Improve Your Pricing Schedule And Turn More Profit

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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

Non-renewal rates are higher than gross dollar churn rates and higher for shorter duration contracts. Source: ForEntrepreneurs

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

The median annual unit churn for SAAS companies was 10% in 2016

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

Gross dollar churn among companies with an internet go-to-market strategy saw a meaningful increase, up from 8% in 2015

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%

A 2017 SaaS Capital survey showed that young companies actually have higher retention rates than more mature SaaS businesses

SAAS companies need to track the number of visitors, trials and closed deals; And also track the conversion rates, with the goal of improving those over time

Increases in revenue growth rates drive twice as much market-capitalisation gain as margin improvements for companies with less than $4 billion in revenues

The fastest growing SaaS companies raise an average of $9.5M in Series A funding

More Growth Strategy Stats

Companies that spend more on sales and marketing (as a % of revenue) generally grew at a faster rate than those that spent less

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

56% treat “Existing Customer Renewals” 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

Less than 20% of new revenue came from existing customers in the form of up-sell and expansion sales

Negative Churn and Expansion Revenue

Internet sales strategies are the only sales method to see a decline in CAC, dropping from $0.54 to $0.42 between 2014 and 2015

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

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

The top 50% of the fastest growing SaaS businesses generate much higher upsells than their competitors. The larger the business, the greater the impact of upselling