Product monetization is the discipline of systematically extracting value from the products you build. It's not about charging more—it's about aligning ...
Steve Saper
Founder & CEO of PM33. Building the agentic-PM platform and writing about how product management is being remade in the AI era.
Product monetization is the discipline of systematically extracting value from the products you build. It's not about charging more—it's about aligning your monetization model with how your customers actually use your product.
I agree, however, most product teams treat monetization as an afterthought. They build the product first, then figure out how to make money. That's backwards. Elena Verna, who led monetization at Slack and has worked with dozens of high-growth companies, sees monetization as a core product strategy, not a pricing exercise.
Here's what we learned from analyzing her frameworks: the best product monetization happens when you understand three things: your customer's willingness to pay, your product's core value drivers, and the jobs your customers are trying to accomplish.
Product monetization strategy is the process of designing how customers pay for value. It's different from pricing (which is tactical) and revenue models (which are structural).
Monetization strategy answers: What specific customer outcomes should we charge for? How do we measure that value? When should we charge—before value realization or after? Who should be the decision-maker—the user or the buyer?
Elena breaks this into three components:
You must identify the specific outcomes your product creates that customers care about. Not features. Outcomes.
For example, Slack doesn't charge for "message search." It charges for information access. The outcome is "my team can find what they need in seconds instead of minutes."
To identify value drivers:
Once you identify value, you can monetize it. If your product saves a 100-person team 5 hours per week of searching for information, that's worth 26,000 hours annually. At a $75/hour blended rate, that's $1.95M in value created. Your monetization should capture a portion of that.
Different customers extract different value from your product. A startup using your tool to organize 50 people experiences different value than an enterprise with 5,000 people.
Jury's still out on the perfect segmentation model, but what works is:
Your monetization model should reflect these segments. You can't charge the same for a user where your product is core infrastructure versus one where it's a productivity convenience.
Once you know what to charge for and who's paying, you need to design the pricing architecture.
The best architectures share three characteristics:
They're transparent: Customers understand what they're paying for. At Slack, you pay for active users—everyone gets the same price per user. There's no confusion.
They're fair: The customer feels the price matches the value received. If Slack charges by active user, and your team uses 100 active users, you trust that 100 is the right unit of value.
They're expandable: As the customer extracts more value, the price increases proportionally. This aligns your growth with theirs.
The worst pricing architectures have hidden complexity, feel arbitrary, or penalize customers for success.
Elena has worked with companies across five primary monetization models. Each works for different product categories:
Best for: Collaboration tools, communication platforms, team software
How it works: Charge per active user per month. Simple. Fair. Scales linearly with your customer's growth.
Advantages:
Disadvantages:
Example: Slack charges ~$12/user/month (Standard plan)
Best for: Infrastructure, APIs, analytics, computational services
How it works: Charge based on measurable consumption—API calls, data processed, compute hours, storage used.
Advantages:
Disadvantages:
Example: AWS charges for compute, storage, data transfer
Best for: Enterprise software, B2B SaaS with quantifiable ROI
How it works: Charge based on the business outcome—revenue generated, cost saved, risk mitigated.
Advantages:
Disadvantages:
Example: A recruiting tool charges based on placements made or hires closed
Best for: Products with broad feature sets and diverse customer segments
How it works: Offer multiple tiers (Basic, Pro, Enterprise) with different features and prices.
Advantages:
Disadvantages:
Example: Asana offers Basic ($0), Advanced ($10.99/user/month), Business ($24.99/user/month)
Best for: Horizontal tools with high virality, low support costs
How it works: Offer free tier with limited features, charge for premium features.
Advantages:
Disadvantages:
Example: Figma offers free tier, charges for premium collaboration features
Elena has seen these mistakes repeatedly:
You identify a value, but it's not actually what customers care most about. So they don't pay.
A project management tool charged for "unlimited projects." Turns out customers didn't care about project count—they cared about seeing their team's status in one place. The real value was visibility, not project quantity.
Fix: Validate value drivers with customers. "If we charged for this, would you pay?" If the answer is no, you're monetizing the wrong thing.
You implement monetization before customers fully understand the value. So they feel the price is too high.
Based on my experience working with early-stage companies, this is the #1 reason monetization fails. Customers haven't realized the value yet. They don't have context for the price.
Fix: Wait until your most engaged customers extract measurable value. Then implement pricing. Your engaged users will justify the cost to the skeptics.
Your monetization model worked at 10 customers. But at 100 customers, your model breaks. Most companies don't adapt.
Slack's per-user model works great until a 500-person company realizes they're spending $60K annually. Then they demand volume discounts. Now Slack has enterprise pricing for these deals.
Fix: Monitor your monetization model quarterly. When you hit 100 customers, revisit. When you hit 1,000 customers, revisit again. Your model will need to evolve.
Here's the step-by-step process Elena recommends:
Monitor these signals:
Based on my experience, if more than 20% of customers churn in the first 90 days after pricing, your price is too high relative to perceived value.
Charge if:
Stay freemium if:
Three strategies:
Jury's still out on how to handle price resistance, but what works: go back to understanding their specific use case and value.
Raise prices when:
Yes, but with care. Slack has per-user pricing. Figma has per-user plus usage. But too many models create confusion.
Rule: No more than 2 monetization models. Any more and customers get confused about what they're paying for.
Elena sees three trends:
1. More usage-based pricing: As metering infrastructure improves, we'll see more granular, usage-based models that align customer payment with value extracted.
2. Dynamic pricing: Just like airlines, we might see SaaS products adjust prices based on demand, customer tier, and extracted value.
3. Outcome-based contracts: Enterprise software will move toward "you pay based on results delivered" models, not seat counts.
Product monetization strategy is about aligning how customers pay with the value they extract. The best monetization:
Start with customer interviews. Identify your core value driver. Quantify that value in business terms. Then price at 50% of that value. You'll be right.
I agree, however—most companies skip the customer research and just copy competitors' pricing. That's how you end up charging for the wrong things.