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# Making Money with Saas @ Seattle Startup Day

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Jeff Lawson speaks about how to figure out pricing for your SaaS product at Seattle 2.0 Startup Day 2010

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### Making Money with Saas @ Seattle Startup Day

1. you’ve decided to So, make a living with SaaS Jeﬀ Lawson jeﬀ@twilio.com @jeﬃel
2. simple, universal pricing formula value created - some discount = your price
4. Consumers Are Not Rational
5. Businesses are Pretty Rational Every decision driven two factors...
6. Reduce Costs Measurable Value OR Increase Revenue
8. so business customers Neat! have a framework for measurable value
9. Be Proud and put a price on the value you’re generating
10. Start No Does my service Yes generate value? Back to the drawing How Much Value? board
11. Cost Based Pricing
12. Proﬁt Margin = Price Proﬁt = Price - Cost Price = Cost / (1-m )
13. Target Margin: 50% (0.5) Costs: \$10 Price = \$10 / (1-0.5) = \$20 Price = Cost / (1-m )
14. What if your unit costs are basically zero? Web Server Web Server MySQL \$200 / mo
15. Value Based Pricing
16. Are they... ...saving money by replacing a more expensive solution?   HOW MUCH? ...saving money on eﬃciency because of you?   HOW MUCH? ...generating more revenue because of you? HOW MUCH?
17. Competitive Pricing Red Herring, see previous slide.
18. Cost Based Value Based sanity \$\$\$ check: do they Competition converge?
19. Is It?
20. Customer Feedback Loops
21. Split Testing
22. \$1,000 Mo + + 0.001 / Msg \$0 / / Mo 0.10 / Msg
23. Talk to potential customers, learn the value prop during private beta (which can be free)
24. Raise prices if merited, but don’t fool people :) Start conservative, drop prices if needed
25. Is It?
26. If you’re unsure, just make more pricing options.
27. Maybe I need mustard instead
28. Figure out value generated Test with Potential Customers Free Private Beta Go Public with a Price Tag Adjust as necessary, ideally down.
29. Jeﬀ Lawson jeﬀ@twilio.com @jeﬃel