Tom Tunguz

MARCH 27, 2023

Startups selling to enterprises have increased 36%, twice those of Mid-Market & SMB focused companies. Mid-market & SMB distributions skew left with up to 10% of businesses reporting a decrease in sales cycle during the period. This figure is statistically significant with a p value of 0.0005.

Startup 299

Startup SMB Headcount Sales 299

FastSpring

SEPTEMBER 16, 2022

But what about pricing? When FastSpring’s Chief Product Officer Kurt Smith worked with growth-stage to Fortune 100 companies at Accel-KKR, he consistently saw pricing as one of the most essential growth levers they employed to meet their next revenue goal. Why You Shouldn’t Trust How Your Competitor’s Price.

Pricing 110

Pricing Payment Solutions Payment Services SaaS Payments 110

SaaStr

DECEMBER 1, 2021

The post The State of Software Buying: From SMB to Enterprise with G2’s CMO appeared first on SaaStr. Key Highlights: Adopt a product-led growth mindset. Treat your customers like your best marketing partners. Focus on your NRR > ARR.

Software Review 219

Software Review SMB Enterprise Software 219

SaaStr

OCTOBER 11, 2023

Pricing Increases Really Boosted MRR. Shopify’s price increase was the biggest driver here, and that should show up in a good next twelve months of revenue growth. #3. Overall subscription solutions revenue is up just 21%, while payments and merchant solutions are up 35% — from a much, much larger base. #2.

Payments 219

Payments Merchant Services Payment Solutions Revenue 219

SaaStr

JULY 14, 2020

With SaaS sales, annual price or monthly price that’s billed annually? It may be the most successful SMB-focused app of our current generation. No hiding the monthly option, no pricing confusion: In fact, 26% of Zoom’s customers still pay monthly, even at $1b+ in ARR: More here: 5 Interesting Learnings From Zoom.

Pricing 205

Pricing Payment Solutions Scale SaaS Payments 205

SaaStr

NOVEMBER 6, 2023

If you’re selling software to SMB merchants and outside of tech like Shopify and Toast and Monday , things are pretty, pretty good, if in some ways still harder than before. On top of that, inflation and price increases are eating into overall IT budgets. So things are all over the place these days. With some big caveats.

Merchant Services 244

Merchant Services Azure Software AWS 244

SaaStr

APRIL 26, 2023

Most of the website / presence growth came from price increases, which saw limited churn as a result. Churn was modest from their price increase, leading to material growth. Relatively inexpensive products selling to SMBs that are truly valuable don’t see much increased churn from moderate price increases. #3.

Scale 207

Scale SMB Churn Pricing 207

SaaStr

FEBRUARY 1, 2022

Toast’s SMB NRR is 114% today — but it took 4 full years just to get to 100%. A reminder that you don’t need to settle for sub-100% NRR from SMBs. And also that, with SMBs, it can take a while and a lot of value-add and learnings to get that NRR over 100%. And it’s the true magic in scaling SMB SaaS.

Scale 329

Scale SMB SaaS Scaling 329

SaaStr

JUNE 27, 2019

It may be the most successful SMB-focused app of our current generation. No hiding the monthly option, no pricing confusion: In fact 26% of Zoom’s customers still pay monthly, even at $500m+ in ARR: More here: 5 Interesting Learnings From Zoom. Then maybe pricing games are worth it. Zoom does not play games. As It IPOs.

Pricing 175

Pricing SaaS Payments Payment Solutions Payment Services 175

SaaStr

MAY 10, 2023

Pricing is up a modest but material 6% on a constant currency basis, and 3% on an as-reported basis, from a year ago. #3. 23% Customer Count Growth Leads to 30% Revenue Growth, but NRR dips to 104% HubSpot is still very much SMB, especially the “M” of SMB. Basically, we all have to now. #2. Including HubSpot. #4.

Scale 233

Scale SMB Headcount New CTO 233

SaaStr

AUGUST 24, 2022

SMB sales (most of Toast) is very tough to do without a highly efficient and effective sales force. Many SMB leaders have to get very, very good at outbound because of the limited deal sizes. An SMB price point where you can afford to pay the reps reasonably well, but again, where margins are tight.

SaaS Payments 266

SaaS Payments Scale SMB Payment Solutions 266

Tom Tunguz

SEPTEMBER 13, 2016

When an SMB SaaS startup is young with quickly growing revenues, more of the same works. A $1M ARR SaaS startup with an average selling price of $750 per year needs to add 1,333 each year on average to double. All this math assumes that the selling price remains the same. ARR 1 5 10 25 50 100. Xero, Wix, Zendesk are among them.

SMB 100

SMB Scale Startup Marketing 100

SaaStr

JUNE 8, 2022

ARR, Zoom was an SMB powerhouse, with Enterprise growing. SMB is now saturated at $4B ARR and not growing, but Enterprise is picking up the slack and growing faster than ever. Enterprise NRR is now 123%, but than means SMB is now well under 100%. ARR … which it did in just 1 year (!!)

