Feature Placement Matrix
Place features within the appropriate tiers
The Feature Placement Matrix is a part of the Feature and Pricing Suite for SaaS that helps you craft a software offering that maximises the total lifetime value of your users. This tool aims to help you place features into the ideal tiers according to their significance and users' willingness to pay. The matrix is based on the proven MaxDiff and Van Westendorp methodologies and helps brands categorise from 3 to 25 features to determine which belong in:
- Every tier as they are the must-haves for all users.
- Premium offerings to engage the most valuable user segments.
- Optional upgrades or add-ons options to upsell the free and basic tiers users.
- Deprioritising to minimise investment in non-value-added features.
![Feature Placement Matrix](https://conjointly.com/img/saas/fpm.png)
Key outputs
Feature Placement Matrix
![Feature Placement Matrix Feature Placement Matrix](https://conjointly.com/img/output-feature-placement-matrix-only.png)
Categorise features into appropriate tiers based on users' preferences and willingness to pay for each feature
Generated with the MaxDiff scores on the x-axis and the willingness to pay from the Van Westendorp (VW) analysis on the y-axis, the Feature Placement Matrix classifies software features into four quadrants - premium, add-ons, every tier, and deprioritise.
In this example, a business messenger app identifies three features to be marketed as premium features, one feature to be offered in every tier and as optional add-ons, respectively, as well as three features to deprioritise.
Ranked list of product features based on users' perceived importance
![Identify the most and least important features for your users Identify the most and least important features for your users](https://conjointly.com/img/fpm-output-maxdiff-v5.png)
Identify the most and least important features for your users
Through MaxDiff Analysis, each software feature is ranked by its prominence in users' subscription decision-making.
The example shows data history, free tutorials/guides, and cloud storage were identified as the most important features among file hosting service subscribers. On the other end, offering a all-in-one control, free gifts, and multiple user access were the least critical features.
Price Sensitivity Meter (PSM)
![Price Sensitivity Meter (PSM) Price Sensitivity Meter (PSM)](https://conjointly.com/img/fpm-vw-v9.png)
Reveal the too cheap, cheap, expensive, and too expensive price points for your software
Another key output of the Feature Placement Matrix is the Van Westerndorp Price Sensitivity Meter, a chart that highlights the psychologically acceptable range of prices for your software.
For example, this chart suggests that the acceptable range of prices is $7.50 to $12.00, with the optimal price of $8.50.
Recommended further actions
The Feature Placement Matrix helps you classify your software features into one of the four quadrants by comparing the users' perceived importance and willingness to pay for each feature. To craft a software offering that attracts users to premium offerings while not disenfranchising the basic tier users, Conjointly's recommendations for each quadrant are as follows:
Willingness to Pay
High | Add-ons | Premium |
---|---|---|
Low feature importance & High willingness to pay
| High feature importance & High willingness to pay
| |
Low | Deprioritise | Every Tier |
Low feature importance & Low willingness to pay
| High feature importance & Low willingness to pay
| |
Low | High | |
MaxDiff Scores |
Methodology
Currently being used and refined over hundreds of projects for SaaS brands, the Feature Placement Matrix was created by combining the MaxDiff and Van Westendorp's Price Sensitivity Meter (VW) analysis. Below is the summary of these methodologies:
MaxDiff | Van Westendorp | |
---|---|---|
Respondent View | Please review the following features and select the ones you find most important and least important for an enterprise software. Unlimited online support Most Important Least Important 100GB Cloud Storage Most Important Least Important All OS compatible Most Important Least Important | Think about SoftwareCo software. At what monthly cost (in USD) per active user, the software would be... ...price so low that you would feel the software couldn't be very good? ...a bargain - a great value for the money? ...starting to get expensive, so that it is not out of the question, but you would have to give some thought to subscribe it? ...so expensive that you would not consider subscribing to it? |
Overview | MaxDiff is an advanced analytical tool constructed based on user trade-off decisions. It provides interval scaled utility scores for each feature that businesses are interested in. | Van Westendorp is a practical pricing tool constructed based on users' price perception. It provides an acceptable price range for each product. |
When do we use it? | To create a ranking for different alternatives, such as:
| To identify the following price points for products:
|
Format of questions |
| Respondents are prompted to enter prices they would consider as:
|
Application in the FPM | A SaaS brand wants to discover the most important features among users. MaxDiff analysis provides a robust ranking of the features' importance and the utility scores for each feature. | A SaaS brand wants to learn how much each software feature contributes to users' willingness to pay for the software. VW analysis identifies the acceptable price range for the software product and provides the optimal price. |
How the Feature Placement Matrix is computed
The Feature Placement Matrix is generated using the MaxDiff scores on the x-axis and the willingness to pay from the Van Westendorp (VW) analysis on the y-axis. The MaxDiff scores are directly obtained from the MaxDiff question.
