Price Intelligently's co-founder and CEO Patrick Campbell on the way to determine SaaS pricing and the factors that influence it.

1. Pricing as a chief lever of growth
SaaSNorth 2016
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2. We live in a world where acquisition,
as we know it, is dead.
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3. Who are you?
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4. Happy customers big and small
ProfitWell
SaaS pricing
software and tech
enabled services
Free financial metrics
for subscription
businesses
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5. We’ve seen inside more software companies
than anyone else on the planet.
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6. The market is becoming saturated and unit
economics just aren’t what they used to be…
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7. The relative value of features is declining.
All software is going to $0.
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8. “Differentiation” isn’t what is used to be…
N = Varies by line, but minimum of 10,000 customer respondents per line
Willingness to pay over time relative to WTP 4 years ago
WTPas%ofWTP4YearsAgo
0%
30%
60%
90%
120%
4 Years Ago 3 Years Ago 2 Years Ago 1 Year Ago Today
Core Features Single Sign On Integrations Analytics
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9. CAC is increasing over time.
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10. Acquiring a customer is getting pricier
N = Varies by line, but minimum of 453 companies per data point
Blended CAC relative to four years ago
CACas%ofCAC4YearsAgo
-15%
0%
15%
30%
45%
60%
4 Years Ago 3 Years Ago 2 Years Ago 1 Year Ago Today
B2B B2C
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11. Appetite for subscriptions is increasing
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12. B2B Consumers Increasingly Moving to Subscriptions
N = 2012 contained 635 B2B software buyers; 2016 contained 753 B2B software buyers
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Preference for software delivery mechanism over time
SaaS Solution
Perpetual License (ongoing support/maintenance)
Perpetual License (No support/maintenance)
On-Premise SaaS
-0.5 -0.375 -0.25 -0.125 0 0.125 0.25 0.375 0.5
2012 2016

13. We make matters worse by focusing on the
wrong fundamentals
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14. Asked Founders/Executives
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15. What we find important
C-Level/Founder Growth Preferences
%oftotalcompanies
0%
25%
50%
75%
100%
More logos Making more money per customer Keeping customers around longer
N = 1,432 software companies
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16. There are clear winners and losers in this
environment.
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17. Death correlates to acquisition focused teams
Of those companies who died, what was the makeup of their growth
%ofCompanies
0%
25%
50%
75%
100%
Less than $10M ARR $10.01M to $25M ARR $25.01M+ ARR
Primarily Acquisition Growth Balanced Growth
N = Minimum of 26 companies per category who died over the past 4 years
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18. Balanced growth velocity is much larger
How do growth rates compare to our two growth groups?
YoYGrowth%
0%
30%
60%
2012 2013 2014 2015
Primarily Acquisition Growth Balanced Growth
N = Minimum of 512 companies per segment pulled from the middle 2/3 of companies in terms of growth rate. This, along with a dampening
model was used to control for outlier spikes in growth rate.
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19. Subscription growth is outpacing perpetual
How do growth rates compare to our two growth groups?
YoYGrowth%
0%
30%
60%
2012 2013 2014 2015
Perpetual Subscription
N = Minimum of 306 companies with $10M in annual revenue or more per segment pulled from the middle 2/3 of companies in terms of growth
rate. This, along with a dampening model was used to control for outlier spikes in growth rate.
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20. The root cause here stems from a lack of
buyer centricity.
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21. We don’t really know our buyers
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22. Buyer Personas
Table Stakes Tony
• Valued features:
• SFDC Integration
• Chrome extension
• Least valued features
• Analytics
• API access
• WTP = ~$10/month
• CAC = ~$22
• LTV: $160
Advanced Arnie
• Valued features:
• Analytics
• API Access
• Least valued features
• Chrome extension
• Premium support
• WTP = ~$25/month
• CAC = ~$56
• LTV: $325
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23. We don’t know our buyers that well
Which single category best describes your buyer personas?
%ofRespondents
0%
25%
50%
75%
100%
Thought about them Central document Quantified buyer personas
N = 1,647 SaaS companies
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24. We don’t do a lot of cust dev conversations
How many cust dev conversations are you having per month?
%ofRespondents
0%
25%
50%
75%
100%
# of cust dev conversations
Less than 10 11 to 25 26 to 50 51+
N = 1,647 SaaS companies
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25. We aren’t truly testing that much
How many tests or experiments are you running each month?
%ofRespondents
0%
25%
50%
75%
100%
# of tests/experiments
0 1 to 3 4 to 10 11+
N = 1,647 SaaS companies
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26. This should be scary.
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27. Everything aligns to the customer
Point of Conversion
Drive Customer #1
Offer Product #1
Offer Product #2
Drive Customer #2
Drive Customer #3
Offer Product #3
Justify price #1
Justify price #2
Justify price #3
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28. How do we fix this?
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29. Quantify your buyer personas
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30. Let’s walk through an example…
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31. ProfitWell
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32. “Oh you’re like….”
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33. “Oh you’re like….”
37 Other
Competitors
(we know about)
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34. Go to the customer!
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35. For the love of God. Talk to your customer.
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36. Great. How do we do that?
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37. 1
2
3
Your Process at a High Level
Buyer Personas
and Design
1
Data Collection
And Segmentation
2
Data Consolidation
And Analysis
3
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38. Persona-Product Fit
Startup Steve
• Valued features:
•
•
• Least valued features
•
•
• WTP = ~$/month
• CAC = ~$
• LTV: $
Miderprise Marty
• Valued features:
•
•
• Least valued features
•
•
• WTP = ~$/month
• CAC = ~$
• LTV: $
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39. Experimental Design
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40. What type of info do we want?
• Demographic Information
– How often do you look at your metrics? Team size? Revenue?...
• Feature/Packaging Information
– Which metrics? What features? Value props?...
• Pricing Information
– How much are they willing to pay? What frequency do they want to pay?...
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41. Relative Preference Analysis
Statistical methodology to measure
preferences for features, intention, and
value propositions
Your Customer Development Toolkit
Price Sensitivity Analysis
Proven model for gauging customer’s
willingness to pay and price sensitivity
Experimental Design
Properly segmenting and breaking down the data.
How do we ask the questions?
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42. What do people value?
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43. “Please rank the following
features on a scale of 1 to 10…”
Depth of your metrics
Beautiful Design
Actionability from your metrics
Accuracy of your metrics
0 0.25 0.5 0.75 1
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44. @PriceIntel

