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Blake Bartlett and Kyle Poyar
SaaStr Annual 2018
Mastering
SaaS Pricing
Proprietary and Confidential ©2018 Copyright OpenView Venture Partners. All Rights Reserved. OPENVIEW
Do you suck at
pricing?
The only difference between companies that succeed and
fail is that the winners figured out how to make money.
The winners thought deeply through the revenue, price, and
business model.“
Steve Ballmer
CEO, Microsoft 2000 - 2014
“This thing called ‘price’ is
really, really important.
We think deeply about pricing
Where are you in your journey?
Early
Expansion
Growth
Maturity
Founders who struggle to raise
capital are…
3x More
likely to say they monetized too late
2x More
likely to say they picked the wrong business model
40% More
likely to say their burn rate was too high
Pricing can make
or break your
business
Source: First Round Capital 2017 State of Startups
88
Top 5
pricing mistakes
1.  You’re too cheap
2.  You picked the wrong value metric
3.  You make it hard to buy
4.  Your upsell path is broken
5.  Your pricing is static
You’re too
cheap.
1
Mastering SaaS Pricing - SaaStr Annual 2018
’13 ’14 ’15 ‘16
$400
$300
$200
$100
$0
Starter Plan
Growth Plan
StatusPage Pricing Evolution, 2013 - 2016
Source: Wayback Machine; “3 Steps to Increasing Our Average Revenue Per User by 2.4X” (Nov 27, 2015)
’13 ’14 ’15 ‘16
$400
$300
$200
$100
$0
Starter Plan
Growth Plan
Corporate plan
StatusPage Pricing Evolution, 2013 - 2016
Source: Wayback Machine; “3 Steps to Increasing Our Average Revenue Per User by 2.4X” (Nov 27, 2015)
’13 ’14 ’15 ‘16
$1,500
$400
$300
$200
$100
$0
Starter Plan
Growth Plan
Corporate plan
Enterprise plan
StatusPage Pricing Evolution, 2013 - 2016
Source: Wayback Machine; “3 Steps to Increasing Our Average Revenue Per User by 2.4X” (Nov 27, 2015)
’13 ’14 ’15 ‘16
$1,500
$400
$300
$200
$100
$0
Starter Plan
Growth Plan
Corporate plan
Enterprise plan
•  Raised highest price point 30x
•  Grew ARPU by 2.4x
•  Minimal impact to conversion
•  Hit $2.5M ARR in 2 years
•  Acquired by Atlassian
StatusPage Pricing Evolution, 2013 - 2016
Source: Wayback Machine; “3 Steps to Increasing Our Average Revenue Per User by 2.4X” (Nov 27, 2015)
Profit Impact of Different Growth Levers
3.3%
6.7%
12.7%
Customer Acquisition Retention Pricing & Packaging
Pricing is a Powerful Growth Lever
Source: Price Intelligently study of 512 SaaS companies
4x More Powerful
2
You picked the
wrong value metric.
32%
30%
54%
39%
41%
24%
6%
11%
3%
23%
19%
18%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Infrastructure
Vertical app
Horizontal app
User or seat-based Usage-based Total employees Other
Source: openview.vc/saas-benchmarks-2017
Are seats the right metric for you?
The right value metric can help you
differentiate against competitors and
generate more revenue
Mastering SaaS Pricing - SaaStr Annual 2018
Expensify differentiates with ’active user’ pricing
Mastering SaaS Pricing - SaaStr Annual 2018
VTS: new value metric increased revenue
Before – Per Building	 After – Per Square Foot	
Problem
One-size-fits-all left money on the table	
Solution
Price aligned with customer value
3
You make it
hard to buy.
