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Naomi Ionita (Menlo Ventures)12 January 2023

How to price your product

5Frameworks
12Insights

Episode overview

Naomi Ionita explains why startups commonly wait too long to monetize, underprice their products, and fail to revisit pricing as the product evolves. She outlines a customer-research process for matching price to value, segmenting packages, and measuring willingness to pay. The conversation also covers pricing experiments, freemium tradeoffs, hybrid usage-based models, and the emerging “modern growth stack” of data-driven tools for product, growth, and revenue teams.

Key ideas

  • Start monetizing early enough to validate that customers will pay, even when a free tier or design-partner period remains useful.
  • Match pricing to a value metric so customer spend can grow naturally with the value and usage they receive.
  • Separate day-one premium features from advanced day-100 features, keeping initial packaging simple and using later capabilities for upsells.
  • Use cross-functional pricing ownership, customer interviews, feature-ranking surveys, and the Van Westendorp method to guide pricing decisions.
  • Revisit monetization every six to twelve months alongside meaningful product releases instead of treating pricing as permanent.
  • For public product-led pricing, test value metrics, quota limits, price points, and promotions while measuring long-term conversion, retention, churn, and revenue effects.
  • Freemium works best when free usage creates habit and organic growth while a deliberate paywall captures value from teams and enterprises.
  • The modern growth stack uses integrated data, automation, and purpose-built workflow tools to reduce costs and drive measurable revenue.

Transcript available · source text is retained privately and is not published

Frameworks in this episode

Finance3 steps

Day One vs Day 100 Feature Packaging

Free the features that create the aha moment; monetize the features whose value only emerges at scale.

Read →
Sales3 steps

Enterprise Price-Ceiling Discovery

Keep asking for more until deals break; losing 20-30% to price is how you find the ceiling.

Read →
Finance3 steps

Match Price to Value with a Value Metric

Pick the unit of value your customer gets, then charge against it so revenue scales as usage grows.

Read →
Finance3 steps

Price Your Product Like Your Roadmap

Treat pricing as a living system revisited every 6-12 months, not a set-and-forget decision.

Read →
Finance3 steps

The Cross-Functional Pricing Process

Stand up a pricing committee, mine demand and willingness-to-pay with structured surveys, then set price.

Read →

People & resources mentioned

Attributed to the moment in the episode. Timestamps are approximate.

People · 5

  • Naomi IonitaMentionsNaomi was one of the first early leaders in product light growth and monetization having built early teams and infrastructure over a decade ago at Evernote

    “today my guest is Naomi ayanida Naomi was one of the first early leaders in product light growth and monetization”

    ▶ Watch at ~0:30approx.
  • Lenny RachitskyMentionstoday we've got another very special compilation episode something I've been pulling on more and more with the podcast and the newsletter

    “welcome to Lenny's podcast I'm Lenny and my goal here is to help you get better at the craft of building and growing products”

    ▶ Watch at ~0:30approx.
  • Naomi IonitaMentionsNaomi was one of the first early leaders in product light growth and monetization having built early teams and infrastructure over a decade ago at Evernote

    “so I'm a partner in Menlo Ventures I focus on early stage SAS from seed to series B”

    ▶ Watch at ~4:30approx.
  • Larry GadeaMentionsin talking to Larry and and getting a feel for how he uh sort of his Evolution around pricing

    “in talking to Larry and and getting a feel for how he uh sort of his Evolution around pricing”

    ▶ Watch at ~26:30approx.
  • Madhavan RamanujamCoinedmadhavan is the author of monetizing innovation the most widely read book on pricing strategy he's also senior partner at Simon Kutcher and partners

    “my buddy monavon from Simon Kutcher's wrote a book called monetizing Innovation”

    ▶ Watch at ~49:30approx.

