Sauna Skills

Monetization Models

Freemium

How it works: Free tier with limited features, paid tiers for more

Pros	Cons
Low friction acquisition	Free users cost money to serve
Large top of funnel	Conversion rates typically 2-5%
Product-led growth potential	Feature gating decisions are hard

Examples: Slack, Dropbox, Zoom, Notion

Best for: Products with viral/network effects, low marginal cost per user

Free Trial

How it works: Full access for limited time, then paywall

Pros	Cons
Users experience full value	Time pressure can feel aggressive
Higher conversion than freemium	No ongoing free acquisition
Simpler packaging	Trial length optimization is tricky

Examples: Netflix, Adobe, Salesforce

Best for: Products where value is clear quickly, complex products needing exploration

Usage-Based

How it works: Pay for what you use (API calls, storage, seats)

Pros	Cons
Aligns price with value	Revenue is unpredictable
Low barrier to start	Large bills can cause churn
Grows with customer	Complex to communicate

Examples: AWS, Twilio, Stripe, Snowflake

Best for: APIs, infrastructure, products with variable usage patterns

Seat-Based / Per-User

How it works: Fixed price per user per month

Pros	Cons
Predictable revenue	Penalizes collaboration
Simple to understand	"Seat consolidation" reduces revenue
Easy expansion revenue	Doesn't capture value delivered

Examples: Figma, Asana, most B2B SaaS

Best for: Collaboration tools, products where more users = more value

Flat Rate / Tiered

How it works: Fixed monthly price, possibly with tiers

Pros	Cons
Dead simple	Doesn't scale with value
Predictable for customers	Hard to price optimally
No usage anxiety	May leave money on table

Examples: Basecamp, Netflix

Best for: Products with consistent value regardless of usage

Monetization Analysis Template

# Monetization Strategy Analysis

## Current State
- **Model:** [Current pricing model]
- **Pricing:** [Current price points]
- **Challenges:** [Pain points with current approach]

## Options Considered

### Option 1: [Model Name]
**How it would work:** [Specific implementation]

| Factor | Analysis |
|--------|----------|
| Revenue potential | [High/Medium/Low] — [Why] |
| Customer fit | [How well it matches their buying patterns] |
| Competitive position | [How it compares to alternatives] |
| Implementation complexity | [What needs to change] |
| Risk | [What could go wrong] |

**Examples:** [Companies using this model successfully]

### Option 2: [Model Name]
...

### Option 3: [Model Name]
...

## Comparison Matrix

| Factor | Option 1 | Option 2 | Option 3 |
|--------|----------|----------|----------|
| Revenue potential | [H/M/L] | [H/M/L] | [H/M/L] |
| Customer alignment | [H/M/L] | [H/M/L] | [H/M/L] |
| Competitive fit | [H/M/L] | [H/M/L] | [H/M/L] |
| Implementation ease | [H/M/L] | [H/M/L] | [H/M/L] |

## Recommendation
[Recommended model] because:
1. [Reason 1]
2. [Reason 2]
3. [Reason 3]

## Implementation Considerations
- [Pricing specifics to determine]
- [Feature gating decisions]
- [Migration path for existing customers]
- [Communication strategy]