The Latest from SaaStr: SaaS Leaders are Raising Prices

So another quiet SaaS success story is Jamf after a quiet IPO in 2020.  The #1 player for enterprises and businesses managing Apple devices, it’s quietly grown over 20 years into a $500 million ARR machine, growing 27% a year, that’s cash-flow positive.  Boom!

They’re doing pretty much everything right, with strong NRR and an efficient engine. 

But are they worth 10x ARR? 15x ARR?  Nope.  Everywhere in the public markets are tough today.  They’re trading at less than 5x ARR,  It’s tough out there.

So Zoom and Shopify are the latest SaaS leaders to do price increases — albeit very differently.

First up is Zoom. While some of the increases vary, the low-end plans are going up $1.00.  Yup, $1.00.

Although it’s more impactful than it sounds, because that’s an almost 7% price increase. More on that below.  The SMB segment of Zoom has stopped growing, so going from ~0% growth to 7% growth actually might end up being huge.

Shopify’s increases are much, much bigger. They’ve raised prices 33%!  Important to note they did not raise prices for Shopify Plus, their $2,000+ and up enterprise edition.  So in some ways, a very different approach from Zoom.

This edition of the SaaStr Daily is sponsored in part by SAP

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What is the right Go-To-Market strategy for a startup getting out of the gate? Sales-led vs. product-led is a hot topic right now, and Jason Eubanks, Chief Revenue Officer of Harness, shares the answer in this new episode of the SaaStr Podcast.

Down-rounds shouldn’t be such a big deal — if the private stock markets worked more like the public ones.

Public stock prices go up and down, after all.

It wouldn’t be the end of the world if private ones did, too. At least, in theory

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The real problem is how venture capital works in practice — the nichey, quirky way private financings and investing works.

VC investment is high-ish risk and you need to know when to just walk away.  A lower price doesn’t make a bad deal into a good one. VC-backed start-ups generally require additional capital infusions (unlike most public companies) with only a relatively small number of players out there that can provide those infusions.

There aren’t that many VC firms, not really, and it’s all a bit of a confidence game until the start-up is so big it doesn’t need VC capital anymore.

When a start-up is hot, it’s insanely easy to raise more money. But when you’re not — it’s extremely, extremely hard.  Only a handful of investments really make VCs big money.  Often, only 1 or 2 per fund.  So when you can see it’s not going to be one of those 1 or 2, even a price change doesn’t help make the deal more attractive.

Charge for any true pilot.

If you don’t charge, it’s not a pilot.  It’s an extended demo.

Now, that’s better than nothing. It’s something. But a free demo is fraught with issues. Most importantly, the feedback you get is often radically different from free “customers” than paying customers.

And let me be clear: I almost never see “Free Pilots” convert to paid.

They are usually a sign of desperation in sales.  Of sales not believing the value is there, that they can close a paying customer.  So they are hoping free will do it.  But it doesn’t.  There’s never enough engagement.  And in the enterprise, there’s always at least some budget for a paid pilot that matters.

Don’t confuse “Free Pilot” with Freemium.  A true freemium product, that can be self-adopted very rapidly, of course, can work.  But a Free Pilot, that takes real work to deploy, and some business process change?  They never convert to Paid, in my experience.  Or at least, almost never.

You have to start somewhere. Getting someone to use your product is better than no one using your product.

This edition of the SaaStr Daily is sponsored in part by MERGE

Merge’s Unified API allows you to access 150+ integrations across HR, payroll, ATS, accounting, CRM, and ticketing systems.

Securing funding has become more challenging for SaaS companies over the past few years as VC firms have grown more cautious about their investments. As a result, startups trying to determine how to approach fundraising efforts may want to consider strategic partnerships with existing company funds.

In this edition of SaaStr Workshop Wednesdays, Brandon Greer, Head of HubSpot Ventures, shares tips on fundraising and working with strategic VCs.

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