Resources · 50

  • ReforgeMentionscompany · Brian Balfour

    “there's also an early contributor to reforge when it was just getting started and helped create some of their early programs”

    ▶ Watch at ~0:30approx.
  • MiroUsessoftware · Miro

    “I actually use Miro to come up with a plan for this very ad”

    ▶ Watch at ~1:30approx.
  • NotionUsessoftware · Notion Labs

    “I use notion to coordinate this very podcast including my content calendar my sponsors and prepping guests”

    ▶ Watch at ~2:30approx.
  • EvernoteMentionssoftware

    “brought that with me then to Evernote back in 2011 early days over there”

    ▶ Watch at ~4:30approx.
  • Menlo VenturesMentionscompany

    “so I'm a partner in Menlo Ventures I focus on early stage SAS from seed to series B”

    ▶ Watch at ~4:30approx.
  • Stanford d.schoolMentionsplace · Stanford University

    “well at business school I spend time at the design Institute at Stanford”

    ▶ Watch at ~4:30approx.
  • IDEOMentionscompany

    “this refreshing view on human centered design and learning from the founder of Ido”

    ▶ Watch at ~4:30approx.
  • Invoice2goMentionssoftware

    “after Evernote I joined a bootstrapped mobile SMB company called invoice2go”

    ▶ Watch at ~5:30approx.
  • LinearMentionssoftware · Linear

    “like design and figma you know roadmap planning and ticketing in Nigeria are linear it just becomes the default platform”

    ▶ Watch at ~7:30approx.
  • FigmaMentionssoftware · Figma

    “like design and figma you know roadmap planning and ticketing in Nigeria are linear it just becomes the default platform”

    ▶ Watch at ~7:30approx.
  • AppleMentionscompany · Steve Jobs, Steve Wozniak, and Ronald Wayne

    “brand new users with low perceived value of Evernote looked at it like their apple pre-installed on their device”

    ▶ Watch at ~17:30approx.
  • OpenViewMentionscompany

    “our friends have openvo do a really good job of pumping out content and doing these great you know sort of SAS benchmarking surveys”

    ▶ Watch at ~23:00approx.
  • ProfitWellMentionscompany · Patrick Campbell

    “profitwell is another group that I've friends at and a lot of respect for them and the content that they've put out”

    ▶ Watch at ~23:30approx.
  • EnvoyMentionssoftware · Larry Gadea

    “I have a specific story there with one of our companies Envoy”

    ▶ Watch at ~26:00approx.
  • VantaMentionssoftware · Christina Cacioppo

    “over 3 000 fast growing companies use vanta to automate up to ninety percent of the work involved with stock 2”

    ▶ Watch at ~31:30approx.
  • Amazon RedshiftMentionssoftware · Amazon Web Services

    “a destination for that data so the cloud-based data warehouse like a snowflake a redshift”

    ▶ Watch at ~35:30approx.
  • SnowflakeMentionscompany · Snowflake Inc.

    “a destination for that data so the cloud-based data warehouse like a snowflake a redshift”

    ▶ Watch at ~35:30approx.
  • dbtMentionssoftware · dbt Labs

    “a data transformation tool like DBT and then finally a platform for visualization on top”

    ▶ Watch at ~35:30approx.
  • HightouchMentionssoftware

    “modern growth stack companies leverage reverse ETL companies like high touch or census to break down these silos”

    ▶ Watch at ~37:30approx.
  • CensusMentionscompany

    “modern growth stack companies leverage reverse ETL companies like high touch or census to break down these silos”

    ▶ Watch at ~37:30approx.
  • YouTubeMentionswebsite · Google

    “it's like higher than Tick Tock and and YouTube and all the things in Facebook and it's four people”

    ▶ Watch at ~40:00approx.
  • GasMentionssoftware · Nikita Bier and team

    “it just reminds me the number one app in the app store at this point I don't know if it still is gas”

    ▶ Watch at ~40:00approx.
  • TikTokMentionssoftware · ByteDance

    “it's like higher than Tick Tock and and YouTube and all the things in Facebook and it's four people”