SMB 258

SMB Enterprise Engineering Scale 258

SaaStr

JULY 31, 2022

The Challenge with SMB SaaS: High Growth Can Only Mask High Churn For Just So Long. SMB SaaS has a lot going for it, but one big existential challenge — inherent churn. 7 Secrets to a Successful SMB GTM Strategy with PayFit and Accel. A deep dive on selling to SMBs and more from SaaStr Europa. It’s not as fun anymore.

New CTO 224

New CTO CTO SMB Venture Capital 224

SaaStr

JANUARY 3, 2021

One question I struggled with a lot in the early days was what price points supported inside sales reps. It was clear to me that our freemium offering, priced at from $0 to $19/month, couldn’t really support a traditional inside sales team. What about a $199 or even a $99/mo price point? But how low can you go?

SMB 325

SMB Pricing Sales Metrics 325

SaaStr

OCTOBER 25, 2023

Leveling Up PLG to Accelerate SMB Customers, Including More Attention to Onboarding I love seeing this, it can seem hard to invest heavily in small customers, but if you don’t especially invest in onboarding, that’s a big shame. But a 3% price boost likely materially helped. #7.

SMB 226

SMB AI Onboarding Cloud 226

Kellblog

APRIL 19, 2024

A lot of today’s SMB companies will be mid-market tomorrow, so we want to catch them on the way up. CEO: Well, you know, you can’t really control who clicks on a Google ad, so we can get inbound from SMB, MM, and ENT. Let’s say you’re strong in SMB and your growth strategy is a big up-market push into MM.

Startup 98

Startup SMB Airlines Banking 98

SaaStr

AUGUST 27, 2022

Salesforce: “We’re finally seeing slowdown now in our commerce, media, telecom, and SMB segments”. While the stock price was hit along with everyone else, the business wasn’t. And at the other end of the spectrum, folks at the intersection of commerce and SMB like Shopify have taken the biggest hit to post-Covid growth.

SMB 215

SMB Scale Cloud Trends 215

SaaStr

OCTOBER 4, 2022

Now, if you’re average price point is higher, you can still afford to go a bit lower to expand the bottom of your market. Then, to make say $100k a year as an SMB rep, you then have to close 4x that (or more), so say $400k a year, maybe more. Dear SaaStr: At What ACV Can We Afford a Sales Team? At least in the U.S. and Western Europe.

SMB 182

SMB Sales Pricing Revenue 182

SaaStr

APRIL 5, 2024

It needed to be accessible and easy for end users, and for Apollo, that meant a hyperfocus on accessibility for SMBs. So Apollo users can be free forever at the SMB scale and still gain value from the platform. Apollo is affordable, but that doesn’t mean they’re setting prices based on everyone else in the space. No, you don’t.

Scale 173

Scale Sales Hiring Pricing AI 173

SaaStr

JUNE 29, 2022

It’s moved beyond its tiniest customers, of an ACV of < $1k, but other than that, it’s going upmarket without giving up its SMB roots. Even though Zendesk still has thousands and thousands of SMB customers. #2. Zendesk IPO’d as an SMB support solution. At $1B in ARR, Zendesk was growing 24%.

SMB 246

SMB Scale B2B Metrics 246

SaaStr

JULY 20, 2022

While these aren’t great metrics if Weave was enterprise, they are still solid for SMBs. Many SMB SaaS companies struggle to hit 100% NRR and 80% GRR. A fairly standard SMB price point. With a current stock price of $3.37, the Series C and D investors are substantially underwater. Series C ($5.35

SaaS Payments 218

SaaS Payments Scale Payment Methods Payments 218

SaaStr

DECEMBER 14, 2022

But … we’re seeing those very low prices bring out the Private Equity firms. Vista acquired Marketo for what seemed like a head-scratching price of $1.79 And a few years after that, it’s at the time smaller, scrappier, SMB competitor called HubSpot … grew into the $15B+ giant we all know and use today.

SaaS 232

SaaS SMB Pricing Marketing 232

SaaStr

MARCH 25, 2021

Having said that, the average ACV here is $14,615 … so that’s at the high end of a traditional SMB spend, which probably accounts for the high NRR. Not competing (directly) on price. While Shopify and BigCommerce pricing isn’t identical in the end, their SMB / published pricing is almost identical.

Outsourcing Services 199

Outsourcing Services Payments Merchant Services SaaS Payments 199

SaaStr

DECEMBER 27, 2023

They started via SMB and are now serving the Amazons of the world. A Lesson Learned: Don’t Undervalue Your Product A lesson learned from growing a company to $1B is spending more time thinking through pricing strategically and doing it sooner. The more SMB you are, the faster the sales cycle and the quicker the team learns.

