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.

PriceIntelligently

More SaaS + Software Stats

Internet sales-driven companies have a much greater reliance on marketing, with 65% of the median company’s CAC budget devoted to marketing

Analysed by contract value, field sales are primarily evident for companies with median deals over $25K. Inside sales strategies are most popular for companies with $1K-$25K median deal sizes

If your Net Revenue Churn is high (above 2% per month) it is an indicator that there is something wrong in your business

Growing faster has twice as much impact on share price as improving margins

54% treat upselling and add-on sales as high priority

Moving from $1.5 million with an eye towards $10 million in ARR is a tough a task and will take an excellent VP of sales to get you there

Since churn is so important, wouldn’t it be useful if we could predict in advance which customers were most likely to churn?

SaaS companies in the $7.5MM-$15MM range are among the fastest growers

Software and online services are in a period of dizzying growth

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

More Growth Strategy Stats

55% of SaaS companies rate Customer Retention as the key metric to measure

The median TTM revenue growth rate + adj. EBITDA margin for publicly traded SaaS companies was ~37%, implying that just under one half met or exceed “The Rule of 40%”

How to Reduce Churn

It’s 4x cheaper to upsell existing customers than acquire new customers: costing just $0.28 to acquire an additional dollar of revenue

After $10M in ARR, the median growth rate slows to just under 50%

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%

As companies scale their growth engines, a slightly-above-average churn rate becomes harder and harder to offset with net new revenue growth, especially when the goal is to outpace it by 4x

In all SaaS businesses there will likely come a moment where they realize that not all customers are created equal

Non-renewal rates are higher than gross dollar churn rates and higher for shorter duration contracts

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