    ▶ Watch at ~40:00approx.
  • FacebookMentionscompany · Meta

    “it's like higher than Tick Tock and and YouTube and all the things in Facebook and it's four people”

    ▶ Watch at ~40:00approx.
  • LoomMentionssoftware · Loom

    “and game happens to be one that I work with they have customers like figma Loom calendly”

    ▶ Watch at ~41:00approx.
  • EndgameMentionssoftware

    “and game happens to be one that I work with they have customers like figma Loom calendly”

    ▶ Watch at ~41:00approx.
  • PocusMentionssoftware

    “I think Pocus has done a phenomenal job of building content and Community to help inform the market”

    ▶ Watch at ~41:00approx.
  • CalendlyMentionssoftware · Tope Awotona

    “and game happens to be one that I work with they have customers like figma Loom calendly”

    ▶ Watch at ~41:00approx.
  • OptimizelyUsessoftware

    “category creators like optimizely really paved the way I was an early buyer of optimizely”

    ▶ Watch at ~42:00approx.
  • EppoMentionssoftware · Eppo

    “some of the modern tools here like EPO which offers experimentation for the modern data stack”

    ▶ Watch at ~42:30approx.
  • AmplitudeUsessoftware · Amplitude

    “I'm also a big fan of amplitude uh been a buyer of that tool as well”

    ▶ Watch at ~44:00approx.
  • ChargebeeMentionssoftware

    “the historical incumbents like a charge b or Zora really serve that model”

    ▶ Watch at ~44:30approx.
  • ZuoraMentionscompany

    “the historical incumbents like a charge b or Zora really serve that model”

    ▶ Watch at ~44:30approx.
  • MetronomeMentionscompany

    “some early breakout players in the world of usage-based billing are metronome and orb”

    ▶ Watch at ~45:00approx.
  • OrbMentionscompany · Orb

    “some early breakout players in the world of usage-based billing are metronome and orb”

    ▶ Watch at ~45:00approx.
  • SlackMentionssoftware · Slack Technologies

    “so in slack there might have been number of messages sent or Dropbox number of terabytes of storage”

    ▶ Watch at ~46:30approx.
  • DropboxMentionscompany · Drew Houston and Arash Ferdowsi

    “so in slack there might have been number of messages sent or Dropbox number of terabytes of storage”

    ▶ Watch at ~46:30approx.
  • SegmentUsessoftware · Twilio

    “I remember using tools like mixpanel and segment and even zero to an extent”

    ▶ Watch at ~47:00approx.
  • MixpanelUsessoftware · Mixpanel

    “I remember using tools like mixpanel and segment and even zero to an extent”

    ▶ Watch at ~47:00approx.
  • XeroUsessoftware

    “I remember using tools like mixpanel and segment and even zero to an extent”

    ▶ Watch at ~47:00approx.
  • Monetizing InnovationRecommendsbook · Madhavan Ramanujam and Georg Tacke

    “my buddy monavon from Simon Kutcher's wrote a book called monetizing Innovation this is a great read”

    ▶ Watch at ~49:30approx.
  • Simon-KucherMentionscompany

    “my buddy monavon from Simon Kutcher's wrote a book called monetizing Innovation”

    ▶ Watch at ~49:30approx.
  • NetflixUsescompany · Netflix

    “we like StoryBots on Netflix they're these little cartoon characters that answer kids questions”

    ▶ Watch at ~50:00approx.
  • StoryBotsRecommendstv show

    “we like StoryBots on Netflix they're these little cartoon characters that answer kids questions”

    ▶ Watch at ~50:00approx.
  • TwitterMentionswebsite · Twitter

    “you can find more about me and the firm at menlovc.com or else on LinkedIn or Twitter”

    ▶ Watch at ~52:00approx.
  • Menlo Ventures websiteRecommendswebsite · Menlo Ventures

    “you can find more about me and the firm at menlovc.com or else on LinkedIn or Twitter”

    ▶ Watch at ~52:00approx.
  • LinkedInMentionswebsite · LinkedIn

    “you can find more about me and the firm at menlovc.com or else on LinkedIn or Twitter”

    ▶ Watch at ~52:00approx.
  • Apple PodcastsRecommendssoftware · Apple Inc.

