Why Pricing Can Make or Break Your SaaS Company
Summary
Net $ retention: a variable pricing strategy which takes into account increasing customer usage helps grow subscription contract values with existing customers Gross $ retention: measures how well you are defending your original contract values from year to year and is an indicator of two things: the success of your pricing strategy as well as whether your sales organization is discounting renewals.Investors are increasingly demanding faster sales, solid margins, low customer acquisition costs and high retention rates.Chris Mele agrees: “this impact on valuation is why—whether you are in early-stage growth phase, pre-IPO, or enterprise expansion mode—today’s environment dictates that you address monetization sooner rather than later.”The bottom line is that pricing is dynamic and should be a management imperative to review at least annually with the appropriate internal data and benchmarks to guide your strategy.Lauren is also a big believer that data and benchmarks level the playing field in decision-making, reducing all sorts of biases that can cloud management decision-making, affecting efficient growth.