Intercom Cut $50M ARR for Simpler Pricing
by Owen McCabe on August 21, 2025
Situation
- Company context: Intercom, a 14-year-old SaaS business with hundreds of millions in ARR, had complex pricing that was widely disliked
- Pricing problem: Their pricing had become a notorious industry meme with viral Twitter jokes mocking its complexity
- Root causes:
- Unfocused strategy: "Trying to do all the things for all the people"
- Multiple value metrics: Charging for seats, messages, leads, and other metrics simultaneously
- Multiple product lines: Customer service, outbound messaging, website messenger, and more
- Business impact: The pricing complexity was eroding customer relationships and internal morale
Actions
- Simplified pricing structure: Dramatically reduced the complexity of their pricing model
- Revenue sacrifice: Deliberately wrote down approximately $50 million in ARR by reducing prices for many customers
- Value alignment: Moved toward pricing that was more predictable and fair for customers
- Cultural shift: Made "customer obsession" a core value when McCabe returned as CEO
- Pricing philosophy change: For their AI agent Fin, they adopted outcome-based pricing (99¢ per resolved ticket)
Results
- Improved retention: Customers stayed longer with simpler, more predictable pricing
- Enhanced internal culture: Staff belief in customer care strengthened when pricing aligned with values
- Healthier customer relationships: Pricing simplicity "promotes a healthier relationship with the customer"
- Cultural alignment: Eliminated the disconnect where employees saw the company "screwing customers" while claiming to care
- New pricing foundation: Created a foundation for their AI-first business with "beautifully simple" outcome-based pricing
Key Lessons
- Pricing complexity reflects strategic confusion: When your strategy is unfocused, pricing becomes complicated as you try to capture value across too many dimensions
- Revenue sacrifice can be strategic: Sometimes giving up short-term revenue creates long-term value through improved retention and relationships
- Pricing affects company culture: When employees perceive pricing as unfair to customers, it undermines their belief in company values
- Customer-friendly pricing builds trust: Simple, predictable pricing creates "ease in the company" and promotes healthier customer relationships
- Outcome-based pricing aligns incentives: Charging for results (like resolved tickets) rather than inputs creates perfect alignment between vendor and customer success