15 Months
10 Months
7 Months
Slow (<30%) Moderate (30-99%) FAST (>100%)
Self-reported CAC payback (Months)
Source: openview.vc/saas-benchmarks-2017
Fastest growers seamlessly land
new customers
Mastering SaaS Pricing - SaaStr Annual 2018
26
Clearly states their
value proposition
Different messaging
for teams vs.
enterprise
Leverages
psychology by
highlighting the price
when paid annually
Crystal clear
about benefits,
not just features
Puts lingering
fears to rest
Mastering SaaS Pricing - SaaStr Annual 2018
0
50
100
150
200
Subscription
PAYG
Jan-14 Jan-15 Jan-16 Jan-17
Sell to your customers the way they
want to buy
4
Your upsell path is
broken.
82%
84%
89%90%
97%
109%
Slow
(<30%)
Moderate
(30-99%)
FAST
(>100%)
Avg logo retention Avg net $ retention
AnnualRetention
Source: openview.vc/saas-benchmarks-2017
Fastest growers see net negative churn
Mastering SaaS Pricing - SaaStr Annual 2018
Value metric & expansion: usage > seats
123% net
retention
Mastering SaaS Pricing - SaaStr Annual 2018
Packaging: use features to drive expansion
Good
Packaging: use features to drive expansion
Good Better
Packaging: use features to drive expansion
Good Better Best
5
Your pricing is
static.
Pricing should evolve as your
company evolves
Mastering SaaS Pricing - SaaStr Annual 2018
Salesforce pricing evolution, 1999 - 2017
’99 ’01 ’03 ’05 ’07 ’09 ’11 ’13 ’15 ’17
$300
$250
$200
$150
$100
$50
$0
Source: Wayback Machine; Salesforce.com; Salesforce press interviews *Price per user per month
Pro
Salesforce pricing evolution, 1999 - 2017
’99 ’01 ’03 ’05 ’07 ’09 ’11 ’13 ’15 ’17
$300
$250
$200
$150
$100
$50
$0
Pro
Enterprise
Unlimited
Source: Wayback Machine; Salesforce.com; Salesforce press interviews *Price per user per month
Salesforce pricing evolution, 1999 - 2017
’99 ’01 ’03 ’05 ’07 ’09 ’11 ’13 ’15 ’17
$300
$250
$200
$150
$100
$50
$0
•  Top price point increased by 6x
•  Enterprise is now the most popular plan
•  Additional revenue from add-on features
Source: Wayback Machine; Salesforce.com; Salesforce press interviews *Price per user per month
Pro
Enterprise
Unlimited
The single most valuable lesson I’ve learned is that you have
to be ready to constantly iterate on both your pricing and
packaging. Successful companies are those that think of
pricing in the same way they think about product
development – their pricing is in a constant state of
evolution.
Monika Saha
General Manager, Finance Product Line
Zuora
It’s never 100% done.
What now?
Pricing & packaging is
super important.
But most people don’t take it seriously
No, 45%
Yes, cursory
research, 48%
Yes, in-depth
research, 8%
No, 64%Yes, 1 round,
15%
Yes, 2+
rounds, 22%
Have you done pricing research? Have you done price testing?
Source: openview.vc/saas-pricing-study
The price is not material enough to be a
factor in the decision.
It is not even a blip on the radar.
“
”
Who should
own pricing?
Who should
own pricing?
Marketing
Finance
Sales
Operations
Product
Who should
own pricing?
Great for positioning and messaging
Already own TOFU & website
Best grasp of product and roadmap
Already doing customer development
May overly focus on features vs. value
Analytical and data-driven
Best handle on costs and profit
Tend to take a cost plus vs. value-based approach
Closest to the customer
Constantly hearing about needs and pain points
May be too close – want too many options
Best grasp of the data
Great at processes and technology
Less customer-focused
Marketing
Product
Finance
Sales
Operations
SaaS Pricing Takeaways
1.  Don’t be too cheap
2.  The right value metric helps you differentiate & sell more
3.  Sell to customers the way they want to buy
4.  Usage-based pricing & feature packaging drives net negative churn
5.  Experiment and iterate on pricing
blake@ov.vc kyle@ov.vc
See this deck: openview.vc/saastr-2018
Blake Bartlett | blake@ov.vc
Kyle Poyar | kyle@ov.vc
Thank You!
