- On our prior episode, I walked you through all
of the SaaS pricing principles that you can apply.
These are all the textbook principles
that you can apply to actually increase
the growth of your SaaS business.
It was one of our most popular episodes.
If you missed it, don't worry,
I'll link to it below all over the end.
You don't have to start by seeing that,
but it inspired us to do another one.
So in this episode, if we've already covered all
the textbook principles of all the dials and levers
you can turn increased SaaS growth,
in this episode, I'm gonna walk
you through the three street-smart principles.
The counterintuitive ones,
the things that we picked up because of,
we worked with some really smart people
that taught us to really tweak these things.
These three principles are gonna help
you accelerate your SaaS growth
and tweak your pricing strategy.
And if you apply these three principles
then you'll be able to accelerate
the growth of your SaaS business, intro.
(upbeat music)
What's up everybody, welcome to unstoppable,
I'm TK and on this channel I help SaaS founders
like you navigate the path to the next stage
of growth with an unstoppable strategy.
On this channel I bring an episode
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I drop an episode with the TK energy
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if you're part of our SaaS Go-To-Market Program,
welcome back.
We're really excited to have you here.
If you're a SaaS founder and you're looking
to navigate the path to the next stage
of growth and accelerate growth,
one of the things that often gets overlooked
is your pricing strategy.
You may be obsessing about the next great feature,
you may be obsessing about your go-to-market machine,
but this thing that you can actually tweak
to really get growth going and to unlock
some growth really quickly is your pricing strategy.
Now, in a prior video, we talked about
the textbook pricing strategies.
You can check it out here, I'll link to it below
so you can check it out at the end of this video,
but in this video, I'm gonna walk
you through some street smart ones.
Some stuff that I picked up along
the way through some really smart people.
So if you're excited to dig in,
go to smash that like button and let's get started.
So the first one, the first pricing strategy
that we started employing a tout app.
This was my SaaS business.
We built software for salespeople
was to really start honing in and thinking about
the ROI and communicating that in the price.
So, so often we get so fixated on what we need to charge,
to cover our costs,
to make sure we have the right margin
so that we're driving growth.
We forget the actual return on investment
that the customer is going to get.
And one of the things we started to do a tout app,
there's kind of two chapters of the business.
The first was we had a self service business
where salespeople just signed up
so that they could use the product
and then we had a second stage of the business
where we actually had a sales team to sell it
and VPs of sales would buy it.
So in the self service business,
we just told salespeople like, look, it's $30 a month.
That's basically a dollar a day
and even if you got just one more deal
because you used our tool to prospect
to actually follow up with leads, would it be worth to you?
And we very quickly started to realize
the return on investment for salespeople
is that more deals done.
They actually get more leads.
So we started to actually position
the price around that return on investment
and what we realized was whether
it was an individual sales person paying
us 30 bucks a month, a dollar a day.
If they got just one more deal,
would that commission check be worth it for the product
with the swipe of their credit card?
Yes, of course.
And also, even at the sales stages
when we were doing the sales driven deals,
we were doing six figure deals,
for our customers, we would just ask them like,
hey, what's your deal size"
What's your, the average deal size?
And so a lot of our customers in the mid market,
they would say, "oh, it's about 30K",
and they were buying our platform for about 20K, 25K
and we'd say, look, if you got just one extra deal,
one extra deal obviously our platform
is gonna do a lot more
but if you just do one extra deal
because our platform is gonna
increase your productivity, help you get more leads,
follow up on your leads more effectively
and generate more pipeline,
would this investment be worth it?
So we started baking that into our sales messaging,
to our marketing messaging,
where we started to actually communicate
the ROI around the product with the price.
How quickly can your customer make their money back
on the investment they're making on their product
if you can start to communicate this,
everything becomes a lot easier.
They start to justify the spend in their head
because they're like, Oh, of course,
it's gonna get me one more deal.
It's gonna do way more than that.
I'll pay for this in no time.
At that point, I'm a smart person.
They made a smart investment, who doesn't want to do that?
So principle number one are on pricing.
The street smart pricing principles is number one, ROI.
Think about ROI, return on investment.
How quickly can you make their money back
if they were to invest in your product?
Now, there are some startups
that maybe they're not in a position,
your position might not be like,
oh, we help you make more money
and there's another video I did
on this on value prop on star.
So you can check it out here, I'll link to it below as well.
There's only two reasons why people buy business software?
Either helps them save money or helps them make more money.
Those are the two reasons.
I think there's a third one but it's not as powerful,
but you can check out the value prop video
to learn more about it.
You gotta position your pricing
around one of those two things.
You either saving money or you make sure
that they don't risk losing a certain amount of money
and then the platform pays for itself
where they make more money
and the platform pays for itself.
Otherwise it's a really tough sale at B2B SaaS software.
The second principle is to charge more, charge more.
This sounds super simple and it is, but simple as hard.
I learned this or I was forced to learn this.
I was in a meeting.
One of our investors was Andreessen Horowitz
and this was a crazy meeting where it's me,
Marc Andreessen, Ben Horowitz, a robot,
a separate story, different day
and I was like, all right,
like here's what we're thinking about,
here's what we're doing,
we were like navigating some tough changes in the company
and I will never forget is Ben Horowitz
was just like, I just wish everyone would just charge more.
Like 90% of our portfolio would do 10 times better
if they just decided to charge more
everything would be fine, they would make more money,
customers would be happier,
they would get better customers, just charge more.
