Why do SaaS companies start creating white papers, security and data sheets and all that stuff? Because they want to sell to larger enterprises. Why do they want to sell to larger enterprises? They have lower churn rates, they buy in volume and their future expansion in volume can add more revenue than selling to a dozen new small companies. So here's Bill and Ted to explain what happened because I think only they can best sum up how simple minded we were in our go to market strategy.
Related: Dumb SaaS pricing mistakes
Also see: Enterprise SaaS pricing advice we wish we had known
And: How we thought we'd attract enterprise customers and what happened
Dude, I built this cool instant screen sharing thing on the side
Hey, I was playing around and built this thing - it's like instant online screensharing.
Cool, let's put it out there for free and see what happens.
Wow, people have really been using it lots, maybe we should start charging for it.
Let's totally charge $50 per company flat. 1000 companies = $50,000 / month
Seems like people like it a lot, let's turn that screen sharing thing into a product and do the same thing we did with the other product we made for that other market, keep it really simple, charge every company $50 per month. No-nonsense pricing.
Yeah, it's a great product. People would pay $50 right? That's really cheap, they have to pay for that price.
Yeah.
We only need 1,000 companies and that's like $50,000 per month.
How do we get 1000 of them? No problem, we'll ride the live chat wave.
Let's integrate with Intercom and Drift and Zendesk and all the other fast growing live chat companies.
When someone is doing live chat support they'll need our instant screen sharing to see what the user sees.
Dude, riding the live chat wave is a no-brainer.
Forget 1,000, we'll have 10,000 companies signed up soon!
Hey, our competitor has all this weird security sheet, data sheet and white paper crap on their site. What is that stuff?
I don't get why all our larger competitors have all these weird security docs, data sheets and white papers.
Who reads that crap?
Isn't that really old school?
We won't need that.
We'll just sell to 10,000 smaller companies at $50 per month.
Dude, our pricing is all wrong, let's change to per agent pricing
That whole $50 per month is dumb. We should be charging per agent.
Why?
We've now got one larger company with 50 agents using it a lot, they cost us half our server fees and they're only paying $50. Also, they use it like 20 hours per week per agent. That's like 1,000 hours of using it per week and they pay $50 per month. They saved themselves like $10,000 per month in time and made more than $20,000 per month extra in sales from our awesome service but are only paying $50. We are the dumbest fucks alive.
Right, let's change to per agent pricing.
Wow, this big company wants to pay us $9,500 per month
This company just enquired about buying for 150 agents.
Wow, 150 agents?
With our new volume pricing that's $9,500 per month. Also, they don't do that month by month stuff, they just want to pay 1 year in advance.
Omfg, that's like $120,000 per year.
Dude, that big company wants proof of concept, security sheets, onboarding documents...
What the hell is a proof of concept?
It's like a trial type thing.
Why didn't they just say trial?
These big companies use a different language sometimes dude. They also want some material to pass around.
What sort of material?
Er... security data sheets, product overview pdfs, some sort of ROI sheet, training material because they're worried about change management, and lots more.
Why?
Turns out, they need to persuade lots of other people in their company that our awesome service is worth buying. They're also audited and have to stick to data security standards. They're also scared they'll get fired over someone hacking customer data and so they need persuade their IT dept that our software is safe. We need to create all these docs. They're not like us dude, we just sign up to stuff and buy it there and then. They gotta go through lots of stages and stuff.
Sheeeeeeeet, so that's why those other companies have that data sheet crap.
Yeah dude.
....
Bill and Ted are aliases for Joe and Pardeep at Upscope which is totally the best instant, no downloads, interactive, awesome screen sharing tool that makes your support people hug you when you give it to them dude.
We hope this helps those other SaaS startups going through similar phases :)
Security is not a dirty word: Should SaaS startups be ISO certified?
Related: Dumb SaaS pricing mistakes
Also see: Enterprise SaaS pricing advice we wish we had known
And: How we thought we'd attract enterprise customers and what happened