Proprietary and Confidential ©2018 Copyright OpenView Venture Partners. All Rights Reserved.

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Mastering SaaS Pricing - SaaStr Annual 2018

  • 1. Blake Bartlett and Kyle Poyar SaaStr Annual 2018 Mastering SaaS Pricing Proprietary and Confidential ©2018 Copyright OpenView Venture Partners. All Rights Reserved. OPENVIEW
  • 2. Do you suck at pricing?
  • 3. The only difference between companies that succeed and fail is that the winners figured out how to make money. The winners thought deeply through the revenue, price, and business model.“ Steve Ballmer CEO, Microsoft 2000 - 2014 “This thing called ‘price’ is really, really important.
  • 4. We think deeply about pricing
  • 5. Where are you in your journey? Early Expansion Growth Maturity
  • 6. Founders who struggle to raise capital are… 3x More likely to say they monetized too late 2x More likely to say they picked the wrong business model 40% More likely to say their burn rate was too high Pricing can make or break your business Source: First Round Capital 2017 State of Startups
  • 7. 88 Top 5 pricing mistakes 1.  You’re too cheap 2.  You picked the wrong value metric 3.  You make it hard to buy 4.  Your upsell path is broken 5.  Your pricing is static
  • 10. ’13 ’14 ’15 ‘16 $400 $300 $200 $100 $0 Starter Plan Growth Plan StatusPage Pricing Evolution, 2013 - 2016 Source: Wayback Machine; “3 Steps to Increasing Our Average Revenue Per User by 2.4X” (Nov 27, 2015)
  • 11. ’13 ’14 ’15 ‘16 $400 $300 $200 $100 $0 Starter Plan Growth Plan Corporate plan StatusPage Pricing Evolution, 2013 - 2016 Source: Wayback Machine; “3 Steps to Increasing Our Average Revenue Per User by 2.4X” (Nov 27, 2015)
  • 12. ’13 ’14 ’15 ‘16 $1,500 $400 $300 $200 $100 $0 Starter Plan Growth Plan Corporate plan Enterprise plan StatusPage Pricing Evolution, 2013 - 2016 Source: Wayback Machine; “3 Steps to Increasing Our Average Revenue Per User by 2.4X” (Nov 27, 2015)
  • 13. ’13 ’14 ’15 ‘16 $1,500 $400 $300 $200 $100 $0 Starter Plan Growth Plan Corporate plan Enterprise plan •  Raised highest price point 30x •  Grew ARPU by 2.4x •  Minimal impact to conversion •  Hit $2.5M ARR in 2 years •  Acquired by Atlassian StatusPage Pricing Evolution, 2013 - 2016 Source: Wayback Machine; “3 Steps to Increasing Our Average Revenue Per User by 2.4X” (Nov 27, 2015)
  • 14. Profit Impact of Different Growth Levers 3.3% 6.7% 12.7% Customer Acquisition Retention Pricing & Packaging Pricing is a Powerful Growth Lever Source: Price Intelligently study of 512 SaaS companies 4x More Powerful
  • 15. 2 You picked the wrong value metric.
  • 16. 32% 30% 54% 39% 41% 24% 6% 11% 3% 23% 19% 18% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Infrastructure Vertical app Horizontal app User or seat-based Usage-based Total employees Other Source: openview.vc/saas-benchmarks-2017 Are seats the right metric for you?
