Price and package a product

To: Priya Nair, CEO From: PM, Pricing Subject: January Pricing & Packaging Proposal: Tiered Plans vs. Flat $19 Increase

Executive Summary

Moving to a flat $19/user/month will hurt our freelancer acquisition while leaving massive agency revenue on the table. Instead of a flat increase, we should launch a three-tier packaging model ($12 / $29 / $49) gated by team size and agency workflows. By aligning price with value, we can increase MRR across our existing base by ~96% (vs. <27% under the $19 plan) while improving top-of-funnel conversion.

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Why a Flat $19/Seat Doesn't Fit Our Data

1. Agencies drive 90% of our revenue and are severely underpriced. In our 150-account sample ($11,835 total MRR): * Freelancers are 54% of accounts (81) but only 10.3% of MRR ($1,215). They send ~8 proposals/quarter (~$5.6k signed value) and stay on average 5 months. * Small Agencies (2–10 seats) are 33% of accounts (49) and 35.4% of MRR ($4,185), averaging $129k in signed value/quarter and 17.5 months tenure. * Mid-sized Agencies (11–50 seats) are 13% of accounts (20) but 54.4% of MRR ($6,435), averaging $1.4M in signed value/quarter and 16.5 months tenure.

2. $19 breaks Freelancer willingness to pay (WTP), but is a giveaway to Agencies. * Freelancers: Our Van Westendorp survey shows $15 is already the median "getting expensive" threshold for freelancers. At $19, 83% of freelancers view Inkwell as getting expensive, and 15% consider it "too expensive" to buy. Furthermore, Q3 funnel data shows freelancers convert at just 9% and 38% churn in month 2. When we lose them, it’s to "Google Docs + free e-signature"—and 80% of all price objections in our win/loss data come from freelancers. * Small Agencies: Median "bargain" is $15; "getting expensive" is $32; "too expensive" is $50. * Agencies (11–50): Median "too cheap to trust" is $12 (and $14–$15 for a third of respondents!). At $15, we look dangerously cheap to larger teams. Their median "bargain" is $25, and "getting expensive" is $51. We only lose agencies to PandaDoc—with zero price objections.

3. Feature usage naturally separates segments. Freelancers only use 1 template and e-signatures. Agencies rely heavily on the shared content library, approval workflows, and CRM sync.

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Proposed Pricing & Packaging

We should replace the single $15 plan with a Free Trial + Freemium/Low-Floor entry for freelancers, and two value-priced tiers for agencies:

Note: All paid tiers retain the 14-day free trial.

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Why This Works

• Fixes the Freelancer Funnel (Free & Solo at $12): Lowering the solo price to $12 (below the $15 "getting expensive" mark) reduces month-2 churn. The Free tier (1 template, 2 proposals/mo) captures the 91% of trialists who don't convert and neutralizes the "Google Docs + free e-sig" threat, keeping low-volume freelancers in our ecosystem until their deal flow picks up.
• Captures Agency Value ($29 and $49): $29/user for Small Agencies sits safely below their $32 "getting expensive" threshold while nearly doubling ARPU. $49/user for 11–50 Agencies sits below their $51 threshold, eliminates the "too cheap to trust" signal, and funds enterprise-grade features to beat PandaDoc.

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Existing Customer Migration Plan

1. January 1: Launch new pricing for all new signups. 2. Freelancers (1 seat): Automatically move existing $15/mo freelancers to the $12/mo Solo plan in January. Framing a pricing update as a price cut for our largest user group by headcount will generate massive goodwill and social proof, while only costing $243/mo across the sample (2% of MRR). 3. Agencies (2+ seats) — 90-Day Grandfathering + Annual Lock-In: * Give existing agencies 90 days' notice (effective April 1) before migrating them to Team ($29) or Agency ($49) based on their seat count and feature usage (e.g., accounts using approval workflows move to Agency). * The "Loyalty Bridge": Offer existing agencies the ability to lock in a legacy annual rate ($19/user/mo for Team, $29/user/mo for Agency) for 12 months if they switch to annual billing before March 31. This minimizes churn, pulls cash forward, and still beats your $19 target.

Revenue Impact (on the 150-account sample)

• Current MRR: $11,835
• Priya’s $19 Flat Plan: $14,991 (+27% before heavy freelancer churn; likely ~18–20% net).
• Proposed Tiered Model (at list price): $23,190 (+96% MRR)—broken down into $972 from Freelancers, $8,091 from Small Agencies, and $14,127 from 11–50 Agencies. Even with 50% of agencies taking the discounted annual Loyalty Bridge in Year 1, net ARR grows by >60% with near-zero logo churn.

Recommendation: raise agency pricing, not every user to $19

Launch segmented plans in January 2027. Keep freelancers at $15 per user; price agencies for the collaboration and CRM features they use. Priya’s 27% figure is the gross increase if every account stays: it does not account for cancellations or lost conversions.

Keep the 14-day free trial. Use seat count as the default plan guide, with sales able to recommend the right fit where an account’s needs differ.

Why this structure

• Freelancers show the clearest risk from a blanket increase. In Q3, 9% of freelancer trials became paying customers, versus 31% for small agencies and 37% for larger agencies. Of paying freelancers, 38% cancelled in month two, compared with 6% of small agencies and none of the larger agencies. A higher entry price could compound an already weak conversion and retention picture.
• Survey responses support different price points by segment. Freelancers typically start to feel price pressure around the mid-teens; agencies report much higher thresholds. The proposed $19 Team and $25 Business prices remain well below the survey’s typical “getting expensive” levels for agencies. Treat the survey as directional, not a guarantee of willingness to pay.
• Agency packaging reflects observed value. Agencies use the shared library, approval workflows, and CRM sync; freelancers mostly use one template and e-signature. The Q3 account sample also shows much heavier proposal activity in agencies. Charging more for agency collaboration and integration is more defensible than charging every freelancer more for features they may not use.
• Sales evidence argues against relying on price increases alone. Recorded losses include freelancers choosing free tools and agencies choosing PandaDoc; many no-decisions stayed with their current process. Price objections appear, but are not the dominant story in these records.

