Jeff's talk on monetizing your SaaS application, extended remix version for Cloudstock!

1. you’ve decided to
So,
make a living
with
SaaS
Je Lawson
je @twilio.com
@je el

2. simple, universal pricing formula
value created
- some discount
= your price

3. measuring
value created

4. Consumer
OR
Business

5. Consumers
Are
Not
Rational

6. Businesses
are
Pretty
Rational
Every decision driven
two factors...

7. Reduce
Costs
Measurable Value
OR
Increase
Revenue

8. No measurable value?
Stick ad
s on it!
X
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advertisement

9. so
business customers
Neat!
have a framework for
measurable
value

10. be proud
and put a price on
your junk
bits & pieces
value generation

11. Start
No Does my service Yes
generate value?
Back to the drawing
How Much Value?
board

12. Cost Based Pricing

13. Profit
Margin =
Price
Profit = Price - Cost
Price = Cost / (1-m )

14. Target Margin: 50% (0.5)
Costs: $10
Price = $10 / (1-0.5)
= $20
Price = Cost / (1-m )

15. What if your unit costs are basically zero?
Web Server Web Server
MySQL
$150 / mo

16. Value Based Pricing

17. Are they...
...saving money
by replacing a more expensive solution?
HOW MUCH?
...saving money
on e ciency because of you?
HOW MUCH?
...generating more revenue
because of you?
HOW MUCH?

18. Are they...
...saving money
IC E
by replacing a more expensive solution?
HOW MUCH?
PR
U R
= O
...saving money
Y of you?
t
nHOW MUCH?
on e ciency because
u
i sc o
- d
...generating more revenue
because of you?
HOW MUCH?

19. Competitive Pricing
Red Herring, see previous slide.

20. Cost Based Value Based
sanity
$$$
check:
do they
Competition converge?

21. Is
It?

22. Customer Feedback Loops

24. Split Testing

27. $1,000 / Mo + 0.001 / Msg

28. $1,000 Mo + + 0.001 / Msg
$0 / / Mo 0.10 / Msg

29. $1,000 Mo + + 0.001 / Msg
$0 / / Mo 0.10 / Msg

30. Talk to potential
customers,
learn the value prop
during private beta
(which can be free)

34. Raise prices if
merited, but
don’t fool
people :)
Start conservative,
drop prices if needed

35. Is
It?

36. If you’re unsure, just
make more pricing
options.

39. Maybe I need
mustard instead

40. Audience Segmentation

41. Quantities

42. Quantities

43. Features

44. Features

45. Support

46. Support

47. Industry Segmentation

48. Industry Segmentation

49. O er less attractive options
(that clearly, only suckers would buy)

50. Price Anchoring

51. CHEAP!
Price Anchoring
CHEAP!

52. Figure out value generated
Test with Potential Customers
Free Private Beta
Go Public with a Price Tag
Adjust as necessary, ideally down
Use price levers & anchoring to Segment

53. Je Lawson
je @twilio.com
@je el