My Top 8 Mistakes Investing in SaaS Startups

SaaStr

My biggest mistakes in SaaS investing actually in the end haven’t been truly costly because, in the end, power laws mean your winners overwhelm your losers if you do it right. But still I have screwed up a number of investments. Investing when the CEO was a bit of a B.S.

SaaStr Podcasts for the Week with Matt Garratt, Trisha Price, David Schmaier, Rob Bernshteyn, and Jason Lemkin

SaaStr

359: The Secrets to Vertical Growth, What it Really Takes to Build a $1B SaaS Company with Matt Garratt, SVP, Managing Partner @ Salesforce Ventures, Trisha Price, Chief Product Officer @ nCino and David Schmaier, CEO & Founder @ Vlocity. Trisha Price. Trisha Price: Yes.

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1 Key SaaS Sales Metric to Fine-Tune Sales Productivity

InsightSquared

When scaling the business, sales typically averages roughly 30% of revenue, so therefore sales spend is one of the biggest investments a company can make. For these reasons, accurately tracking key sales metrics and benchmarking your performance against peers and market leaders is critical to getting the most out of your sales resources. Typical SaaS Sales Metrics. Underlying those metrics are processes which can improve or reduce performance in each of the above metrics.

Matching Price to Value: 3 Lessons in Monetization from Menlo Ventures (Video + Transcript)

SaaStr

Naomi Pilosof Ionita | Investing Partner @ Menlo Ventures. We’re going to talk about matching price to value, and I’m going to share some lessons from my time as both an operator and an investor. I’m a nerd on the subject, I love it and I brought it now from my time as an advisor and an operator to the investing side. This is an interesting study that was done by the folks from Price Intelligently. The next camp, we price it artificially low.

How to Package and Price Embedded Analytics

HOW TO PACKAGE & PRICE EMBEDDED ANALYTICS. 15 Pricing for Value Organizing Your Tiers. Competitive Pricing. About Logi Analytics and Software Pricing Partners.25 dashboard of real-time metrics inside their primary application is all they need.

The Metrics-driven SaaS Business

Chaotic Flow

My first serious lesson in the criticality of SaaS metrics was about six years ago when I was unexpectedly stumped in a board of directors meeting. In 2014, we not only have a much better understanding of the financial levers that drive SaaS business success, we are on the verge of a metrics revolution in the way SaaS businesses are managed. Today we are witnessing the emergence of The Metrics-driven SaaS Business. The SaaS Metrics Mandate. The SaaS Metrics Universe.

What’s an effective price? Price effective strategies & subscriptions

ProfitWell

There’s a question that every startup founder, subscription service provider, and ecommerce store owner, needs to ask themselves on a regular basis: Is this the most effective price for my product or service? Finding an effective price helps you solidify your position, build trust with your customers, and achieve your business goals. In this article, we’ll walk through what makes up an effective price and how to conceptualize the most effective price for your business.

What is a pricing matrix? 4 Pricing matrix examples for high growth

ProfitWell

Ah, pricing—the core of your business. Your pricing page is where the magic happens. Your pricing page is where you convert leads into revenue. So, your pricing structure needs to be laid out in a digestible format for customers—you do this with a pricing matrix. Throughout this article, I’ll unpack what a pricing matrix is, how to set one up, and some stellar pricing matrix examples. What is a pricing matrix? Pricing as a growth lever.

SaaStr Podcast #358 with Tipalti Founder & CEO Chen Amit

SaaStr

How does Chen think about optimizing pricing models today? How can SaaS companies have variable pricing mechanisms without disincentivizing usage? So, the one key metric that makes life so great for us, we have less than 1% annual dollar churn.

Seed Investing Today: What’s Changed, What Hasn’t with Aileen Lee and Jason Lemkin (Video + Transcript)

SaaStr

What Nobody Tells You About Seed Investing with SaaStr CEO Jason Lemkin and Cowboy Ventures Founder and Partner Aileen Lee. I think it gives us a perspective that maybe we don’t get in some other places, in addition to many great investments over the years. On either a scale of 1 to 10 or a percentage basis, where is seed investment? I think that’s going to be an awesome time to invest, but I don’t think we’re quite there yet.

