Improve Your Pricing Schedule And Turn More Profit

From PriceIntelligently
Quote in SaaS & Tech Growth Strategy

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.

More SaaS + Software Stats

If your Net Revenue Churn is high (above 2% per month) it is an indicator that there is something wrong in your business; which may have a dramatically negative effect on your company’s growth. Source: Mckinsey

At a 35% CAGR, it takes 10 years for a SaaS company to grow from $5M to $100M in ARR

SaaS solutions have the highest security features with 95% security failures due to human error

Even if a software company is growing at 60% annually, its chances of becoming a multibillion-dollar giant are no better than 50/50

The median annual contract value (ACV) was $25K, $21K, $21K, $20K in 2016, 2015, 2014 and 2013

The average company booking professional services revenue on new deals is equivalent to 16% of the first year subscription value. Professional services margins are approximately 22%

Negative Churn and Expansion Revenue

All types of investment have grown, year-on-year, with the biggest growth during the seed stage of financing

How to Reduce Churn

SaaS, and other recurring revenue businesses are different because the revenue for the service comes over an extended period of time (the customer lifetime)

More SaaS & Tech Growth Strategy Stats

Revenue Renewal Rate= (MRR up for the renewal at beginning of month- MRR not renewed at the end of month)/ MRR up for renewal at beginning of month)

The fastest growing SAAS companies averaged $250k in MRR and were only losing around 3.2% of that revenue each month to churn

SAAS companies invest between 80% and 120% of their revenue in sales and marketing in the first 5 years of their existence

Sony’s PlayStation brand had accumulated approximately 38.57 million fans on the social network

High-growth companies offer a return to shareholders 5 times greater than medium-growth companies

How Often Should The Pricing Committee Be Meeting And Making Changes?

In 2017, Foxconn Technology Group achieved a net income of 135.37 billion New Taiwanese dollars, the equivalent to approximately 4.55 billion U.S. dollars.

If your Net Revenue Churn is high (above 2% per month) it is an indicator that there is something wrong in your business; this will become a major drag on growth

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%

Even if a software company is growing at 60% annually, its chances of becoming a multibillion-dollar giant are no better than 50/50