SaaS Pricing

Consider price v no. of customers required to hit MRR goals

e.g. £10,000/month requires:

• 100 customers at £100/month
• 40 customers at £250/month
• 20 customers at £500/month

Use Enterprise/Contact Us plan to find value larger clients will pay.

Almost all (?) $100m SaaS businesses charge more than $5k/year or less than $500/year.

Nathan, if I want to build a $100m software company, should I go for a lot of customers paying a little, or few customers paying a lot?!

Me: Charge more than $5000 per year or less than $500 to drastically increase likelihood you build a $100m company.#saas #pricing #software pic.twitter.com/V9a0fTStqg

— Nathan Latka (@NathanLatka) May 17, 2019

Some key points from the Twitter thread above:

1. Avoid the “dead zone” between $500 & $5000
2. Going after “whales” is easier, then trying to catch a gazillion “mosquitos”.
3. companies often see inexpensive software as being not “enterprise-grade”
4. it’s too expensive for the seller to go through procurement malarkey for every thousand dollars or so
5. Re Clickfunnels they have “relied (smartly) on professional services/selling training to jump cash gap issues and get payback basically on day 1”
6. (1) outbound sales rep based, hands-on – economically viable when MMR is high enough to cover the costs, hence a cut off ~$5000. (2) automated inbound web-based model no sales staff – only works for price <$500 bc businesses won’t pay more without human touch. Hence the gap.