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The 10 Essential SaaS Growth Strategies

Optimize Pricing and Packaging

Introduction

For every successful SaaS company that has grown over 50% year over year — including such well-known companies as Zendesk, Box, Hubspot, and New Relic — there are thousands of startups that have failed.

In fact, according to a recent McKinsey study Grow Fast or Die Slow,

If a software company grows less than 20% annually, there is a 92% chance of failure.

McKinsey, Grow Fast or Die Slow

When you’re a startup, it’s fairly easy to double revenues in a month (for example, going from $10K to $20K). As you start to grow, you can expect to double revenue in a quarter, then in a year. But as you get larger, it’s very, very difficult to double your revenues in these same time frames — after all, how many companies grow from $50M to $100M in one month?

So how can SaaS companies grow, grow fast, grow efficiently, and keep growing?

In working with hundreds of SaaS companies, we’ve learned that the solution to sustaining a high growth rate is to diversify your approach to growth and embrace multiple growth strategies.

We’ve boiled it down to the top 10 essential growth strategies: this article highlights the fifth – Optimize Pricing and Packaging.  

Optimize Pricing and Packaging

Over the course of the entire lifetime of a SaaS business, do you know how much time the average company devotes to planning their pricing? Six hours (that’s according to research by Jeanne Hopkins, Executive Vice President & CMO at Ipswitch, presented at a recent SaaSFest). That’s it.

This seems crazy, especially considering the huge impact that pricing has on your bottom line — bigger even than acquisition or retention, according to research by Price Intelligently

STAR EXAMPLE: INVOCA

Invoca, a call performance marketing solution, demonstrates an evolved approach to pricing.

According to the former VP of Marketing at Invoca, “If you can’t price and package the services and the software and the products that you’re delivering — or if you do it inefficiently — you’re not going to be successful with growth.”

Invoca wanted a pricing solution that could handle multiple usage dimensions along with recurring monthly charges. Because of the nature of their business, Invoca’s pricing manages multiple usage dimensions including minutes, calls, phone numbers, voice prompts, and more. This combined with recurring monthly charges creates exponential complexity in terms of pricing.

So, to optimize pricing, Invoca needed pricing and packaging flexibility to easily and quickly match customer requirements and demonstrate value. And they needed a system that could support their negotiated sales process and provide clear insight into the pricing dimensions throughout the quote-to-subscription cycle. including increased visibility into key subscription metrics such as TCV, ARR, and MRR, so they can make more data-driven pricing decisions. 

If you can't price and package the services and the software and the products that you're delivering — or if you do it inefficiently — you're not going to be successful with growth.

Kyle Christensen, VP of Marketing at Invoca

KEY TAKEAWAYS

To increase monetization through pricing optimization, SaaS businesses need the ability to:

1. Change pricing in a central location so that it updates across all systems and sales channels (online, partner resellers, in the quoting tool, etc.)

2. Point-and-click to change pricing, not re-write code

3. Easily manage the impact of pricing changes for the entire organization so that finance, sales, and operation teams can keep up with pricing changes 

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