Six Lessons on How to Build a Platform that Fuels an Ecosystem with Plaid (Video + Transcript)

SaaStr

Quovo had focused on investment accounts and allowing you to programmatically interact with your investment accounts through third-party applications. If you think about the heyday, the early days of Wealthfront and Betterment, they came out and people started investing with them and they were really excited to grow their assets under management. So when you start to look at the metrics of a platform, there’s incredibly high engagement and incredibly low churn.

What is pricing power? How the power of pricing determines success

ProfitWell

Deciding when to adjust your pricing is never easy. Think back to the last time Netflix raised its monthly price—social media was chock-full of negative comments about it. That’s why understanding how much pricing power you have is so important. This knowledge helps you predict how any price adjustments will impact your customers as well as your business. Instead of worrying about whether or not you’ll lose customers, you’re able to raise your prices with confidence.

It’s Time to Resegment Your Market (and Revise Your Pricing)

OpenView Labs

Any changes to either of these should cause you to reconsider your pricing strategy. Related read: The Ultimate SaaS Pricing Resources Guide. This is generally a bad thing, as commoditization means lower willingness to pay and less opportunity to make strategic pricing decisions.

SaaS Pricing Guide: When & How to Raise Prices Without Losing Customers

OpenView Labs

Segment CEO and Co-founder Peter Reinhardt was recently reflecting on what were his top lessons learned from changing packages and pricing. Without batting an eye, the unicorn founder said, “The first is to raise prices and that we discovered we could raise prices by probably ten thousand times from what we were initially charging and people were happy to pay for that.”. Successful price increases drive a far higher profit improvement than any other initiative.

The metrics behind Spotify’s IPO

Chart Mogul

Spotify's recent F-1 filing is packed full of metrics and insights into both consumer subscriptions and the streaming music industry. This means that the company will not embark on the usual roadshow, there will be no pre-defined opening share price and more freedom for existing stakeholders who want to sell their shares. Spotify even states in the company’s F-1 filing that it expects a volatile share price in the early days after listing.

Pricing Optimization: Why and How You Need to Optimize Your Prices

ProfitWell

For years, I’ve seen companies start their pricing journey by simply pulling a number out of their hat and calling it a day. Some get close, guided by their competitors’ prices (which were likely pulled from their own hats). We’ve talked before about pricing strategy being like a dartboard. Guessing at your pricing is a little like throwing darts blindfolded. That’s where pricing optimization comes in. You can’t afford to overlook optimizing your pricing.

What is a Pricing Discrepancy? Why Customers Leave Before Checkout

ProfitWell

And while I’m sure unexpected power outages, cranky children, and overdrawn credit cards play some part in that number, the biggest contributor to abandoned checkouts is pricing discrepancy. Pricing discrepancies and extra costs were the primary cause of abandoned carts for 60% of respondents in a 2017 survey from Baymard. Fixing unexpected discrepancies in your pricing, then, can quickly and dramatically increase your conversion rates. What is a pricing discrepancy?

Value Delivery Patterns Shape Your Pricing Choices

OpenView Labs

The when becomes a critical input into designing your pricing model. Working with a large B2B SaaS company that has a long implementation and configuration cycle, we uncovered contradictions between their pricing and how the customer was getting value. This company manages time to capture implementation costs (how many months will it take until revenue collected exceeds investment in implementation), with a target to capture these within four months.

Using Product Led Growth as an Indicator for Investment w/OpenView Venture Partner, Ashley Smith (Video + Transcript)

SaaStr

Ashley Smith, Venture Partner at OpenView provides insight on what investors are looking for in product metrics and growth indicators so you can capitalize on your product’s story for funding. I’m talking about product-led growth as an investment strategy, but really my background is 10 years of operating experience in the product-led growth world. Now I’m investing in that. We actually invest in this company.

From Product-Market Fit to Product-Market-Price Fit

OpenView Labs

Unfortunately, all of the focus on product-market fit glosses over a concept that’s equally as important to a startup’s success: pricing. Product-market-price fit. I propose we reframe product-market fit to product-market-price fit. Here’s my working definition: Product-market-price fit refers to instances when a startup offers a new product that meets a real need that customers will pay for at a price that can support a standalone business.

The 14 best SaaS tools: analytics, accounting, pricing, and retention

ProfitWell

So I’ll unpack some of our favorite tools that cater to certain needs—analytics, accounting, retention, pricing, and more. From optimizing your pricing to CRM—there’s a tool tailored for all your SaaS needs. Will this tool uncover metrics I’d have otherwise not known? If the tool can track and discover metrics you would have never considered, it’s worth your investment. If you find the tool is just reaffirming metrics you already knew, it’s not needed.

