Improve Your Pricing Schedule And Turn More Profit

Quote Info

We want you to look at pricing the same way you look at other business functions, because at the end of the day pricing is the greatest leverage that you have on your bottom line.  Empower your organization to be in tune with your customers and always be optimizing for profits. If you remember nothing else from this post – remember these few points.

• Pricing is a constant process that is fueled by tons of customer data

• A pricing committee is the strong grip of a hand that cranks your pricing lever

• You should be evaluating every quarter and making sure that your personas are quantified

• You should be making minor changes every three months, and major changes every six

• Improve your product so that you can improve your pricing. 1% increases in price yield 11% increases in profit.

More SaaS + Software Stats

The median cost for a SaaS company to acquire a dollar of new customer revenue is $1.18

The best SaaS companies achieve 5-7% annual revenue churn – equivalent to a loss of $1 out of every $200 each month

Best-in-class SaaS companies achieve 5-7% annual revenue churn – equivalent to a loss of $1 out of every $200 each month

If a software company grows at 20% annually, it has a 92% chance of ceasing to exist within a few years

Getting paid in advance is really smart idea if you can do it without impacting bookings, as it can provide the cash flow that you need to cover your cash problem

The very best SAAS business has a negative churn rate and will have a Dollar Retention Rate of greater than 100%

The very best SaaS businesses have a negative revenue churn rate and will have a Revenue Retention Rate of greater than 100%

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

The largest SaaS companies (>$75million yearly revenue) attribute 2.5x as much new revenue to upselling than the smallest SaaS companies (<$1.25million): 28% versus 11%

When venture capitalists participate in seed rounds, the average round size is 3x larger

More Growth Strategy Stats

While field sales remains the most popular way to sell for companies >$2.5MM revenue, companies with <$2.5MM revenue tended to use inside sales as their primary mode of distribution

The average SaaS business generates 16% of its new Annual Contract Value (ACV) from upselling to existing customers

The venture-backed companies that were acquired most often had a 7 percent share of female execs, as opposed to 3 percent at unsuccessful (unacquired) firms

Unlike many other industries, if a software company grows at only 20%, it has a 92% chance of ceasing to exist within a few years

Smaller SAAS companies reported more frequent use of third-party providers as their primary application delivery method, while the largest companies were more likely to use self-managed servers

Software and online services are in a period of dizzying growth

The best SAAS businesses have a LTV to CAC ratio that is higher than 3, sometimes as high as 7 or 8

The best SaaS companies achieve 5-7% annual revenue churn – equivalent to a loss of $1 out of every $200 each month

SAAS companies with >$250K median ACV book nearly 25% of their contracts at 3 years or longer

Japanese company Hitachi accounted for three percent of the world’s market for diagnostic imaging in 2017.