- When the topic of SaaS pricing comes up,
I'll be honest,
I get equally excited
but my head also starts to spin.
There's so many questions.
Do you do self-service?
Do you do sales driven?
Do you do a monthly payment or do you prepay for the year?
Do you do a one-year contract, but quarterly payments?
Do you charge per user or per usage?
Is there some unit that you do?
Do you take a cut of their transactions?
So many questions,
and it could get so overwhelming.
Now I've been part of very different
kinds of SaaS businesses,
and what I realize is it can easily get overwhelming
and we can easily over-complicate pricing
but if you fall on these three golden principles
around SaaS pricing
you could just get 80% there without overwhelming yourself
and that's a great start.
And in this video I'm gonna walk you
through those three principles.
Intro.
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Everybody welcome to Unstoppable, I'm TK on this channel
I help SaaS founders like you
grow your SaaS businesses faster
with an unstoppable strategy.
If you are new to this channel
I bring you an episode three times a week
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Now, if you're already part of this community,
if you're part my SaaS coaching programs,
welcome back I'm so glad to see you over here.
All right, so I've been part
of different types of SaaS businesses.
I've run self-service SaaS businesses
I've run sales driven SaaS businesses
and I've also done biz dev Alliance type functions as well
different ways of growing SaaS businesses,
different ways of going to market.
The one thing that's true is
you got to nail the pricing
appropriate to the grow market motion that you're running.
And if you nail the pricing strategy for your SaaS business,
you'll grow faster,
your unit economics will be stronger,
and you'll actually also just close more deals
because the value of what you're delivering
will match up to the price
and people will pay more attention to you,
so pricing is super important,
and in this channel we've done a few videos
on pricing strategy, more than one,
and I'll link to all of them below,
there's more that you can really dig into.
But what I wanted to do was
it can be very easy to just get overwhelmed
by all the knobs and dials.
So what I wanted to do was distill down three principles
that you should just start with in your pricing journey
so that you don't over complicate it,
you don't overwhelm yourself
and you get like some core things right.
If you follow these three principles
you gonna get 80% there,
after that, it's about all the knobs and dials beyond that.
Now, if you're in a competitive situation
and you're trying to figure out exactly
how to compete with it
then you have to dig into it a lot of the details,
if you're just starting out
and you really want to just nail pricing
without making any dumb mistakes
these three principles will get you there.
So if you're excited to begin,
go on and smash that like button for the YouTube algorithm
it really likes it when you do that, so do we,
and let's go into principle number one.
So principle number one is first for sales driven.
If you're a sales driven business
meaning a sales person is involved
they're getting on a zoom call or a phone call
maybe they're going on site,
or you're some sort of hybrid
maybe of SDRs and salespeople.
If you're a sales driven SaaS business,
I have this one golden principle
that I apply for any business I'm part of,
anyone I'm coaching
and that's, don't get out of bed
for anything less than a 25 K deal.
At least a 25 to 50 K deal.
There's a reason for this,
it's not because I'm snooty or I have high maintenance,
it's because the reason is the math
just doesn't add up otherwise,
by the time you pay for marketing to generate a lead
then the salesperson
maybe there's an SDR involved,
and then there's all the other expenses.
If you're not charging at least 25 K for the year,
upwards to 50 K at least
then none of your stuff is just gonna work,
it's just not gonna be a good market,
it's not gonna be a good business,
you're constantly gonna be underfunded,
every customer is gonna be too expensive,
churn is going to kill you.
So there's this number one principle of
if you're a sales driven business,
if sales is involved,
don't get out of bed for less than 25 K,
ideally 50 K
and the higher you can get it
with a balanced towards your sales cycles
the better off you're gonna be.
Now, if your sales cycles are a year
and you get to sell 50 K deal,
remember time is money too,
so then it's obvious to point,
but if you can get down 25 to 50 K deals
within the 30 to 60 day sales cycle
maybe two or three calls, then you're talking,
then you're at a good price point.
And a lot of times you know
when founders are figuring out their market
and their product,
and the go to market strategy and their ICP,
I'll tell them like,
look, maybe just start with the numbers,
like what can you charge 25 to 50 K for,
and it's a problem worth that?
If it's not worth that don't solve that problem
because you're never gonna have a scalable business
and that's not gonna be very fun for you,
that's not gonna be fun when it comes to raising money,
you're unit economics are gonna be terrible,
it's not gonna be profitably even with bootstrap,
it just won't work.
So principle number one,
is don't get out of bed for anything less than 25 to 50 K
if salespeople are involved,
if you follow that,
you'll get 80% there on your side in your pricing well,
believe me, you'll just get there.
The second principle I have is
if it's a self-service business,
if you're not sales driven.
Then at least do $30 a month
and have an additional tier
of at least $79 a month or more.
$30 a month used to be blasphemous
until we proved them wrong.
ToutApp was $30 a month
everyone thought it was crazy and people paid.
Now there's lots of tools that $30 a month
if businesses are willing to pay $30 a month for your tool
then it's not an important urgent problem,
they don't have budget,
they're not the right customer,
you're gonna get there,
it's just never gonna get there.