How Customer-Driven, Pay-As-You-Go Pricing Changes Everything

OpenView Labs

Some SaaS companies still have the pricing strategy that their founder picked after a thirty minute whiteboarding session five years ago; those startups subist but rarely thrive. After fifteen years of running Logikcull, a Series B legal tech startup (and OpenView portfolio company), I’ve learned a lot about the art and science of pricing, particularly when I transitioned Logikcull from a managed service to software-as-a-service. Just Try Stuff: Pricing Testing Tips.

Benchmarking DataDog's S-1: How 7 Key Metrics Stack up

Tomasz Tunguz

To put the company’s stellar trajectory in context, I’ve plotted its metrics relative to two other incredible monitoring companies: NewRelic (NEWR) and AppDynamics (APPD). Here’s why: For every dollar of sales and marketing investment, DataDog generates $1.68 DataDog is playing across price points. One last chart: revenue dollars at IPO per venture dollar invested.

SaaStr Podcasts for the Week with Matrix Partners and EZPR — February 21, 2020

SaaStr

David is also the author of foreentrepreneurs.com the must read blog in the world of SaaS metrics. Harry Stebbings: And David is also the author of foreentrepreneurs.com, the must read blog in the world of Saas metrics. . David Skok: So I actually, I’m definitely a believer that it definitely gets easier and I think we see that in our venture investments too. What price points you will you sell at?

SaaStr Podcast #398 with Salsify Co-Founder & CMO Rob Gonzalez

SaaStr

How does Rob think through pricing today in a way that encourages land and expand? How does Rob think about usage vs seat-based pricing in SaaS? How should sales and marketing work together on pricing? Marketing Podcasts SaaS Product Pricing rob gonzalez salsify

David Skok on choosing the right metrics for the right growth stage

Chart Mogul

In this one-off episode of SaaS Open Mic recorded at SaaStock Dublin, I talk to the "Godfather" of SaaS metrics, David Skok. But it would be strange to not give one, so here goes… David Skok ( @bostonVC ) is a former entrepreneur turned VC, who founded four companies before he turned his focus to investing. ” David was thinking about SaaS metrics before I was even starting out on my career. His industry-defining post, SaaS Metrics 2.0

Nothing simple about SaaS benchmark metrics

Practical Advice on SaaS marketing

There are certainly plenty of surveys and published benchmarks on SaaS metrics that try to provide guidance. You cannot invest $1 in sales and marketing expenses and get 75 cents in return. A company with a high subscription price and long subscriptions can afford a high customer acquisition cost. At the other end of the spectrum, a company with lower subscription prices and shorter subscription terms needs to be much more efficient with its customer acquisition spending.

Benchmarking PagerDuty's S-1:How 7 Key Metrics Stack Up

Tomasz Tunguz

Let’s first look at one of the key SaaS metrics: the dollar attention. Sales efficiency is a measure of the marginal gross profit generated by a dollar invested in sales and marketing. In terms of price point, PagerDuty is right around the $10,000 revenue per customer per year. Comparing the metrics to other world-class companies, we can see that PagerDuty’s metrics are clearly the top decile, and represent another fantastic software IPO

Decacorns & Unicorns in 2020: Founders Fund Keith Rabois and SaaStr’s Jason Lemkin (Video + Transcript)

SaaStr

Some of these businesses, maybe even many of these businesses have started investing more and more in selling online to their preexisting in store customers. For example Founders Fund, I don’t think we changed our criteria at all, but I felt like maybe we were on the 20th percentile in terms of conservatism on some of these metrics. I mean, including IAA and now four investments over the last month, let’s say. Actually, we only invested 4.6

How to Structure Your SaaS Pricing and Packages for Growth

Chargify

However, they often overlook the most powerful way to increase their revenue, which is pricing optimization. According to Price Intelligently’s “The Anatomy of SaaS Pricing Strategy” report, pricing is an untapped growth lever. In their study of 512 SaaS companies, Price Intelligently discovered that monetization had the largest impact on the bottom line. Use anchoring in your pricing tiers . Avoid pricing too low (or too high!).

