In the competitive world of SaaS, pricing and packaging can make or break a company’s growth trajectory. Phrase, a leader in AI-led translation and localization technology, discovered this firsthand. Its journey offers valuable insights for subscription-based businesses looking to scale.
The Phrase Success Story
Phrase enables companies of all sizes to manage translation and localization at scale. With a team of over 300 employees, it serves more than 200,000 users globally, including companies like Snowflake, Zendesk, Uber, and Shopify.
In recent years, Phrase has undergone a significant transformation:
Let’s dive into the key lessons Phrase learned during this journey, as shared by CFO Martin Konop and Tech Lead Michal Petřík in a recent conversation with the Chargebee team.
Five Key Takeaways for Growth-Minded Subscription Businesses
1. Prioritize pricing and packaging as strategic levers
Phrase invested heavily in researching pricing and packaging strategies, with CFO Martin Konop directly engaging customers to understand the value they derive from the platform. This customer-centric approach guided the implementation of a usage-based pricing model. He noted, “The shift to usage-based pricing helped align our pricing strategy directly with the value our customers get from Phrase.”
2. Align your subscription experience with your product vision
Expanding product lines and adjacencies increases the Total Addressable Market (TAM) and product stickiness. Focusing on enhancing the subscription experience in tandem can significantly boost growth.
Initially, Phrase’s multi-product customers had separate subscriptions, invoices, and renewal dates, leading to a fragmented experience.
Michal Petřík, Phrase’s Tech Lead, explained: “In 2023, our products were already connected to the Chargebee solution as independent products with limited feature access. When the new pricing requirements emerged, we recognized the need for unification and a completely different level of integration, particularly regarding entitlements.”
By centralizing its feature provisioning on Chargebee, Phrase turned this around.
3. Invest in scalable entitlements to succeed with usage pricing
Usage-based pricing is popular for its flexibility, but managing it with a large customer base can be challenging. When customers quickly reach their usage limits, you need a system that can handle complex entitlement calculations and help you adjust limits easily without relying heavily on your engineering team.
Martin on scaling with usage-based pricing:
“Our primary goal with the shift to usage-based pricing was to allow customers to scale without limitations. With Chargebee Entitlements, we have a centralized, scalable approach to feature provisioning and packaging. This is essential for meeting customer expectations in a usage-based pricing model.”
In addition to product and feature activation, Phrase manages primary and secondary pricing metrics with dynamic capacity management based on billing cycles via Chargebee.
4. Let teams focus on strengths: Finance on pricing, engineering on tech
If you manage entitlements in-house, your engineering teams define feature access levels (what features get unlocked as part of what plan) through coding—’metadata’ in technical terms. However, relying on JSON metadata and directly managing provisioning in the code base can create inefficiencies for multiple teams.
By outsourcing the billing and entitlements pieces of the puzzle to Chargebee, Phrase’s finance team gained the agility they needed, while engineering regained focus on their core product. Read Phrase’s success story to learn how the team achieved efficient growth and operations at scale.
5. Know when and what to outsource
Many subscription businesses grapple with the ‘build vs. buy’ decision for feature provisioning and access management. Building in-house solutions might be tempting initially. But as you scale and optimize for fast growth, you need more flexibility in entitlements and provisioning to support your customer needs.
For Phrase, the turning point came with new product launches. “As we ran into provisioning challenges, it raised fundamental questions about entitlement ownership, upsells, and other use cases. We recognized that our previous approach wasn’t scalable and needed a more effective solution,” Michal noted.
If you are relying on homegrown or other systems to manage provisioning, consider the engineering bandwidth you are consuming to manage entitlements, the time to market with pricing and packaging revisions, and your customer-facing team’s ability to get things done without relying on the engineering team. These factors can help assess the right time to consider an alternative solution.
Unlocking Growth Through Strategic Pricing and Entitlement Management
Phrase’s transformation offers valuable lessons for subscription businesses aiming to scale. By prioritizing pricing and packaging, aligning the subscription experience with its product vision and customer expectations, implementing robust entitlement management, allowing teams to focus on their strengths, and knowing when to outsource, Phrase turned pricing and packaging into a growth lever and a competitive advantage.
As you consider your own growth strategies, ask yourself: Is your current approach to pricing, packaging, and entitlement management supporting or hindering your growth?
Chargebee Entitlements empowers hundreds of subscription leaders like Phrase to drive revenue growth through packaging experimentation and faster time-to-market. Let’s talk about how you can implement these winning strategies in your business.
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