CASE: MECE structure to suggest "paid" features & basic in a freemium product?

Case structure and frameworks case study MECE New product Pricing case study Product Manager
New answer on Aug 31, 2022
5 Answers
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Anonymous A asked on Sep 15, 2020

Hi Guys, I have a case to work where it goal is to develop a freemium model for a SaaS product & one has to decide which features should be "free" & "premium"

What kind of MECE structure/framework can one use to decide the feature in "Free" & "paid"?

I have tried to brainstorm on this but reached a dead end. Any thoughts?

(edited)

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Vlad
Expert
replied on Sep 15, 2020
McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School

Hi,

I recommend using the Product Development frameworks. They include the analysis of companies vision and strategy, customer segments and needs, etc. You can find a lot of product frameworks in the following books:

  • Cracking the PM interview
  • Decode and Conquer
  • Amazon product manager interview
  • Principles of product management, Peter Yang
  • Strategize, Roman Pichler
  • Product handbook by product school
  • Secrets of product manage interview, Lewis Lin

The first 3 books are very famous and commonly used to prepare for such interviews

Best

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Ian
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Content Creator
replied on Sep 15, 2020
#1 BCG coach | MBB | Tier 2 | Digital, Tech, Platinion | 100% personal success rate (8/8) | 95% candidate success rate

Well, your framework here needs to be how you evaluate each feature.

So,

Value of product as "Free" offering

vs

Value of product as "Premium"

For each, you need to measure:

  • Quantity of consumers i.e. likelihood of bringing in customers
  • Value of customers i.e. how much they're paying
  • Stickiness of customers i.e. likelihood of preventing them from leaving

So, free has the benefit of bringing in new customers (which you have to value at a certain rate), which have a x % probability of buying premium products, BUT may free-ride

Premium has the benefit of earning more money per customer BUT preventing certain users from entering the platform.

Free = Drives Quantity

Premium drivers basket size per customer

You want to maximize this equation/combination

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Clara
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Content Creator
replied on Sep 15, 2020
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

Hello!

I would not advise you to think about this leveraging frameworks, but to think about it in your own terms.

I would try to create a score system, such as a table, in which I would list as rows all the different features. Then, as columns, I would measure different KPIs that are key for a customer, such as:

  • How much they need that feature
  • How much time is saved with that feature
  • How much they enjoy that feature
  • Is this feature also relevant as status symbol or others?
  • etc.

Then, I would give a score to each feature in each of the different KPIS.

With that score, you can prioritize them and see for which ones you want to charge and for which ones not, which ones to use as a hook, etc.

Hope it helps!

Cheers,

Clara

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Simon
Expert
Content Creator
replied on Aug 31, 2022
50+ successful coachings / Ex-Mckinsey JEM & Interviewer / Industry + Engineering background

Dear A,

in general a good structure can be evaluated by a certain depth and breadth. The “depth” should be at least 3-4 levels while the “breadth” should cover the entire solution space. You can cross-check this with the MECE principles (For details see respective article on Preplounge), but the CE (collectively exhaustive) part is basically defining your breadth.

Finally, make sure to check for inter-linkages in your structure and point them out.

Simon

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Anonymous replied on Sep 15, 2020

Exciting case! Since you're analysis this on a feature leve, not a product, level, I'd map out each feature across two dimensions: Importance for basic app usability and customer excitement (translates to willingness to pay). That way, you can make a decision in a 2x2 for each feature individually.

If there are featues that you identify as high/high (shouldn't be too many, as customers won't get very excited about a table stake), you can either make them freemium or start premium and then offer then as promotions for free. E.g. social media raffles, referrals bonusses, etc.)Freemium SaaS Graph

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Vlad gave the best answer

Vlad

McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School
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