S3E7 – How to price your B2B SaaS to accelerate growth? with Wolter Rebergen
How to price your B2B SaaS to accelerate your growth? What is your pricing approach for your B2B SaaS, and what metrics guide your pricing decisions? Additionally, how do you package your product? In this episode of the ‘Grow Your B2B SaaS’ podcast, host Joran Hofman engages in a deep dive with Wolter Rebergen, VP of Revenue Operations at Younium, to understand B2B SaaS pricing better. The discussion highlights the significance of effective pricing in fostering B2B SaaS growth, the evolving trends, and its pivotal role in startup success. Drawing from his wealth of experience with various B2B SaaS companies, Wolter shares valuable insights and expertise.
The Role of Pricing in B2B SaaS and its Importance for your GTM & PMF
Wolter explains the critical role of pricing in B2B SaaS, emphasizing the need for pricing to resonate with customers, reflect value, and be transparent. He discusses the impact of pricing on product-led growth and the need for ongoing evaluation and iteration of pricing strategies.
Wolter emphasizes the importance of pricing strategy in the go-to-market process and the evaluation of product-market fit. He discusses the significance of aligning pricing with customer needs and the potential impact on churn. He stresses the need for continuous evaluation, customer feedback, and segmentation to optimize pricing and packaging.
The Common Mistakes & Best practices for B2B SaaS pricing
Wolter highlights common mistakes made by B2B SaaS companies, including the lack of pricing iterations, failure to consider the entire customer lifecycle in pricing, and the importance of segmentation in pricing strategy. The better you are able to segment your clients, the better you can tailor your pricing packages against them.
Wolter outlines a five-step process for pricing and packaging, including segmentation, packaging, pricing metrics, sales strategies, and implementation. He emphasizes the importance of aligning pricing with customer segments and strategic evaluation.
How to determine your SaaS pricing?
Wolter discusses various pricing models, including the “good, better, best” model and functional packaging. He also explores the trend of usage-based pricing and its potential impact on revenue forecasting and customer psychology.
Wolter advises companies to segment their customers, analyze their usage patterns and features, and gather feedback on pricing to determine the best strategy for their SaaS pricing.
General Advice for SaaS Founders
Wolter encourages SaaS founders to measure success and track key performance indicators (KPIs) from the early stages, document customer testimonials, and establish referral programs. He emphasizes the importance of becoming a data-driven, metric-driven organization for transparency and decision-making. He also shares insights on the steps to determine the best pricing for a specific SaaS company, emphasizing the importance of customer segmentation, packaging and iterating pricing strategies at the early stage, and transitioning to strategic pricing decisions and transparency as the company scales.
Key Timecode
- (0:37) Show and guest intro
- (1:30) Why you should listen to Wolter Rebergen
- (2:18) The Crucial Role of Pricing in B2B SaaS: A Key Factor for Startup Success
- (3:29) How important is pricing for your go to market strategy?
- (5:18) The Significance of Pricing After Achieving Product Market Fit
- (6:35) The common Pricing Mistakes in B2B SaaS Companies
- (11:04) The best pricing practices to implement.
- (9:18) The challenges companies run into when setting their pricing
- (13:19) Wolter’s different model packages
- (19:04) Challenges companies run into when setting their pricing
- (21:42) The future of SaaS pricing
- (25:29) How to grow towards 10K MRR
- (26:40) How to grow towards 10 million ARR
- (28:22) Wolter’s crucial advice to B2B SaaS founders
Transcription
[00:00:00.000] – Intro
Welcome to the Grow Your BTB SaaS podcast. In this podcast, we cover all topics on how to grow your BTB SaaS, no matter in which stage you’re in. I’m Joran Hofman, the host of this show and the founder of Reditus, which is a B2B SaaS that helps other BTB SaaS companies to set up, manage, and grow an affiliate program. Being a founder myself means I’m going to the exact same journey as you are, experiencing the exact same issues, and probably have the exact same questions. And this is why I started the podcast in the first place. Get advice from industry experts on to grow my B2B SaaS. So if you like this content, make sure to subscribe, follow, give it a thumbs up. Let’s just dive in.
[00:00:37.280] – Joran
In today’s episode, we’re going to talk about SaaS pricing. It is something which is always evolving and which will have a huge impact on the success of your startup. My guest is Wolter Rebergen. Wolter is the VP of Revenue Operations at Younium, and Younium is a subscription management and billing tool for B2B SaaS companies. They work with over 150 B2B SaaS customers, which have a more complex billing setup. This gives them great insights as what is working and what isn’t within B2B SaaS pricing. Before Younium, Wolter has worked in product and project management in his roles at Technetix and Exact. In these roles, he worked together with pricing specialists like Simon Kutcher and partners. He was also involved in the M&A processes when acquiring new companies and set up pricing as the part of the integration. Welcome to the show, Wolter.
[00:01:23.680] – Wolter
Thank you so much. Nice introduction. Great to be here. Nice.
[00:01:27.800] – Joran
You’re Dutch, so I can just ask this right Why should people listen to you today?
[00:01:32.660] – Wolter
I think the intro gave some of it away. I’m working with pricing for many years. It’s one of the things I’m most passionate about. I’m also a strong believer that pricing can make or break companies if you do it right. Also, I think I speak to SaaS companies that work with pricing on a daily basis, and I think we use their pricing model actually to qualify or disqualify leads. We have to listen to or get to listen to at least six pricing models a day, I would say, which I think is super interesting. We a lot. We know what works, we know what doesn’t work. And like you said in my introduction, I think from past history, I did it myself. I hope that’s some reason to stay online on this podcast today.