Move existing customers carefully

1. New customers: Apply the new plan prices from January 2027.
2. Existing freelancers: Keep them on Solo at $15. Do not force a price increase or a feature downgrade.
3. Existing agencies: Give each account its recommended plan, explain the feature mapping, and grandfather its current access for 12 months. Provide at least 60 days’ notice before any price change; for annual customers, change pricing at renewal, not mid-term.
4. Phase agency increases: Cap each renewal increase at 20%, with a clear schedule to reach the recommended list price within three renewals. Let customers adjust seats or select a lower plan before renewal; do not remove access unexpectedly.
5. Review before scaling: Track trial conversion, second-month cancellations, agency churn, and downgrade requests by segment. Revisit prices after two quarters rather than assuming the sample or survey predicts the full customer base.

The 150-account export is a random sample, not a forecast. The proposed prices are a testable segment-based starting point; blanket repricing would add avoidable freelancer risk.

Inkwell Pricing and Packaging Proposal

Recommendation

Don't move everyone to a flat $19. Our customers aren't one market.

• Freelancers are 53% of accounts but only 10% of revenue, and they already find $15 expensive.
• Agencies are 13% of accounts and 56% of revenue, and they consider $15 cheap.

A flat $19 overcharges the first group and still undercharges the second. I propose three plans priced by segment, with a staged move for existing customers. Before churn, this delivers about +44% MRR in year one and +95% once fully migrated, compared with +27% for a flat $19.

What the data says

Revenue concentration (150-account sample, $11,805 MRR)

Freelancers are price-sensitive and short-lived. - 50 of 60 freelancer survey respondents put "getting expensive" below $19. For 35 of 60, $15 is already at or past that point. - 5 of the 6 price objections in win/loss came from freelancers. - Freelancers lose to "Google Docs and a free e-signature tool" (12 of 70 deals), not to PandaDoc. - Their trial conversion is 9%, and 38% cancel in month two. - No freelancer in the sample has been a customer longer than 9 months. - They mostly use one template and e-signature.

Agencies are underpriced. - Every agency respondent's "bargain" price is $20 or higher. - 7 of 20 put "too cheap to trust" at $14–15. - Agencies never raised price in win/loss. Their losses to PandaDoc were about product. - They had 0% early churn and use the features freelancers don't: shared library, approvals and CRM sync. - At $35, every sampled agency would pay under 0.5% of the contract value it signs through Inkwell.

Small agencies have room. - Every respondent's "getting expensive" point is $26 or higher. - Trial conversion is 31%, with 6% early churn.

Plans

The 14-day free trial stays on all plans.

Why these prices: - $12 Solo sits below "getting expensive" for 56 of 60 freelancers. It costs about 2% of total MRR to cut existing freelancers from $15. - $25 Team is below every small-agency respondent's "getting expensive" point. - $35 Agency is below every agency respondent's "getting expensive" point (lowest is $42) and well under "too expensive" (lowest is $60).

Plan fences: - The seat cap (Solo = 1, Team ≤ 10) is the main fence. It maps onto the segments the data already uses. - Agency features are deliberately the ones a larger team needs to manage people, not new product promises.

Moving existing customers

How to run it: - Notice. Give at least 60 days' notice to anyone whose price rises. If January is closer than that, launch new prices for new customers in January and move existing customers in February or March. - Lead with what's included. Existing teams keep every feature they use today. The message is "you're on the plan built for teams," not "the price went up." - Annual lock. Offer annual prepay at the year-1 rate, locked for 12 months. This converts the increase into commitment. - At-risk agencies. Have someone call the top agencies by MRR personally before the email goes out. - Your $19 still appears. It becomes the year-1 rate for existing small agencies.

Revenue impact (sample MRR, before churn)

What this means: - The flat $19 figure assumes zero churn and no drag on new sales. Most of the churn risk sits with freelancers, the segment that pays the least. - Year 1 beats flat $19 unless we lose about 12% of MRR. That's roughly 1 in 5 agency seats, in a segment with 0% early churn and no price objections. - The real risk is concentrated. Agency seats carry most of the upside, so agency retention through migration is the thing to watch. Freelancer churn barely moves the total.

Risks and checks before announcing

1. The survey is stated willingness to pay, not behaviour. We don't know whether respondents are customers or prospects. To limit the risk: - Launch new-customer prices first and watch trial conversion by segment for 4–6 weeks before existing customers move. - Keep the agency year-1 rate at $25. 2. Check CRM sync usage before finalising Team. CRM sync is in Team so small agencies lose nothing. If heavy CRM-sync users are mostly 11+ seat accounts, it could move to Agency instead. I need feature usage by account size to confirm. 3. Agencies near the 10/11 seat boundary may resist the jump. Allow a 12-seat grace period on Team for existing customers in year 1. 4. Freelancer losses to free tools aren't solved by a cheaper Solo plan alone. A free tier (e.g., 2 sends a month) is worth testing separately on new trials. It isn't part of this launch because it could cannibalise paying freelancers, who send about 3 proposals a month. 5. Metrics to track monthly: - Trial-to-paid conversion by plan - Month-two cancellations for Solo - Agency logo and seat churn through each migration step - Win rate against PandaDoc

Decision needed from Priya: approve the three plans and the staged migration, and confirm the existing-customer timing (January if 60 days' notice is possible, otherwise February/March).