The Rules You Can Break, The Ones You Can’t With Tradeshift (Video + Transcript)

SaaStr

Jos White : We were fortunate enough to lead a Series A investment into Tradeshift back in 2010, I think. Notion Capital was really the first fund to have the guts to invest in Tradeshift. Because, market share is really number one metric. Christian Lanng : What Jos is trying to say in a polite way is, we had almost no revenues the first four years after he invested and we were okay with that. Christian Lanng : So, you get a lot of power when you pick your metrics.

Recurring revenue: drive business growth with simple metrics

ProfitWell

Implementing a recurring revenue model requires enabling a data-driven process and understanding the axes through which SaaS metrics impact your business. Throughout this article, I’ll unpack what recurring revenue is, some examples of different models, and revenue metrics you need to track. Many companies don’t take the time to comprehend what’s driving their recurring revenue , and miss a great opportunity to learn and grow through understanding their metrics.

SaaStr Podcasts for the Week with Matrix Partners, ActiveCampaign, Insight Squared, and Dropbox — June 29, 2019

SaaStr

Jason Lemkin is the Founder @ SaaStr, the world’s largest SaaS community and leading early-stage SaaS fund with investments in Automile, TalkDesk, Algolia and more. In Today’s Episode We Discuss: * Does David Skok believe that ACV should sit at the top of the metrics stack? What are the 4 metrics that fundamentally matter in your business? What can founders do to their pricing model to extract as much value from each customer?

SMB 112

Outcomes-Based Pricing: Understanding Where Customers See Value

ProfitWell

Outcomes-based pricing. Outcomes-based pricing is a framework for understanding where customers are seeing the value in your product, then adjusting the pricing to align with that value. It's a fundamental shift in how to think about pricing. By structuring our pricing based on the actual value of our product as well as the customer's perceptions of that value, we're better able to create a pricing strategy that justifies how your company monetizes.

Data-driven sales: 18 sales KPIs and metrics to grow your revenue faster

Inside Intercom

Sales KPIs versus sales metrics: Is there a difference? Some might argue that there are fine-grained distinctions to be made between KPIs and metrics. You can think about it this way: your KPIs are the key metrics you use to measure sales performance. The KPIs are organized by category with more detail on how we calculate and use each sales metric. Average revenue per account (also referred to as Average Transaction Size (ATS) or Average Sales Price (ASP)).

6 Customer retention metrics vital to growth | ProfitWell

ProfitWell

We're about to go diving for metrics. Why you need to understand your customer retention metrics. That's what metrics give you. In particular, your customer retention metrics are a critical component of long-term business planning. 6 Customer retention metrics to pay attention to. When monitoring customer retention, there are six particular metrics we like to track. The price was too high: Finding the right price isn't always easy.

Churn 40

Insightful Study of 386 SaaS Startup Pricing Pages

OnStartups

As it turned out, 80% of the 250 biggest SaaS companies didn’t have a pricing page at all. Of the remaining 386 which hadn’t shut down, I found that startups are around twice as likely to show their pricing than their enterprise SaaS big brothers. In fact, 39% of the 389 startups I analysed had pricing clearly available. Here’s a quick overview of the main findings for my set of data from 386 AngelList trending startups: 39% have pricing publicly available.

2021 Planning and Global Economic Collapse

SaaStr

And every single SaaS company I work with or invested in had a better July. Third, maybe model more pricing pressure from CIOs next year. Blog Posts Metrics

Mobile app monetization metrics for subscriptions

Chart Mogul

Metrics like ARPU and retention are a critical part of this process — scaling to millions of users means that the tiniest optimizations can make the difference between profit and loss. Apple’s expanded support for subscriptions on iOS gives advanced control over pricing tiers and managing subscribers. Many of the same app monetization metrics exist for subscriptions, but the way they’re measured differs considerably. The metrics behind Spotify’s IPO.

RevOps and Pricing with Robert Cortese of SolarWinds

ProfitWell

In this episode of RevOps and Hops, Robert Cortese , Director of Pricing and Product Strategy at SolarWinds joins us to chat about the similarities between RevOps and pricing. Prioritization is key when it comes to pricing. It’s crucial to understand what levers you’re going to pull with pricing, even if it’s just one product. The idea of a chief diplomat, and bringing everyone to the table when it comes to pricing and the impact it has on the organization.