45. What do your customers
value the most?
More on: Relative Preference Analysis
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46. What do your customers
value the most?
More on: Relative Preference Analysis
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47. What do your customers
value the most?
More on: Relative Preference Analysis
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48. Persona-Product Fit
Startup Steve
• Valued features:
• Price
• Design
• Least valued features
• Actionabiltiy
• Depth
• WTP = ~$/month
• CAC = ~$
• LTV: $
Miderprise Marty
• Valued features:
• Accuracy
• Uptime
• Least valued features
• Price
• Design
• WTP = ~$/month
• CAC = ~$
• LTV: $
@PriceIntel

49. Relative Preference Analysis
Statistical methodology to measure
preferences for features, intention, and
value propositions
Your Customer Development Toolkit
Price Sensitivity Analysis
Proven model for gauging customer’s
willingness to pay and price sensitivity
Experimental Design
Properly segmenting and breaking down the data.
How do we ask the questions?
@PriceIntel

50. How much are they willing to pay?
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51. • At what (monthly) price point does [PRODUCT] become too
expensive that you’d never consider purchasing it?
• At what (monthly) price point does [PRODUCT] start to become
expensive, but you’d still consider purchasing it?
• At what (monthly) price point does [PRODUCT] a really good
deal?
• At what (monthly) price point does [PRODUCT] too cheap that
you question the quality of it?
More on: Relative Price Sensitivity Meter
How much are your
customers willing to pay?
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52. How much are your customers willing to
pay?
More on: Relative Price Sensitivity Meter
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53. WTP for SaaS Metrics
WTP for a SaaS Metrics Solution
WTP
$0
$75
$150
$225
$300
Size of Company (MRR)
$0 - $50k $51k - $100k $101k - $250k $251k - $500k $501k+
N = 234 companies
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54. Persona-Product Fit
Startup Steve
• Valued features:
• Price
• Design
• Least valued features
• Actionabiltiy
• Depth
• WTP = ~$50/month
• CAC = ~$
• LTV: $
Miderprise Marty
• Valued features:
• Accuracy
• Uptime
• Least valued features
• Price
• Design
• WTP = ~$150-250/month
• CAC = ~$
• LTV: $
@PriceIntel

55. Persona-Product Fit
Startup Steve
• Valued features:
• Price
• Design
• Least valued features
• Actionabiltiy
• Depth
• WTP = ~$50/month
• CAC = ~$500-600
• LTV: $600
Miderprise Marty
• Valued features:
• Accuracy
• Uptime
• Least valued features
• Price
• Design
• WTP = ~$150-250/month
• CAC = ~$3000
• LTV: $1500
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56. WTP for Churn Recovery
WTP for a Recovering Churn
WTP
$0
$1,125
$2,250
$3,375
$4,500
Size of Company (MRR)
$0 - $50k $51k - $100k $101k - $250k $251k - $500k $501k+
N = 234 companies
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57. WTP for Rev Rec
WTP for a Revenue Recognition
WTP
$0
$875
$1,750
$2,625
$3,500
Size of Company (MRR)
$0 - $50k $51k - $100k $101k - $250k $251k - $500k $501k+
N = 234 companies
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58. A good entry point
Low CAC with
constant value
Creates the
Requirement
Path to Share
of Wallet
ProfitWell
Financial metrics for the subscription economy
100% accurate
SaaS metrics for
free integrating 1-
click with your
billing system
Central fulcrum to
cust success, sales,
finance, marketing e-
team, and rest of
stakeholders
Allows interface to
clearly point to
problems and
reinforce value of
paid add-ons
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59. 12 hours total.
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60. 12 hours total. $2089.
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61. Balanced growth is crucial to survive and thrive.
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62. patrick@priceintelligently.com
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