SaaS Pricing Models In Flux. At Forrester’s recent IT Forum in Las Vegas, we conducted a roundtable with several leading software and services firms focused on SaaS around the topic of SaaS pricing trends.
Key takeaways: SaaS pricing is evolving toward true usage-based models. Most early examples of SaaS price on a fairly simplistic per-user per-month basis, sometimes with add-on costs for “extras” like mobile, storage, or advanced modules. However, today many buyers seek pricing options that more closely map to value, such as usage-based or transaction-based models. At the same time, many SaaS vendors are becoming more sophisticated with billing and provisioning (either themselves or through specialist partners like Zuora, eVapt, MetraTech, and Aria), which means that they can profitably offer more flexible pricing models (eliminating effort that formerly required manual intervention).
SaaS Metrics: Software as a Service – SaaS Business Planning. What metrics should you use to track the health of your software as a service business?
In the SaaS model, key business metrics are different from those for a traditional software company. As with any company, it's critical to start with a strong SaaS business plan which includes key SaaS metrics. One of the major challenges of the SaaS business model is that a lot of the costs are front-loaded while the customer revenue comes in over time. Your business plan and financial model will show how healthy your business is over the mid- to long-term and you can catch issues early. For example, the health of a traditional software business is measured in bookings: how many new customers (or upgrades) do you bring in each quarter? The best SaaS metrics are not bookings, but instead these five measurables (as originally defined by Bessemer Venture Partners): 1. This is a key financial metric for measuring growth. 2. Churn is the percent of customers who cancel each year. 3. 4. 5.
SaaS Metrics – SaaSoNomics 101 » Haut Tech. Late last week there was a lot of buzz around the announcement that the president and chief executive at Salesforce, Steve Cakebread, and two of his top sales executives had left the company.
The news has generated blog entries with provocative titles (Is the Bloom Off the SaaS Rose? By Jeff Kaplan) and several sober assessments about the general effect the down economy is having on IT spending. It is interesting to me that what didn’t lead the articles was a clear assessment of the metrics of a Software as a Service business and how that might be impacting Salesforce and other SaaS-based companies going after the enterprise market in this economy. The metrics of any business model are arguably “entertaining reading” for only a very limited number of people to be sure. But it is a critical subject for companies with new SaaS products or ISVs moving to SaaS to understand and be ready to measure from day one of operations. First, let’s talk a little about marketing SaaS products. SaaS Metrics: SaaSoNomics 102A » Haut Tech. At the recent OpSource SaaS Summit 09, I had the opportunity to meet many entrepreneurs either operating a SaaS business or preparing to offer a product as SaaS.
I was not surprised to see that the most popular sessions were based on marketing, sales compensation, sales channels and “Thriving Not Just Surviving.” In this economy it is critical to understand the practical issues around running a successful SaaS business model. In this article, I’m going to cover some examples of using SaaS metrics to guide business operations. If you haven’t read our SaaSoNomics 101 article – I’d suggest you hop over and give it a look, before you start on this one. It will give you an overview of the “generally recognized” metrics – and I have made a couple of additions and updates since we published the article.
To expose how the gears of a SaaS business mesh, let’s start with one of the most difficult areas – Sales Compensation. So – what does all this tell us about SaaS metrics? Analytics & Financial Management for SaaS.