Inc - Four Simple Tips to Increase Pricing

One simple thought: earn it.

First, plan to increase pricing in general once a year, each year for new customers.  But earn it.  And generally for new customers, not existing customers. How much? Well, that will depend on how much additional value you’ve added over last year, how strong you stack up vs the competition, and how strong your brand is. But you should be a bigger, better, and more highly regarded company and product this year than last. So increase pricing annually to reflect that. How much? Well, that depends on how much you’ve earned.  Try to increase pricing annually for new customers.  But make sure you’ve earned it.

Second, don’t rip your customers off. Don’t increase pricing beyond what you’ve earned. Yes, this will be hard to measure.  But this is your job as CEO, to balance the different incentives and forces here.

Third, focus just as much on deal size than pricing. You can often make more money closing 2x the seats without futzing with pricing. Driving up deal size is often much more important than per-user pricing, per se.

Fourth, start at the high end. You don’t have to wait a year here. If your largest customer is $25k a year and they are happy … ask for $35k the next time you get a similar lead. Then, if they are happy to pay $35k … ask for $50k for your next Biggest Deal. This will build confidence.

Spreadsheets are great, but pricing is a complicated topic. A spreadsheet isn’t the real world, and doesn’t incorporate brand, competition, sales friction, etc. The four tips above can help there.

Is Generative AI going to be transformative or incremental for your startup? Are you re-vampimg your entire product roadmap, or sprinkling AI in along the way? A panel of AI-driven organizations took the stage at SaaStr Annual to talk about the trends and opportunities of GenAI and how it’s shaped their companies.

In this session you’ll hear from:

• Ravi Rajamani, Managing Director and Global Head of GenAI at Google
• Lilian Breidenbach, Co-founder and Managing Director of Legal OS
• Harpinder Singh, Partner at Innovation Endeavors
• Sarah Al-Hussaini, Co-founder and COO at Ultimate

As a startup, one of the more complicated things you can do is integrate AI into your product roadmap because of the speed of evolution of the tech itself. 

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• CEO PagerDuty
• CEO Contextual AI
• Head of AI at Shopify
• Head AI IBM
• Head AI Cisco

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So at $3.1 Billion in ARR, Snowflake finally feels a bit … human. Like a truly epic, incredible, generational tech leader. But perhaps, no longer like it’s from another planet altogether.

After years of metrics (170%+ NRR) and growth (110% at ~$1B ARR) like we’ve never seen before, it hasn’t been immune from macro slowdowns, and now is growing 32% at $3.1 Billion in ARR. And generational transition comes for all of us, eventually. Legendary CEO Frank Slootman has stepped down, and up, to Chairman.

All that is still incredible. Growing 32% at $3.1 Billion in ARR still means adding +$1B in new ARR a year! But growth and NRR are starting to normalize at scale. For the first time ever.

So we recently did a SaaStr survey on if folks would pick the same VCs if they have to do it all over again.

The learnings aren’t surprising, but they are interesting:  only 23% would pick the same VCs for sure.

Now there is a lot of nuance beyond this poll.  The relationship between investor and founders should be supportive.  Interests truly are aligned, at least 90% of the time.  But there are frictions.

Many are natural, e.g.:

• Some founders are way too wasteful and spend too much, too quickly.  Sadly, this became commonplace in 2020-2022.  The “go down with the ship and spend it all” mentality can lead to a lot of friction.
• Some founders expect their VCs to bail them out.  It doesn’t work that way.  A second (and third) check has to be earned.
• Some VCs just are way too patronizing.  Many.  This rubs almost everyone the wrong way.
• Some VCs are manipulate around outcomes.  Pushing founders to sell, or not sell, or raise more, or not raise more.
• Many VCs now are grinfrackers.  They tell you everything is great, or fine.  No VC wants to be labeled un-founder friendly now.  This leads to tough conversations happening far later than they need to.
• Etc. Etc.

Former member of the M&A team at Google, Brett Goldstein, now Founder at Micro and Co-Founder & CEO of Launch House Ventures, shares the nine things founders should know about getting acquired. It’s a common dream for founders to hope their startup be acquired one day, but what is a company, like Google, really looking for in their acquisitions? And what should all founders know about the process if the time comes? 

First, there are three types of acquisition deals: 

• Talent — To get the expertise on your team and more firepower. 
• Asset — To gain certain assets like code, patents, data sets, etc, while leaving the team and often the company behind. 
• Talent + Asset — Taking everything to expand the business or some core piece of the product. Or integrate the features into an existing product, which is an acquisition of the product. 

Now, let’s look at what founders should know before, during, and after the M&A process. 

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

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I’m not aware of any huge successes in SaaS that were active side projects while the founders worked at different companies.

But there are a bunch that were side projects at the same company:

• Mailchimp was a side project while the founders ran a web-design agency. There are many start-ups born out of agenies and consultancies. It can be a tough transition, but it’s pretty common.
• Hootsuite was also a web-agency spin-off.
• Slack was an internal tool built when the company was a gaming company. It took off.

Mailchimp is perhaps the most interesting one to me because they took their time until 2007 to go all-in. But once they did, growth accelerated. Dramatically.

When this model works, it takes longer. And there’s often some tough choices about leaving an agency or other prior business or project behind. But you have to, to go big.

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