    “you can subscribe to the show on Apple podcast Spotify or your favorite podcast app”

    ▶ Watch at ~52:30approx.
  • SpotifyRecommendssoftware · Spotify

    “you can subscribe to the show on Apple podcast Spotify or your favorite podcast app”

    ▶ Watch at ~52:30approx.
  • Lenny's Podcast websiteRecommendswebsite · Lenny Rachitsky

    “you can find all past episodes or learn more about the show at lennyspodcast.com”

    ▶ Watch at ~53:00approx.

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Insights & moments

The myth-busts, hot takes, explainers, and tools worth keeping.

Hot Take· 3

Hot Take10:00

The Real Signal of Product-Market Fit Is People Paying

Naomi pushes back on staying free too long. Early free beta feedback is valuable as an 'R&D class' to make sure you're building the right thing, but the true signal of product-market fit is people opening their wallets and paying. Delaying monetization cheapens the product, forfeits critical willingness-to-pay feedback, and sets up future backlash when you eventually start charging.

  • Free beta users are useful as an R&D feedback loop, not a permanent state
  • The true PMF signal is people actually paying you
  • Staying free too long makes users attribute a zero or low dollar value to your product
  • You shoot your future self in the foot — charging later triggers backlash you could have avoided

“I think that's the true signal aquatic Market fit is ultimately having people open up their wallets and pay you”

Naomi Ionita · 10:30
#product-market-fit#monetization#pricing
Hot Take17:00

If Guilt Is Why People Pay You, Your Free Version Is Too Good

Running conversion surveys at Evernote, Naomi found the most common reason people upgraded was guilt — they got so much value they felt obligated to pay. Her sharp read: if guilt is a main driver of conversion, your free tier is too generous and you're leaving money on the table. A single premium tier is often a mistake because it fails to capture value from your highest-value segments.

  • Survey data showed people converted out of guilt, not need
  • Guilt-driven conversion means the free version gives away too much
  • A single premium tier leaves money on the table for high-value segments
  • Don't optimize your free tier to be a guilt-based paid driver

“then your free version is too good and you are leaving money on the table so a single premium tier is often a mistake”

Naomi Ionita · 17:30
#freemium#conversion#pricing#evernote
Hot Take46:00

Usage vs Seat-Based? Almost Everyone Should Go Hybrid

On the usage-based vs seat-based debate, Naomi says they aren't mutually exclusive. Only a small sliver of SaaS — roughly 5%, under 10% — runs a pure usage-based escalator; the vast majority use a hybrid good-better-best model with a consumption component (messages, storage, invoices) per tier. Pure usage-based pricing struggles because CFOs want predictability and the ability to budget — unpredictable bills create a breaking point.

  • Under 10% (roughly 5%) of SaaS companies use a pure usage-based model
  • The vast majority use a hybrid good-better-best model with per-tier consumption quotas
  • Hitting a quota limit triggers an upgrade or overage charge
  • Pure usage-based pricing conflicts with CFOs' need for predictability and budgeting

“a small sliver less than 10 percent around roughly five percent have just pure natural escalator kind of usage based model”

Naomi Ionita · 46:00

“one challenge with purely usage-based models is that's not always how CFOs want to buy I think buyers sometimes want predictability they want to be…”

Naomi Ionita · 47:00
#pricing-models#usage-based#saas#packaging

Explainer· 2

Explainer07:00

Why Evernote Missed the Single-Player-to-Team Chasm

Naomi explains that Evernote's biggest structural mistake was staying philosophically anti-social — a personal 'second brain' tool that never bridged from single-player to multiplayer to team to enterprise. That collaboration chasm is what many bottom-up SaaS businesses fail to cross, and it caps growth. When a product nails the bridge, every metric benefits: acquisition, retention, and monetization.