  • 17. The right value metric can help you differentiate against competitors and generate more revenue
  • 19. Expensify differentiates with ’active user’ pricing
  • 21. VTS: new value metric increased revenue Before – Per Building After – Per Square Foot Problem One-size-fits-all left money on the table Solution Price aligned with customer value
  • 23. 15 Months 10 Months 7 Months Slow (<30%) Moderate (30-99%) FAST (>100%) Self-reported CAC payback (Months) Source: openview.vc/saas-benchmarks-2017 Fastest growers seamlessly land new customers
  • 25. 26
  • 28. Leverages psychology by highlighting the price when paid annually
  • 32. 0 50 100 150 200 Subscription PAYG Jan-14 Jan-15 Jan-16 Jan-17 Sell to your customers the way they want to buy
  • 33. 4 Your upsell path is broken.
  • 34. 82% 84% 89%90% 97% 109% Slow (<30%) Moderate (30-99%) FAST (>100%) Avg logo retention Avg net $ retention AnnualRetention Source: openview.vc/saas-benchmarks-2017 Fastest growers see net negative churn
  • 36. Value metric & expansion: usage > seats 123% net retention
  • 38. Packaging: use features to drive expansion Good
  • 39. Packaging: use features to drive expansion Good Better
  • 40. Packaging: use features to drive expansion Good Better Best
  • 42. Pricing should evolve as your company evolves
  • 44. Salesforce pricing evolution, 1999 - 2017 ’99 ’01 ’03 ’05 ’07 ’09 ’11 ’13 ’15 ’17 $300 $250 $200 $150 $100 $50 $0 Source: Wayback Machine; Salesforce.com; Salesforce press interviews *Price per user per month Pro
  • 45. Salesforce pricing evolution, 1999 - 2017 ’99 ’01 ’03 ’05 ’07 ’09 ’11 ’13 ’15 ’17 $300 $250 $200 $150 $100 $50 $0 Pro Enterprise Unlimited Source: Wayback Machine; Salesforce.com; Salesforce press interviews *Price per user per month
  • 46. Salesforce pricing evolution, 1999 - 2017 ’99 ’01 ’03 ’05 ’07 ’09 ’11 ’13 ’15 ’17 $300 $250 $200 $150 $100 $50 $0 •  Top price point increased by 6x •  Enterprise is now the most popular plan •  Additional revenue from add-on features Source: Wayback Machine; Salesforce.com; Salesforce press interviews *Price per user per month Pro Enterprise Unlimited
  • 47. The single most valuable lesson I’ve learned is that you have to be ready to constantly iterate on both your pricing and packaging. Successful companies are those that think of pricing in the same way they think about product development – their pricing is in a constant state of evolution. Monika Saha General Manager, Finance Product Line Zuora It’s never 100% done.
  • 49. Pricing & packaging is super important.
  • 50. But most people don’t take it seriously No, 45% Yes, cursory research, 48% Yes, in-depth research, 8% No, 64%Yes, 1 round, 15% Yes, 2+ rounds, 22% Have you done pricing research? Have you done price testing? Source: openview.vc/saas-pricing-study
  • 51. The price is not material enough to be a factor in the decision. It is not even a blip on the radar. “ ”
  • 54. Who should own pricing? Great for positioning and messaging Already own TOFU & website Best grasp of product and roadmap Already doing customer development May overly focus on features vs. value Analytical and data-driven Best handle on costs and profit Tend to take a cost plus vs. value-based approach Closest to the customer Constantly hearing about needs and pain points May be too close – want too many options Best grasp of the data Great at processes and technology Less customer-focused Marketing Product Finance Sales Operations
  • 55. SaaS Pricing Takeaways 1.  Don’t be too cheap 2.  The right value metric helps you differentiate & sell more 3.  Sell to customers the way they want to buy 4.  Usage-based pricing & feature packaging drives net negative churn 5.  Experiment and iterate on pricing
  • 57. See this deck: openview.vc/saastr-2018 Blake Bartlett | blake@ov.vc Kyle Poyar | kyle@ov.vc Thank You! Proprietary and Confidential ©2018 Copyright OpenView Venture Partners. All Rights Reserved.