Sales Hiring 184

Sales Hiring Scale SMB Outsourced Development 184

SaaStr

APRIL 10, 2023

Others may seek to corner the SMB market. Zendesk knew that they could risk selling to startups like any other SMB, so that was the problem they set out to solve. Durham says, “We are judging ourselves in how we treat startups differently from an average SMB. However, what many businesses may overlook is the startup segment.

Startup 187

Startup Scale SMB Venture Capital 187

SaaStr

AUGUST 26, 2021

Charge a super cheap price early to take friction out of sales, and to get to 100, 200, 500+ customers fast. Price way too cheap, and you will just confuse the prospects. And don’t charge $4 a month for an SMB product. You need to learn quickly if you are going to do fewer big deals, or tons of smaller deals.

SMB 259

SMB Enterprise Pricing Revenue 259

SaaStr

SEPTEMBER 26, 2019

Housing prices apparently are falling in the Bay Area. What we learned from ’08-’09 in SaaS: First, SMB churn went through the roof — as SMBs went under much more quickly and often. As soon as the economy went south, SMBs started to simply go bankrupt and/or shut down. Slack is mortal. functioned.

SaaS Payments 270

SaaS Payments Sales Hiring Scale SMB 270

SaaStr

MAY 18, 2022

If you can’t pull off both points, you’ll mostly likely need a product with a higher price point and a sales-driven model to support it. Even SMB leaders like Monday waited to go Freemium. For sure this is part of most Freemium products we all use every day, from Canva to Zoom to Notion to Spotify. More on that here.

SMB 210

SMB Pricing B2B Engineering 210

SaaStr

NOVEMBER 20, 2020

And it’s very hard to support them with any customer support or salespeople at that price point. Even products that used to be super-cheap, have raised prices to achieve scale. At $12 a year, how much can you spend on live support? Or sales commissions? Or even hosting? E.g., Airtable certainly costs a lot more than Excel.

Scale 219

Scale SaaS SMB Pricing 219

SaaStr

FEBRUARY 24, 2021

80% SMB, 20% Enterprise. While Upwork has made inrounds into the enterprise, it remains squarely an SMB product. Upwork charges from 5%-20% of the service price (less the more you make through the platform), averaging out to 12%. So don’t settle for less. This makes the 100% NRR especially impressive in the space.

Marketplace as a Service 252

Marketplace as a Service SMB Cloud Enterprise 252

SaaStr

MAY 19, 2019

What lessons can we learn from this huge Kiwi SMB success, for other founders? ” So even in SMB sales in smaller markets, if you take dominant market share — you can get to $500m+ in ARR! ” So even in SMB sales in smaller markets, if you take dominant market share — you can get to $500m+ in ARR!

SMB 209

SMB Customer Lifetime Value AWS Churn 209

SaaStr

MAY 18, 2021

Squarespace is almost all not just SMB, but self-service. HubSpot is almost all small businesses, but at a higher price point ($10k) that is sold directly and through channel partners. But one thing that is almost always true, is you get more renewals, more upsells, and more net revenue retention from your largest customers.

Merchant Services 260

Merchant Services Revenue SMB SaaS 260

SaaStr

DECEMBER 26, 2020

The startups I’m involved with that have happy SMB customers have much higher brand awareness around $10m in general than those that don’t. This makes the SMB leads worth a lot more than just their direct lifetime value. Don’t stay in SMB if your NPS there is 5 and your NPS in enterprise is 40+.

SMB 333

SMB Sales Hiring Marketing Enterprise 333

SaaStr

OCTOBER 20, 2022

One thing that is clear is that public SaaS and Cloud stock prices are way down. Note this doesn’t include SMB spend, it’s enterprise focused): In a slightly more dated survey, Gartner found in July 69% of CFOs plan to increase their digital spending in 2023. So are we in some sort of downturn — or aren’t we?

Forecasting 220

Forecasting Artificial Intelligence Software Business 220

SaaStr

APRIL 19, 2023

One leader in SMB commerce is Lightspeed Commerce, founded way back in 2005. It’s exciting to sell to SMBs, but one of the existential challenges at scale is the low deal sizes. That’s a material increase in pricing and ARPU. And it indeed has strong market share there. Subscription fees were essentially flat. #3.

Payment Solutions 217

Payment Solutions Point of Sale Payments SaaS Payments 217

SaaStr

MAY 8, 2021

And customer count varies a lot based on pricing / ACV: Dropbox may have the most customers of any SaaS company — 15m+ at $2B in ARR. HubSpot is SMB too, but a bit upmarket of Squarespace and Wix. Q: How many SaaS companies have 1 million customers? There aren’t that many companies in SaaS with 1 million paying customers. More here.

SMB 196

SMB SaaS Subscription Payment Features 196