I don't know what else to say
and I really took that to heart
because one of the amazing things
about smart guys like
that is they don't give you complicated advice.
They give you very simple advice.
It's very actionable and when you do it, it works
and so I went back and I told my team like,
alright, here's what we're gonna do.
We're gonna start charging more
and it's not just me, Ben said so.
So you have, we have to do it
and what we started to do was,
we started to say that our platform
in order to buy it, was a minimum 15K platform fee.
One of the things we started realized
was we would get deals that were all different sizes.
Some people would need five seats,
some people wouldn't need 10 seats,
some people would need a thousand seats
and what would happen is it would be very hard
to really disqualify those really tiny deals
because they were like, well,
they still wanna buy our product,
we don't want to give them to a competitor.
So what we started to do was we just started
to say there's a minimum platform fee
meaning the minimum span you can do with us is 15K.
The 15K includes ten seats or whatever it was,
I don't remember and these features
and you have to start there.
And then from there you can actually
add more seats as you grow.
And that way we weren't pigeonholing ourselves
but we set a minimum floor, a floor for the cost
and essentially we were charging more.
So we got out of doing the 5K deals and the 10K deals,
we didn't have to say no to anyone,
any costumer that came,
even if there were a two person company.
So look in order to get access to our platform,
it's a 15K platform fee.
That's what gives you access to the platform,
the core features, certain number of seats
and then you can grow from there.
If you need less seats, that's okay,
totally understand but you have to invest
in the platform in this 15K fee.
And that immediately, nearly actually that quarter
when we put this into place among with some other things
that we did on ICP, our deal size quadrupled.
It was incredible.
So principle number two is charge more.
Now lemme just pause here for a second
before I go to principle number three,
If you're starting to get this,
if you're starting to see how these streets smart principles
that are on pricing,
if you apply this for your SaaS business
it really accelerate your growth,
can I just get a yes in the comments,
smash out like button for the YouTube algorithm.
Also, if you're thinking about growth,
I wanna tell you a little bit
before I get in principle number three,
about my SaaS Go-To-Market Program.
My SaaS Go-To-Market Program is a coaching program.
We focused three things.
We help you hone in on your ICP,
we help you build out your strategic narrative,
we call it a manifesto and then we help you run
a broadway show to actually generate quality pipeline,
quality leads and accelerate your growth.
What this program helps you do.
It's a coaching program that I run,
helps you actually execute on a well balanced strategy
across product market and go-to-market.
A lot of founders that I work with,
they tend to over index on product
and don't do enough on market and go-to-market
and that's what this SaaS Go-To-Market Program does.
We are accepting new members into this program.
So if you wanna drive growth,
if you want or work with me, go to @tkkader.com/gtm
for details around the program
and to apply to join the program,
I wanna make sure you're the right fit.
We'll get on a call and then we'll make sure
that we can help you.
So anyway, back to the original programming,
I just wanted to tell you about
that 'cause we are accepting some more members
into the program right now.
The third principle of on pricing streets smart principle
on pricing is to actually charge for training and success.
Here's the thing.
Services revenue has become a little bit
of a dirty term in the SaaS industry.
People don't wanna do services,
services revenue isn't valued as much,
but here's the thing and I learned this lesson
when I was analyzing Eloqua and what they did.
This is a competitor Marquetto
and what they were doing in the early days
and Eloqua would not let a customer sign up
unless they signed up and committed
to come to their training center
unless they paid for the 15K in training
where they would make sure that Eloqua
was set up for success for them.
Like forget the platform fee of 15K,
you thought that was crazy.
Obviously, an enterprise, this works really well.
And Eloqua said, look, you have
to buy our 15K training package
and you have to come to our offices
and learn how to deploy Eloqua
and learn how to get trained on it.
Trained on it to use it properly
so that you are set up for success.
So this does two things.
One, customers have skin in the game.
They're paying so therefore they would take the training.
This means that they're gonna be more successful.
This means that they're gonna use your product more,
which also means that your LTV
and your churn rates are all gonna get healthier.
So these are the three streets smart principals.
They don't have this into in the textbooks
that I would apply right now in your SaaS business.
These are the pricing principles
that you should absolutely apply today.
Number one, align your pricing with the ROI.
How quickly can they make the money back?
For us it was one extra deal.
It makes some money back,
pays for the platform for starters.
Number two, charge more, charge more, charge more,
put in a platform fee and number three,
charge for training and success.
Again, additional revenues is additional growth
and also increases your LTV and reduces your churn.
Those are my three streets smart principles
for your pricing strategy.
You got value from this video,
be sure smash up like button for the YouTube algorithm.
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about growing your SaaS business more effectively.
Speaking of which, if you are growing your SaaS business,
be sure to check out my SaaS Go-To-Market Program.
My SaaS Go-To-Market Program will help you actually build
a differentiator to go to market engine.
We are accepting new members, go to tkkader.com/gtm
or just follow the link below
and also have something free for you.
I also have my five point star growth strategy guide.
In it I give you some more videos
and some more resources about
how to think about SaaS growth,
some additional resources that I have.
So if you are interested in that, it's completely free.
you can download it @getunstoppable.com/strategy
or you can follow the link below.
And also we'll put a link below
for the additional pricing video and also link to a here
if you want to dig deep into the textbook principles,
these are the street principles,
we'll look at the textbook principles
on pricing strategy, you can check that out as well.
I wanna thank you for joining.
If you got value from this,
please be sure to comment below and let me know
what other topics you want me to cover.
If you have a friend that would get value from this,
please share the video with them
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 the next episode.
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