But if you can get $30 a month,
then that means you can spend some money
to actually acquire customers.
It also means that even if the churn is a little bit high
in the early days
you have enough wiggle room to solve for it,
if you're at the $9 price point or the $19,
and this is for B2B SaaS,
B2C SaaS I think is different rules
and I don't deal with that,
that's why I'm still learning about that.
I say $30 a month bare minimum,
and if you can do that,
like force yourself to deliver enough
and solve an important urgent enough problem
you can at least charge $30 a month.
And always have one upsell layer
where they'll hit a natural point
and they have to upgrade to a higher plan
because you want your successful customers
upgrading to a higher plan and paying at least $79 a month.
That's the benchmark,
that's the bar.
And that's the second principle
I would do for self-service businesses.
So now before I go to the third principle
let me just pause here for a second.
Is this cut and dry?
Yeah.
Am I oversimplifying?
A little bit, but not that much.
Is this gonna get you 80% there
and helping you avoid major pitfalls in your pricing model?
A 100%.
A like 110%.
This will help make sure that your CAC and LTV
it's not gonna be out of whack.
It'll force you to make sure
you're solving an important urgent problem.
It'll help you validate that there's a real business here
that you can scale.
It will make a fundraising easier
because you're charging enough money,
and that's a huge signal.
All this stuff comes together.
You just follow these two
and you can start to see
how it'll transform your pricing strategy.
Can I just get a yes in the comments below?
A, because I love here from you.
B, because I wanna hear from you.
And C, because our team loves hearing from you.
So please put a yes down in the comments
and tell us what you're thinking and who you are,
we'd love to meet you.
Also smash that like button
if you haven't already.
And if you're building out your pricing strategy
and you're trying to figure out
how to get the right strategy for growing your business,
I also invite you to check out
my five point SaaS growth strategy guide.
It's completely free.
It goes to the five key pillars of SaaS growth
that helps you create a one-page strategy.
It's completely free.
I'll link to it below
and I'll tell you more about it at the end of this video
but let's go to principle number three.
Principle number three is
you should have at least three stages in your pricing tier,
don't just have one pricing.
I always recommend this,
and here's the trick,
are you ready, pro tip?
Take your ICP for your ICP
think about what time they go through
when they're starting,
when they're in the middle,
and when they're pros
and create three tiers of that.
The three tiers of that will help them grow
and ensure that as they continue to use your product more
and go through their transformation,
they're gonna unlock more and more pieces of your software
and pay you more.
Those are your three tiers
and naturally speaking they'll look at it and they're like,
Oh, we're in the early stage,
let's go do this, we don't need all the bells and whistles
or they'll be like,
no, we wanna be the pros at this,
let's go for this one,
and they'll naturally self-select,
you won't alienate anybody
and you will actually help them be successful.
Now, one word of caveat here
when you are creating these three stages,
don't nickel and dime,
don't charge for stupid things,
I was signing up for a SaaS product the other day
and we were trying to make it where
people could text us and we could respond from there,
and they're like,
in order to do that you need to do a one-year plan,
and it has to be $800 a month,
otherwise it's $49 a month,
I'm like, I just need that one thing,
and I'm just connecting to Twilio,
it doesn't even cost you anything.
You're gonna force me to do it,
it was dumb, it was just stupid.
I wouldn't mention the name of the product
but it pissed me off and we're sorting it out,
but honestly, we're sorting it out
because I know the people there
but a normal user would not
so it pissed me off.
So don't do anything stupid,
don't nickel and dime,
just identify where they are in their journey
and charge them appropriately
and be fair about it,
and don't twist your arm
because a lot of people will grow to be very large customers
and you don't wanna them off in the early days,
like that's kinda how it goes. So third tier,
third principle is pricing tier have three stages
along your ICP journey
so that as they grow in their journey and in your serving
they'll go through higher pricing tiers
as they use more of the platform.
So to recap, these are my three brass tacks
pricing principles,
we'll get you 80% of the way there and then you can dig more
into your core pricing strategy.
Number one, if your sales proven
don't get out of bed for anything less than 25 K a year.
Number two, self service
at least $30 a month and have a $79 plan.
Number three, have three stages,
three tiers lined up with the ICPs journey
and then you'll be golden you'll get 80% there.
Now, if you wanna dig more
into more of the SaaS pricing strategy,
you can check out this video
where I go into a lot more details
around the core mechanics of building a pricing strategy.
The second thing is,
if you're building a SaaS business
and you wanna actually drive growth,
be sure to check out
my five point SaaS growth strategy guide,
you can follow the link below,
or go to getunstoppable.com/strategy,
it's completely free, great resource,
is everything you need
to create your one-page growth strategy.
If you guys got value from this video
be sure to hit the like button if you haven't already,
if you're new and haven't subscribed yet,
I drop a video like this three times a week
with actionable strategies and tactics
to grow your SaaS business fast.
So be sure to hit the subscribe button and that bell icon
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If you're part of a Slack group,
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And lastly, remember everyone needs a strategy
for their life and their business,
but when you are with us,
yours is gonna be unstoppable,
I'm TK and I'll see you in the next episode.
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