Article · long read

Value Metrics and Pricing Design for SaaS Companies

Dr. Ajay Sethi · Accel India Insights (SeedToScale) Free Intermediate India

Gives you a way to actually pick a value metric rather than just being told to have one: plot activities by frequency and importance, then monetise the medium-medium ones and subsidise the high frequency ones. Worked through with CleverTap as the example.

  • Pick the value metric by plotting each customer activity on frequency against importance.
  • The sweet spot to charge on is medium frequency, medium importance, not the highest frequency action.
  • Do not price the highest frequency activity heavily: subsidize it so a competitor cannot undercut you there.
  • Strong SaaS businesses pull more than 20 percent of revenue expansion out of the existing base.
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It answers 2 questions

  1. I have no idea what to charge. How do I pick a first price?
  2. What is a value metric and why does everyone say it matters more than the number?

Read with it

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  3. Maps tiers to how adoption actually spreads (casual user, professional, team, organisation) rather than to a feature matrix,... Andreessen Horowitz Article · long read Bottom Up Pricing & Packaging: Let the User Journey Be Your Guide Jennifer Li and Martin Casado
  4. Video · 18 min How To Price For B2B | Startup School Tom Blomfield
  5. Video · 37 min Lessons from 24,376 SaaS Companies: Value-Based Pricing Strategy - Patrick Campbell Patrick Campbell (ProfitWell)
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