The Secret Weapon of Viral SaaS: The User Initiated Upgrade

May 2, 2023
Patrick Rafferty
Co-founder of UserHub

The 2023 Edition of Okta Business at Work has some of the best data available on relative growth rates of private companies. This chart caught our attention:

Figma, Miro, and 1Password are growing rapidly, with a 90% increase in new logos and a 60% rise in new user growth within logos. This means that they are not only gaining new customers but are also adding new users quickly within existing accounts. These per-user billers have pioneered B2B go-to-market strategies that exhibit consumer-grade virality.

How did these products achieve such outlier levels of user growth? Obviously, great products with horizontal appeal are a requirement to exist in this quadrant. Kevin Kwok's analysis provides an excellent explanation of why Figma Design Product is inherently viral.

However, we believe that another key factor is the unique approach to user licensing. After all, "viral" adoption is inherently at odds with the friction of monetization. Imagine trying to go viral if the customer billing admin had to pre-purchase seats and then assign them to users, which is how most SaaS products with a per-user model approach subscription management.

These companies have re-imagined how user provisioning and subscription management work together in order to unlock end-user adoption.

At a minimum, PLG companies with a Per User Model use 'Express Licensing' in their Team Admin portal. No checkout flow is required to add another user, and subscription management happens in the background. For example, 1Password uses this method, below:

For Seat-Based SaaS, Express Licensing may appear to represent the lowest-friction approach available. However, Figma, Coda, Miro, and other PLG companies have gone even further by moving the process of purchasing a license all the way into the background.

End-users can become paying users without pre-approval from the billing admin at all, via the User Initiated Upgrade - the B2B SaaS equivalent of Amazon launching brick & mortar stores with Just Walk Out technology, which removes the checkout experience altogether.

The User Initiated Upgrade

Buried in Figma Help Center Documentation, you can find a description of the User Initiated Upgrade.

<div class="purple-text-wrapper"><p class="purple-text-wrapper-p">[Users with the role of] Viewer can upgrade themselves to a paid Editor role by performing an upgrade action. Admins don't need to approve these upgrades…. This allows people to get the access they need without requiring approval. Figma only includes them in the organization’s billing when they signal their intent and take an explicit edit action. As this is a provisional role, it's not possible to set someone's role back to viewer after they are upgraded. [Instead, they can only be placed back to a Viewer-Restricted Role].</p></div>

To put this monetization logic into action, Figma developed an innovative approach to role design, account management, and billing automation:

How does this setup unlock growth?

In the majority of B2B SaaS products utilizing a seat-based model, invitation rights are typically granted to a limited number of users. However, Figma diverges from this convention by permitting numerous non-admin users to invite others to the product, leading to a greater abundance of inviters.

Upon being invited, users are placed in the provisional role of Viewer. Users who perform one of the Core Actions are transformed into an Editor via the User Initiated Upgrade.


This approach ultimately minimizes friction for end-users. They can join the account and seamlessly transition to the Editor role. The billing admin doesn't need to modify the subscription settings in advance, and in fact, they don't have to take any action at all for the User Initiated Upgrade to unfold.

So how does the billing admin exercise any cost control at all?

Although we could not find any documentation in the help center that explains this behavior, we observed the proration flows ourselves. Most SaaS companies would prorate the upgraded user. In other words, if a user becomes billable halfway through the month, the next invoice would include a proration line-item for the half of the month. However, Figma appears not to charge for proration, see below:

An email is sent to the admin previewing the invoice for the upcoming month, giving the admin a chance to intervene and push the user back down to a free role.

The admin can then place the user into a Viewer-Restricted Role, where the user cannot self-upgrade or invite other users who can self-upgrade.

Overall, the User Initiated Upgrade flow flips the sequence of typical user licensing behavior:

  • The Billing Admin buys licenses via the checkout flow: Monetization → Adoption.
  • User Initiated Upgrade: Adoption → Monetization.

(Note: These are not mutually exclusive. Figma still allows admins to pre-purchase licenses.)

Unlock End-User demand with a Frictionless monetization journey

Unlocking end-user demand with a frictionless monetization journey is crucial for PLG companies that desire a "bottoms-up" adoption motion. Otherwise, the billing admin acts as a gatekeeper between your product and seat growth.

Elena Verna, former head of growth at Miro, Amplitude, said:

<div class="blog-quote-wrapper"><p class="purple-text-wrapper-p">PLG [product-led growth] works when end users experience value and bring their organization on board. That’s not possible in industries where the enterprise buyer holds all the power…. End-users need to have permission from the organization to solve the problem. This includes access to suitable systems/passwords & decision-making ability.</p></div>

When many people think of pricing and packaging, they think of a static pricing page. However, of equal importance is how the monetization journey is designed to maximizes the probability that would-be users become paying-users. Picking your moment to monetize is critical.

If you are looking to unlock virality to drive subscriber growth, reach out to us.

<div class="button-blog-wrapper"><a href="https://userhub.com/contact" class="button-blog">TALK TO US</a></div>

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The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

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In this article, we walk through five key questions to help you design a Team Management Portal that unlocks product-led growth:

  • Is every Team Membership role considered billable?
  • How should your Team Management portal behave at each pricing tier?
  • How can users become team members?
  • What is the optimal moment to monetize an end-user?
  • How forgiving are your proration flows to billing admins?
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The Case For Free Roles
Examples: Coda, Figma
  • An organization has lower willingness to pay for secondary users; however, these secondary users enhance the product's value for primary users.
  • Since there is a free role for inviting users, SaaS companies tend to feel more comfortable granting user invitation privileges to all users by default, rather than limiting them to only admins.
  • For instance, Figma does not charge an organization for non-editors. This approach enhanced the product's value for designers by providing a platform for collaborative design processes. Subsequently, they monetized these non-designers by cross-selling their whiteboard product, Figjam.
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The Case Against Free Roles
Examples: Zoom, GitHub
  • There are no obvious secondary users, so offering a free role may lead to cannibalization of paying users
  • In the case of GitHub, introducing a free role could potentially have more drawbacks than advantages. Unlike Figma, users who cannot read code may not enhance the platform's collaborative utility. Furthermore, attempting to create a free role for non-engineers introduces the risk of cannibalization. GitHub could lose the ability to monetize engineers who do not write code but still provide valuable contributions through code reviews.

[Users with the role of] Viewer can upgrade themselves to a paid Editor role by performing an upgrade action. Admins don't need to approve these upgrades…. This allows people to get the access they need without requiring approval. Figma only includes them in the organization’s billing when they signal their intent and take an explicit edit action. As this is a provisional role, it's not possible to set someone's role back to viewer after they are upgraded. [Instead, they can only be placed back to a Viewer-Restricted Role].

PLG [product-led growth] works when end users experience value and bring their organization on board. That’s not possible in industries where the enterprise buyer holds all the power…. End-users need to have permission from the organization to solve the problem. This includes access to suitable systems/passwords & decision-making ability.

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Heading

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The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Heading

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  • text example 2
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The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

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Patrick Rafferty
Co-founder of UserHub

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