In a recent YouTube video titled "How to Package New Product Features Without Killing Your Revenue," Akhil from Monetizely presents a strategic framework for SaaS executives facing the critical decision of how to package new product features. The video offers practical guidance on making feature packaging decisions that can significantly impact revenue and customer adoption rates.
The Feature Packaging Dilemma
When you've built a new feature for your SaaS product, you're immediately confronted with a crucial decision: should you integrate it into your existing package or offer it as a standalone add-on? As Akhil points out, "This decision can significantly impact your revenue and customer adoption."
Making the wrong choice can leave substantial money on the table or create friction in your customer experience. Most SaaS teams end up guessing rather than using a structured approach, which is why Monetizely's framework is so valuable.
The Strategic 2x2 Matrix Framework
At the heart of this approach is a simple but powerful 2x2 matrix that considers two key factors:
- Customer demand: What percentage of your customers want or need this feature?
- Willingness to pay: How much extra would customers pay for this capability?
By plotting features on this matrix, you can make more informed packaging decisions. Let's break down each quadrant and the recommended strategy for features that fall within them.
High Demand, Low Willingness to Pay
Features that fall into this quadrant should be integrated into your main product lineup. As Akhil explains, "While many customers want these features, they won't pay much extra for them. Including them strengthens your core value proposition without sacrificing revenue."
An example might be a simplified dashboard that 80% of your customers want but wouldn't pay significantly more to access. By including such features in your core offering, you strengthen your overall value proposition and competitive positioning.
High Demand, High Willingness to Pay
These features represent prime opportunities for premium tier differentiation. In Akhil's words, "These are ideal features for a premium tier differentiation. They become powerful motivators for customers to upgrade to higher price packages."
These features can drive significant upsell revenue as they're both widely desired and perceived as valuable enough to warrant additional payment.
Low Demand, High Willingness to Pay
This is the sweet spot for add-ons. Akhil describes it perfectly: "This is the sweet spot for add-ons. A smaller subset of customers really value this capability and will pay well for it. Rather than forcing all customers to subsidize features only some will use, create targeted add-ons."
For example, Akhil offers a scenario where "you have developed an advanced security compliance feature. Your research shows only about 20% of customers need it, which is low demand. But those who do would pay significantly more, which is high willingness to pay. According to our matrix, this is prime add-on territory."
This approach allows you to monetize valuable features without forcing your entire customer base to subsidize functionality that only a subset will use.
Low Demand, Low Willingness to Pay
If both demand and willingness to pay are low, Akhil recommends a more cautious approach: "For these features, really consider delaying monetization or reconsidering development priorities altogether. They will not be worth the investment yet."
This quadrant serves as a warning sign that these features may not be worth prioritizing in your current development roadmap.
Real-World Application
The matrix isn't just theoretical—it's a practical tool used by successful SaaS companies. As Akhil mentions, "This framework is covered in detail in our book, Price to Scale, where we explore packaging strategies that have worked for companies across various SaaS segments."
When applying this framework, it's essential to gather solid data on both customer demand and willingness to pay. This typically requires customer surveys, interviews, usage data analysis, and possibly prototype testing.
Balancing Customer Value and Revenue Goals
Effective feature packaging isn't just about maximizing short-term revenue—it's about creating sustainable growth while maintaining customer satisfaction. As Akhil concludes, "Effective packaging balances customer value with your revenue goals. This framework helps you make strategic decisions that support sustainable growth while maximizing customer satisfaction."
By using this structured approach to feature packaging decisions, SaaS executives can avoid the common pitfalls of:
- Bundling too many features into the core product, diminishing perceived value
- Creating add-ons for features customers expect to be included
- Missing opportunities to monetize high-value features
- Developing features with limited revenue potential
Moving Forward
For SaaS leaders facing packaging decisions, implementing this matrix approach requires:
- Gathering reliable data on feature demand and willingness to pay
- Honestly assessing where each feature falls on the matrix
- Creating a cohesive packaging strategy that aligns with your overall pricing philosophy
- Regularly reassessing as market conditions and customer preferences evolve
The difference between guessing and using a strategic framework like this can mean millions in revenue and significantly improved customer satisfaction. As you evaluate your product roadmap and feature development priorities, consider how this matrix might help you make more informed packaging decisions.