The speed of business today, especially in the SaaS space, moves lightning quick with little room for hesitation. SaaS differs from other industries out there in the fact that customers, competitors, and technology can so quickly evolve and change. A customer can easily switch from one solution to another, and competitors can copy that new nifty feature. This environment means that your pricing, the exchange rate on the value you’re creating, needs to constantly be evolving, as well. You must be proactive.
Practically, to be proactive and make sure that your pricing strategy is evolving as quickly as your customer and product, you need two key pieces of infrastructure: 1. a pricing committee, and 2. a pricing cadence.
As we mentioned previously, pricing is at the center of your business. This is a beautiful fact because it means that pricing is a single fulcrum you can use to push for profit. This is a horrendous fact though because it means pricing is something everyone will have an opinion on and an opportunity to politic through your organization.
To cut through the potential for politics, as well as to streamline the time and tasks to collect data and make pricing decision you need a pricing committee. A pricing committee is the strong grip of a hand that pulls your pricing lever. The purpose of this committee is to insure that your company is identifying the strengths and weaknesses of your pricing strategy and always optimizing for profit. Practically, this purpose manifests itself in two forms – equal representation from the organization, and managing the pricing process.
Equal representation throughout your organization is absolutely crucial, because each part of even a small company will have a perspective that’s important to the pricing process. Sales will provide valuable insights into the sales tactics that are working in pricing conversations. Marketing will provide necessary customer persona data. Product will know the roadmap.
When determining Sales Capacity, “it’s worth noting that some percentage of new sales hires won’t meet expectations, so that should be taken into consideration when setting hiring goals. Typically we have seen failure rates around 25-30% for field sales reps, but this varies by company. The failure rate is lower for inside sales reps. can be counted as half of a productive rep”
Between the SMB and Enterprise customer types, the top-quartile performers not only have net-revenue churn that is 14% to 23% percentage less than the average performers but also have net-revenue churn that is negative in an absolute sense