OpenView Venture Partners pricing experts, Partner Blake Bartlett and Senior Director of Market Strategy Kyle Poyar, join host and CodeScience CEO Brian Walsh to share real-life examples and actionable pricing strategies that position SaaS businesses for success. Learn: - Why pricing can make or break your business - The 5 most common pricing mistakes for SaaS companies - Pricing examples both good and bad from other SaaS organizations - What roles and teams in your company should own pricing - Key takeaways for optimal pricing - Gotchas to avoid when pricing for the AppExchange - And more! Watch the recording at https://youtu.be/emDzLKq1f5g

2. Speakers
Brian Walsh
CEO
CodeScience
Blake Bartlett
Partner
OpenView
Kyle Poyar
Senior Director Market Strategy
OpenView

3. Who is CodeScience?
● Founding partner in the Salesforce Product Development
Outsourcing (PDO) Program since 2008
● PDO Program provides app development services to
ISVs for Salesforce AppExchange
● Partnered with many clients in various industries to assist
in building 175+ apps on the AppExchange
● Certified as PDO Master in 2017
● Clients range from 3 person start-ups to a Fortune 3
company

4. Do you suck at
pricing?

5. 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.

6. We think deeply about pricing

7. Where are you in your journey?
Early
Expansion
Growth
Maturity

8. 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

9. 1010
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. You’re too
cheap.
1

12. ’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. ’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)

14. ’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)

15. ’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)

16. 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

17. 2
You picked the
wrong value metric.

18. 32%
30%
54%
39%
41%
24%
6%
11%
3%
23%
19%
18%
0% 20% 40% 60% 80% 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?

19. The right value metric can help you
differentiate against competitors and
generate more revenue

21. Expensify differentiates with ’active user’ pricing

23. 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

24. 3
You make it
hard to buy.

25. 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

27. 28

28. Clearly states their
value proposition

29. Different messaging
for teams vs.
enterprise

30. Leverages
psychology by
highlighting the price
when paid annually

31. Crystal clear
about benefits,
not just features

32. Puts lingering
fears to rest

34. 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

35. 4
Your upsell path is
broken.

36. 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

38. Value metric & expansion: usage > seats
123% net
retention

40. Packaging: use features to drive expansion
Good

41. Packaging: use features to drive expansion
Good Better

42. Packaging: use features to drive expansion
Good Better Best

43. 5
Your pricing is
static.

44. Pricing should evolve as your
company evolves

46. 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

47. 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

48. 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

49. 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.

50. What now?

51. Pricing & packaging is
super important.

52. 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

53. 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?

55. Who should
own pricing?
Marketing
Finance
Sales
Operations
Product

56. 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

57. 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

58. Thank you!
sales@codescience.com
codescience.com
@codescience
blake@ov.vc | kyle@ov.vc
openviewpartners.com
@openviewventure

59. See this deck: openview.vc/saastr-2018
Blake Bartlett | blake@ov.vc
Kyle Poyar | kyle@ov.vc
Thank You!
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