Introducing the Team Based Business Model

Photo by Leon

Across SaaS products, it’s common to see all types of different business models — per user, per active user, flat rate, usage based, feature based, a combination of different models and so on. At Clap, we saw the need for a different model to bring the most value to our product and customers.

Here’s what our pricing page looks like:

Clap pricing page

Yup, we charge per channel. The correlation we make is that 1 channel on Slack represents 1 team.

The team based model is self-explanatory; our revenue scales with the product’s adoption by each team in the business.

There are a couple of reasons we decided to go with this model:

1. Clap requires the team to vote to recognize team players; it only works when everyone buys in and engages with the product. We only succeed when the entire team is successful in our product.
2. We encourage a culture that make teams more collaborative and as a by-product, more profitable 😉.

I think you get it — in order to provide the best experience for our customers, we see our unit of measurement as a team.

Team Based Business Model

Disadvantages

First, let’s get this out of the way — there are a few obvious disadvantages this model presents:

• The smaller the team, the more the customer is paying per person on that team. (We combat this issue for our smaller customers with our freemium offering — allowing individual teams to use the product for free for as long as they’d like.)
• As a business, we lose revenue on growing teams where we would be increasing revenue using a user based model (charging per user).

Advantages

Although there are some shortcomings, we think in the long term our customers get the most benefit:

• The larger the customer’s team, the more they are saving per person.
• In a growing organization where people come and go frequently, being able to provision groups of people (teams) instead of individual people is simple, saves time and makes customers more productive in our product.
• It’s easy for customers to calculate how much they’ll pay based on their org charts and it’s easier to predict revenue as those teams change less frequently than people moving in and out of the company.
• Coupled with the freemium model, we provide the same product for individual teams to use Clap for free as long as they’d like — allowing organizations to take a bottom-up approach by trialing Clap for a single team before proliferating the product throughout the rest of the business.

Pioneering the Model

It can be scary being the first to try something new (new to me?), but as business we are looking to be innovative not only on the product, but in all types of ways that are beneficial to our customers.

The team based business model fits our use case and we are looking forward to learning as we go along. Maybe we will start seeing a few businesses adopt a team based model soon 🙂.

I’d love to hear whether you’ve seen this business model used before, or if you see any other advantages or disadvantages of the model.

Oh, and last thing! We officially launched Clap if you’re interested in making your teams more collaborative and your people happier.