What PMs Need to Know About Monetization

Starting points for product managers working on subscription-based products

As a product manager, if you don't know how much revenue your product area brings to the company, you're at a significant disadvantage.

Monetization, traditionally considered part of the Growth domain, is a critical aspect that all PMs should understand. Having spent six months leading the Monetization team at my last company, I've gained insights that I'd like to share.

Misconceptions

You might recognize these thoughts:

1. "As a feature-team PM, I focus on engagement. Monetization isn't my problem."

2. "The Growth team's constant experiments are hard to keep up with."

3. "Upgrades have always been the Growth team's responsibility, so why should I worry?"

I used to think this way too. Then, I learned the hard way that changes to upgrade paths can significantly impact subscribers and revenue—not always positively. When you're asked to explain where millions of dollars went, it's a nerve-wracking experience. However, I'm grateful for that challenge as it forced me to work closely with the data analytics team, tracking every dollar and investigating discrepancies.

This experience matured my product understanding and boosted my career. It developed my curiosity and deepened my understanding of business operations. Thanks to this initially traumatic experience, I was later given the opportunity to lead the monetization team for a publicly traded company with $106M in total revenue. Still blows my mind that I was trusted with it.

Why Monetization Matters for All PMs

While not everyone needs to become a monetization expert, PMs responsible for user-facing products can benefit from fluency in certain areas. This knowledge will help both the business and your career progression.

Note: My expertise is primarily in subscription SaaS.

Key Areas to Understand:

1. Upgrade Paths

• Identify all upgrade placements within your product area

• Understand the user journey when [Upgrade] CTA is clicked. E.g: 

  • Do users see a shopping cart?

  • Is there an upgrade modal?

  • Are they directed to a pricing page?

  • What happens after a successful upgrade? 

• Familiarize yourself with trial and direct purchase flows

2. Downgrade Paths

• Know what happens when users cancel their paid plan

  • Will they retain access to certain functionality?

  • What occurs when a trial ends and is it different to direct purchase cancellation?

• Ensure users understand the value they'll lose upon cancellation

3. Revenue and Subscriber Metrics

• Track how many new subscribers your product area generates

• Calculate the revenue generated from these subscribers

  • While not an exact science, directional understanding is valuable

  • Consider both last-touch and multi-touch attribution*

• Determine your product's percentage of overall revenue and subscribers

Taking Action

Think about your current project. Go through the list of questions above. Do you have answers? If not, consider consulting with your Growth team and talking to your data analysts. Take initiative! 

Understanding monetization isn't just about numbers—it's about developing a holistic view of your product's impact on the business. This knowledge will not only make you a more effective PM but also accelerate your career growth.

* If you're interested in a deeper dive into  last-touch and multi-touch attribution and measurements, let us know in the comments, and we'll prepare a more detailed post on the topic.