundled into various "seats" (Collab Seats, Dev Seats, and Full Seats) across Professional, Organization, and Enterprise tiers.
Akhil's immediate reaction to the current pricing page reveals the issues with this approach: "The moment you opened this, I went into this trying to get a sense of which one works for me. I see nine numbers… And while some people might think of them as not professional, not organization or professional organization, I look at features and what I want. Now, I have a feeling that it will take me some time and a lot of cognitive effort to figure out which works for me."
Ajit notes this complexity is typical pre-IPO behavior: "When they are close to an exit event, they will juice their customers. That is unfortunately what companies do. Company software companies are blockbuster movies that play out over 10 to 15 year horizons. And just before the exit, they squeeze their customers."
The Bundling Problem
The experts identify a key issue with Figma's current strategy: bundling products that don't necessarily belong together. When companies create bundles of unequally valued products, several problems emerge:
- Disregarding user needs: Customers may only want one or two products from the bundle
- Value perception issues: As Ajit explains, "Even if I value your full seat at $90 per month… When you add more products there, suddenly I think, hey, I could have gotten that for cheaper because you're giving me eight for 90. But that one thing I needed could have been 20."
- Price increases: "Between these two plans, that price is actually doubled… in four years, you've doubled the price."
As Ajit warns, "Bundling can very easily blow in your face." This strategy typically only works well for monopolistic players like Microsoft, who can bundle everything into packages like E5.
Alternatives to Complex Bundling
The experts discuss potential alternatives to Figma's current approach:
- Build Your Own Plan: Allow customers to select specific products they need, treating each as a "Lego block"
- Add-ons: Follow Zoom's model with core plans plus additional paid features
However, they acknowledge the trade-offs involved. While these approaches may better meet customer needs, they can complicate the purchase process and potentially reduce conversion rates.
Lessons for SaaS Founders
This analysis offers valuable insights for SaaS companies at various stages:
- Early-stage: Focus on finding product-market fit and customers willing to pay something before optimizing pricing
- Growth stage: Develop pricing tiers based on genuine customer segmentation, not arbitrary "good, better, best" structures
- Scaling: Be cautious about bundling products that don't naturally go together
- Pre-exit: Recognize that aggressive pricing changes may boost short-term metrics but risk long-term customer relationships
Conclusion
Figma's pricing journey illustrates the evolution many successful SaaS companies undergo as they scale. While their initial approach brilliantly matched product features to segment needs, their pre-IPO strategy has sacrificed simplicity and customer-centricity for revenue maximization.
As Ajit concludes, "This is what it looks like before a company tries to have a big exit. It may work in the short term, but the question is if it works in the long term."
The ultimate success of Figma's current pricing approach remains to be seen. As the experts note, with AI causing market disruption and users increasingly questioning value for money, companies cannot take customer loyalty for granted—even when they're the current market standard.