  • Evernote was 'collaboration-optional,' built as a personal second brain, which limited its growth ceiling
  • You cannot retrofit collaboration — products must be collaboration-first to become a default team platform
  • Crossing the chasm lifts acquisition (referrals), retention (shared sticky workflows), and monetization (revenue scales with usage)
  • Shared workflows make products sticky the way Figma owns design or Linear owns roadmap planning

“I always used to say you can't retrofit collaboration you have to be collaboration first”

Naomi Ionita · 07:00
#saas#collaboration#growth#evernote
Explainer23:00

How Big a Deal Is a Pricing Change? The Data

Naomi cites benchmarking data on the impact of pricing changes. An OpenView survey found roughly half of companies that changed pricing saw at least a 25% ARR increase — a step-function gain with no major technical overhaul. A ProfitWell study of 500+ SaaS companies found a 1% improvement in monetization moved the bottom line 4x as much as the same improvement in acquisition. She's personally seen lifts up to 10x, though hard to isolate from concurrent changes.

  • OpenView: ~half of companies that changed pricing saw at least a 25% ARR increase
  • ProfitWell (500+ SaaS companies): a 1% monetization gain hits the bottom line 4x harder than acquisition
  • Monetization is an underappreciated growth lever versus acquisition and retention
  • Naomi has seen up to 10x revenue lifts, though usually bundled with product changes, rebrands, or new plans

“roughly half of companies that instituted a pricing change saw at least a 25 increase in ARR so that's a pretty massive step function Improvement…”

Naomi Ionita · 23:30

“they found that the impact with an improvement on monetization was Forex that of acquisition”

Naomi Ionita · 24:00
#pricing#monetization#benchmarks#growth

Story· 3

Story17:30

Avid Evernote Users Were Floored They Only Paid $45 a Year

Evernote had one flat price — $45/year — which set a foundation but was sub-optimal. Research revealed two very different personas: brand-new users who saw it like a pre-installed app and couldn't fathom paying $45, and avid cross-client power users who treated it as their second brain and were floored they paid so little for hundreds of dollars of value. That gap led to a bifurcated, persona-based pricing strategy.

  • Evernote charged a single $45/year subscription from the beginning
  • New users perceived near-zero value and balked at $45
  • Avid power users felt they got hundreds of dollars of value and were underpaying
  • The insight drove a bifurcated strategy: different plans for different personas and willingness to pay

“these people were floored that they were only paying 45 dollars a year”

Naomi Ionita · 18:00

“they told us that they were getting hundreds of dollars value from Evernote”

Naomi Ionita · 18:00
#pricing#segmentation#evernote#willingness-to-pay
Story26:00

Envoy's Founder 10x'd His Price on the Spot — and the Exec Said Yes

Naomi tells the story of Larry at Envoy (the visitor-registration tool). Mid-conversation with a big hospitality prospect who was leaning in, Larry impulsively quoted 10x his typical price. The exec agreed instantly — no hesitation — revealing he'd been wildly underpriced and probably could have gone even higher. The lesson: keep asking for more in enterprise deals, and it's fine to lose ~20–30% of deals on price to find the ceiling.

  • Larry impulsively asked a hospitality prospect for 10x his usual price
  • The exec agreed with zero hesitation, proving he was wildly underpriced
  • No hesitation is a signal you could have pushed the price even higher
  • In enterprise, keep asking for more; losing 20–30% of deals on price helps you find the upper bound

“he decided to 10x the price that he was typically charging people so just in the moment he said just go for it go out…”

Naomi Ionita · 27:00

“in that moment the exec said okay sure sounds good like not a minute of hesitation not a second of hesitation and what he learned…”

Naomi Ionita · 27:00
#pricing#enterprise#underpricing#sales
Story32:30

Why Figma Gave Away the Individual to Win the Enterprise

Asked whether to index on growth or revenue, Naomi points to Figma. It took a while to monetize and stayed free for individuals to build insane community and love. Because design is inherently collaborative, once it embedded in a company it tripped a wire to paid — more than half of Figma users weren't even designers. Willing to forgo individual revenue, Figma rode compounding growth loops to an exponential monetization curve at the team/enterprise tier.