To compute the willingness to pay, Conjointly calculates the difference between the feature's optimal software price and average optimal software price. However, this calculation only takes into account the top 20% of respondents with the highest MaxDiff score for each feature.
This approach involves a simpler survey and focuses on respondents with a high interest in selected features. There are two realistic assumptions behind this approach:
- The software value is rarely the total value of all features offered. Thus, this approach helps learn the overall value of the software for respondents and eliminate guesswork.
- The respondents with a higher interest in selected features are more likely to use those features and hence should be given more weight than those with low interest in the selected features.
Minimum sample size required for Feature Placement Matrix
To generate the Feature Placement Matrix, a minimum sample size of 40 respondents is required. This is because the VW analysis itself requires a minimum of 8 respondents to compute the optimal price point. Additionally, for each feature, the VW "optimal" price is calculated using the top 20% of respondents with the highest MaxDiff scores for that specific feature (8/20%=40).
Survey flow
A Feature Placement Matrix survey consists of four following stages.
Stage 1: Screening questions
The survey begins with screening questions to filter potential survey respondents and ensure only the desired audience is re-directed to complete the survey. Some commonly used screening questions include demographics, usages, and behaviours.
How would you best describe your usage, or intended future use regarding the enterprise software?
No Use or Plans
Plan to Use
Using
Heavy user
Stage 2: MaxDiff questions
Qualified respondents then proceed with MaxDiff questions. The respondents are asked to choose both their most important and least important features shown.
Please review the following features and select the ones you find most important and least important for an enterprise software.
Unlimited online support
Important
Important
100GB Cloud Storage
Important
Important
All OS compatible
Important
Important
Stage 3: Van Westerndorp Exercises
Then, respondents proceed to complete the Van Westendorp exercises. Each respondent is asked approximately four questions on the price perception. For instance, at what prices respondents would consider subscribing to the software:
- “Priced so low that you would feel the software couldn't be very good?” – to determine the “too cheap” price.
- “A bargain—a great value for the money?” – to determine the “cheap” price.
- “Starting to get expensive, so that it is not out of the question, but you would have to give some thought of subscribing it?” – to determine the “expensive” price.
- “So expensive that you would not consider subscribing to it?” – to determine the “too expensive” price.
Think about SoftwareCo software, at what monthly cost (in USD) per active user, the software would be...
...price so low that you would feel the software couldn't be very good?
...a bargain - a great value for the money?
...starting to get expensive, so that it is not out of the question, but you would have to give some thought of subscribing it?
...so expensive that you would not consider subscribing to it?
Stage 4: Additional diagnostic questions
Lastly, the survey ends with additional diagnostic questions, such as gender, location, and current software usage, that help you perform the subgroup analysis for more in-depth insights.
How many people are employed at your company?
1-50
51-200
201-500
More than 500
Which of the following enterprise software are you using?
Software A
Software B
Software C
Software D
Software E
Software F
Brand X
Brand Y
Soundwave Co
None of the above
Wonder what the actual FPM surveys look like? Take a sample FPM survey today..
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