Unlocking scalable growth through smarter pricing.
Revenue Growth
ARR scaled from ~$20M to $150M in 3 yrs, reaching ~$250M by 2023
Sales Efficiency
Higher rates of renewals, upgrades, and upsells including increased deal velocity
Market Entry
Successfully transitioned into Enterprise Sales
The situation.
When Bamboo HR began, its pricing structure and strategy were an afterthought that was given attention only as the company was ready to go to market with its initial product offering.
In fact, their original pricing model simply adapted an approach from a similar-sized software company in the project management space.
As its customer base grew, management began adjusting pricing to capture higher margins. Based largely on assumptions and intuition, these adjustments lacked data and real market intelligence to project and manage risk. As a result, customer churn accelerated, new customer acquisition decelerated, and similar customers were often paying wildly different amounts.
They needed to stop the spiral. The team wanted a more scientific and disciplined pricing structure that could improve their business performance and recognized they needed specialized expertise if they were going to do it successfully. After an extensive review, Bamboo HR signed with Software Pricing Partners (SPP).
"We wanted to do what we were doing with more certainty; with better science behind the process and with a better understanding of what we mean when we’re dealing with our clients with regards to pricing."
-Kent Goates, Bamboo HR Chief Financial Officer
The challenge.
As Bamboo HR gained market traction, profitability and scalability became front and center for achieving business growth. However, several challenges related to software pricing were preventing them from achieving their goals at scale:
- There were few guardrails in place to manage customer discount demands. Sales would repeatedly ask the Deal Desk to approve one-off deals causing extended negotiations, slowing deal velocity, eroding margins and creating significant price disparity across customers.
- Given their prior pricing model failures, the company needed an accurate way to forecast the impact of any new pricing adjustments to their customers and the organization.
- Bamboo had an aggressive product roadmap and expansion plans to grow into new markets. This exacerbated the need for an easy-to-understand pricing model that could accommodate new product innovation and encourage upselling and cross-selling.
The solution.
Software Pricing Partners choreographed an array of research, analytics, strategy and training elements to tackle Bamboo’s challenges.
- A comprehensive data analysis to fully understand how customers used and gained value from Bamboo HR software.
- Gathering competitive intelligence via secondary and primary research to determine what customers did and did not like about competitors’ software, what features they did and did not use, the basis for competitors’ pricing and how much their customers were actually paying.
- Collaboration with Bamboo’s engineering team—informed by the data analysis and competitive intelligence—to optimize packaging.
- Designing and running scenarios to project the impact of the new pricing model options. This increased confidence in decision making and provided the ability to test, learn and adjust early in the launch and rollout phases.
- Working with a sales implementation partner, SPP trained Sales and Deal Desk management on the new pricing model and developed processes to measure compliance - including willingness from leadership to walk away from deals that didn’t adhere to the model.
The success.
Software Pricing Partners’ engagement with Bamboo HR delivered significant and positive results, including:
Cool Stat
750%
growth in 3 years following SPP's engagement
In 2017, Bamboo HR revenue had stalled at ~$20M ARR. By 2020, 3 years after their engagement, ARR reached $150M. By 2023, revenues have approached $250M and Bamboo HR remains poised for IPO.
Bamboo HR now has a comprehensive pricing strategy in place. The overall attention to reducing deal friction and designing a clearer path for customers to renew, upgrade and expand has enabled Bamboo to scale their enterprise.
By applying the model across the entire sales organization, deal velocity has increased and rates of renewals, upgrades and upsells have improved.
Clear discounting parameters are now aligned to corporate strategy rather than individual discretion, including an algorithm for discounting that defines ways for customers to earn discounts as their spend increases.
The new discounting model eliminated opportunities for customers to game the system, and upheld important customer fairness principles, as all customers in similar situations now pay similar amounts.
Importantly, Bamboo HR originally steered away from selling Enterprise companies due to the inability to determine and manage profitable pricing at high utilization levels. After SPP’s involvement, they are now successfully selling and closing Enterprise clients.
"We wanted to do what we were doing with more certainty; with better science behind the process and with a better understanding of what we mean when we’re dealing with our clients with regards to pricing."
-Kent Goates, Bamboo HR Chief Financial Officer