  • Figma kept individual usage free to drive community and love for the product
  • Design is inherently collaborative, pulling in engineers, PMs, marketers, researchers, and execs
  • More than half of Figma users weren't even designers once it embedded in the enterprise
  • If you have a bridge to move up-market, giving up the long tail of individual users can be worthwhile

“more than half of figma users weren't even designers once it was embedded in the Enterprise”

Naomi Ionita · 33:30
#plg#figma#growth#collaboration

Tool· 1

Tool49:30

Book Rec: 'Monetizing Innovation' by Simon-Kucher

In the lightning round, Naomi recommends 'Monetizing Innovation,' written by her friend at Simon-Kucher, whose team has run pricing engagements with hundreds of tech companies. She calls it a great read full of stories and practical tips, and says it's the book she most often gifts to founders.

  • 'Monetizing Innovation' comes out of Simon-Kucher's work with hundreds of tech companies
  • Packed with pricing stories and practical, actionable tips
  • Naomi's most-gifted book for founders

“my buddy monavon from Simon Kutcher's wrote a book called monetizing Innovation this is a great read”

Naomi Ionita · 49:30
#books#pricing#recommendation

Takeaway· 3

Takeaway09:00

The Three Monetization Mistakes Startups Make Most

Naomi names the three most common monetization missteps she sees founders make. First, waiting too long to monetize. Second, underpricing — not just a low base price, but leaving money on the table by failing to offer multiple plans for different segments. Third, treating pricing as 'set it and forget it' instead of an evolving product.

  • Misstep 1: waiting too long to start charging
  • Misstep 2: underpricing — base price too low AND no segmented plans
  • Misstep 3: setting pricing once and never revisiting it
  • Pricing work is never done, just like product development is never done

“one is uh waiting too long to monetize another one is under pricing and this isn't just setting the base price too low but it's…”

Naomi Ionita · 09:00
#pricing#monetization#startups
Takeaway13:30

Day-One vs Day-100 Features: How to Package a Paid Plan

Naomi shares a simple lens for what to put behind the paywall: separate day-one premium features (value on first use) from day-100 features (advanced functionality, value that comes from scale of data over time). Push the advanced stuff into a pro tier and upsell later so you don't burden new users with cognitive load. At invoice2go this rebalancing doubled the upgrade rate while raising the Pro plan price ~30%.

  • Day-one features deliver value the very first time someone uses the product
  • Day-100 features are advanced or scale-dependent — monetize them later via upsell
  • Don't waste new users' cognitive load on features they can't yet appreciate
  • invoice2go doubled its starter-to-Pro upgrade rate while charging ~30% more for the new plan

“what is a day One Premium feature what is a premium feature that you can get value from the very first time you engage with…”

Naomi Ionita · 14:00

“to actually get twice as many people to upgrade while paying something like 30 percent more for that new plan is pretty rare”

Naomi Ionita · 14:00
#packaging#pricing#freemium#upsell
Takeaway19:00

Treat Pricing Like Your Roadmap, Not a One-Time Decision

Naomi's fix for the 'set it and forget it' trap: revisit pricing on the same cadence as your product roadmap. Every six to twelve months you're likely shipping something meaningful — treat each of those moments as a chance to revisit your monetization strategy and make sure you're being compensated appropriately. Evernote went many years before overhauling its pricing.

  • Companies obsess over design and features but pluck pricing 'out of thin air' and never revisit it
  • Revisit pricing every 6–12 months, tied to meaningful product launches
  • Treat pricing as an evolving asset, not a one-time setting
  • Evernote waited many years before overhauling its pricing

“do not set it and forget it I see companies do this where they labor over designs and features and they build this perfect product…”

Naomi Ionita · 19:00
#pricing#monetization#roadmap