In a recent YouTube video titled "Deputy's Pricing Dilemma: Fix or Fade?" from the channel "AI, SaaS & Agentic Pricing with Monetizely," Guru Lakshmi, a senior pricing consultant at Monetizely, provides a detailed breakdown of Deputy's pricing page. The analysis reveals how the workforce management platform's current pricing structure might be leaving millions in potential revenue on the table.
The Impact of Pricing on SaaS Growth
According to Guru Lakshmi, pricing plays a crucial role in a company's growth trajectory. She cites a study by Bessemer Ventures that demonstrates pricing can impact revenue growth by 12% to 25%. For a company like Deputy, which is reportedly generating around $120 million in ARR and growing at approximately 14% year-on-year, this translates to a potential $10-12 million in additional revenue annually that might be missed due to their current pricing and packaging structures.
"You would be surprised to know how much of an impact pricing could have on your growth potential that it could make you lose your sleep at night," Lakshmi states in the video.
A Framework for Pricing Page Analysis
Lakshmi shares her three-step framework for analyzing SaaS pricing pages:
- Packaging: Assessing if packaging maps to real customer segments and if tiers/features reflect user personas
- Pricing Metrics: Evaluating if the metric reflects both customer value derived and the company's internal cost structures
- Price Point: Determining if pricing is competitive, aligned with market expectations, and scalable to support expansion and retention
Deputy's Packaging Problems
The analysis identifies three major issues with Deputy's current packaging approach:
1. Improper Split Between Tiers
Deputy offers four plans: two purpose-driven plans (scheduling and time/attendance), a premium plan combining both toolsets, and an enterprise plan. Lakshmi points out that the purpose-driven plans aren't true entry-level options.
"If you take a closer look at these two purpose-driven plans, they're not truly entry level because they're a literal split of the premium into two separate plans for just 50 cents less on annual subscription," she explains.
This structure effectively forces customers toward the premium plan while making the purpose-driven plans unattractive. Meanwhile, competitors like Homebase, When I Work, and Planday offer similar value to Deputy's premium plan at half the price.
2. Free Trial vs. Permanent Free Plan
While Deputy offers a 31-day free trial, Lakshmi questions this approach when the industry standard is moving toward permanent free plans. She suggests evaluating how effective the trial is for product adoption, especially considering free alternatives in the market.
3. Questionable Add-On Strategy
Deputy offers two add-ons: one for HR (onboarding, employee feedback, document management) and another for advanced analytics and reporting. Lakshmi questions this strategy when competitors include basic HR and analytics in their standard offerings.
"I would want to understand the rationale behind doing these add-ons especially when you've got players in the industry that do basic HR and analytics as part of their standard lineup," she notes.
The Pricing Metric: User-Based Pricing Done Right
On a positive note, Lakshmi approves of Deputy's dollar-per-user-per-month pricing metric:
"Deputy does dollar per user per month as the metric, which is fairly easy to understand where customers are paying per employee registered on the platform a month, and it is also fairly simple to track."
This approach strikes the right balance by:
- Scaling predictably with customer size
- Aligning customer growth with Deputy's growth
- Offering predictability
- Enabling faster deployment with minimal IT overhead
The Price Point Problem
Despite getting the pricing metric right, Deputy's entry price point raises concerns. At $6 monthly or $5 annually per user, it significantly exceeds the industry range of $1-4 per user.
"This raises a key strategic question. Is Deputy unintentionally gating adoption or is it intentionally pricing high to signal quality?" Lakshmi questions. She adds that such high price points need to be justified by clear feature differentiation and outcome-driven value, which Deputy currently lacks.
Recommendations for Improvement
Lakshmi offers several strategic recommendations for Deputy:
- Consolidate purpose-driven tiers into a single, stronger entry-level plan with basic time tracking and scheduling features
- Create more differentiated premium and enterprise plans
- Evaluate the effectiveness of the 31-day trial versus a permanent free tier
- Reconsider the add-on strategy based on customer data and willingness to pay
- Adjust price points to balance competitiveness with adoption rates
- Conduct in-depth user segmentation to understand willingness to pay through conjoint analysis, Van Westendorp studies, or interviews
Conclusion
"Deputy has a strong platform and has achieved impressive profitability and growth over the past year. But their pricing structure could be creating some barriers in the path to their growth potential," Lakshmi concludes.
By addressing these pricing and packaging issues, Deputy could potentially tap into the estimated $10 million in additional revenue they might be leaving on the table annually. The key lies in creating a more strategic packaging structure with a strong entry-level tier, thoughtful add-on strategy, and price points that balance competitiveness with market expectations.
For SaaS executives, this analysis serves as a reminder that pricing isn't just about numbers—it's a strategic lever that can significantly impact growth trajectory, customer acquisition, and long-term revenue potential.