[00:02:10.000] – Joran
A hundred %. It will have a big impact. And definitely what works and what doesn’t is going to be really valuable. Let’s just zoom out for one second. In your opinion, what is the role the pricing plays in a B2B SaaS? And why do you think it’s a critical aspect for the success of a startup?
[00:02:26.120] – Wolter
I think regardless of how you have it, it always needs to be You can have the best product in the world, but the price needs to be right as well. I think that is super important, especially with trends like product-led growth. Price needs to be more transparent. Price needs to be something… You don’t get to sell so much on the price. You can’t have AEs make up for your bad pricing. Account executives make up for bad pricing. You need to be on the point and your customers need to understand it. What you often see is companies make up their pricing based on their reality. This is my company, this is my product, my industry. They get They’re so stuck in their ways that they forget, but maybe my customer is doing something else entirely. They don’t really see the same things and thoughts. That’s why it can really make or break. You don’t resonate. Test what you do with your customers. You’re not off to a good start at the beginning, but also later on need to keep on evaluating pricing. Keep on reiterating.
[00:03:17.300] – Joran
Yeah, I love it. I think you mentioned transparency and understanding. I think maybe that’s the most important part. People have to understand how they’re actually being charged now, but also going forward. When we break it up into two pieces, how important What is pricing for your go-to-market strategy?
[00:03:33.070] – Wolter
For your go-to-market strategy, you have your recurring go-to-market strategy, if I can say it like that. You launch new things, you test new things, you reiterate new pricing, and then bring it to market again. I think it’s super good that you have a very good first one, but you would probably be the first SaaS company ever that hits their pricing just right on their first go. I think it’s more important that you have a good pricing strategy in your review, in your evaluation of your go-to-market. You have done some testing, you have You’ve done some thinking, now you’re launching it to some customers, and then it’s time to evaluate. I think in the first iteration, that’s where it becomes important. Do we speak to our customers? What is the input we get from sales? What is the input we get during renewals? Yeah, because that’s usually when you also notice, because maybe you had a good salesperson at the beginning, but then it’s time for renewal and then suddenly the customer says, Yeah, we like the product, but we don’t really see the full value, so we need to talk price again. That’s things you want to avoid.
[00:04:24.950] – Wolter
You can only avoid that by proactive evaluation of how was the message received. I I think it’s super important to be included in the go-to-market, but especially also the evaluation, which is part of many go-to-market process, sometimes secretly forgotten, right?
[00:04:38.230] – Joran
Yeah, I can relate to that. We definitely launched a certain pricing. We tested it, and in the end, we did increase it 100% pretty quickly because we were too cheap. But you have to go to market, I guess, to test it. I guess to zoom out from what you said. Check the input from sales. So top up from the beginning all the way to renewal. So does it affect churn? So did you sell too high and then were they not able to renew here?
[00:05:01.530] – Wolter
Exactly. It’s okay if it’s not perfect. Like you said as well, you can be too cheap, you can be way too expensive, and that’s okay. You’re not going to get it right in one go. Maybe then you’re super lucky. It will be nothing else but lucky. It will certainly not be science by getting it right in one time.
[00:05:16.200] – Joran
Exactly. I think that’s going to be really hard. Let’s assume, I guess, if we split it up in the two parts. So the second part, let’s say, establish product market fit, where at least you have clients who are willing to pay the price you set. And then just to think how important What solution is pricing when you established PMF?
[00:05:33.030] – Wolter
I think it’s always going to be important. Packaging might even be more important in PMF. Like really, do my customers use the right things? So you have a product that fits your market, so you have established that. But Then do the customers use all the features they need for their business? And is that included in their package of the solution that they have? We see a lot of those good, better, best pricing models. A startup company uses the startup bundle. It’s the enterprise versus the enterprise. I think it’s roughly more translated to the packaging rather than the pricing. If it’s becoming more important because they need to feel that they’re using the things that they’re paying for. Because otherwise then it becomes a problem about price. Like, yeah, but we have feature X and Y and Z. We never even touched them. Why do we pay for that? I think it’s for the product market checks, more important that you have the packaging right and the price tag, of course, that complements that. But packaging is, I think, more of a focus.
[00:06:22.790] – Joran
Yeah, and it’s an interesting point that you don’t want to have enterprise clients in the smallest package, basically.
[00:06:27.620] – Wolter
No, especially not the other way around. Exactly.
[00:06:29.860] – Joran
And this might already be a common mistake. But if we, I guess, dive into the next question, what is the most common mistake B2B SaaS companies make while setting up their pricing structure? Two things.
[00:06:42.140] – Wolter
One is not enough iterations. We don’t want to confuse our customers. Let’s not change their pricing again. I think at least every year you need to update your pricing. You have probably a development department. Probably they release something and probably what they did needs to be included, maybe a separate module that is monetized or at least in certain bundles. So at least every year. Also looking at markets, what have your competitors been doing? What has inflation been doing? Maybe there should be an extra low cost model. What is trends in pricing? Like usage-based pricing, that is a big trend. What can we do there? At least reiterate is the thing I see companies do wrong a lot. They just have, Oh, we have this price model. It worked for five years. We’ll work another year. Even if that’s true, is it still the maximum you get out of the business? What is the potential you do not reach when you do that? I think maybe there’s three then. The second one is then also, do we include the full life cycle of our customer in our pricing? Pricing is often so focused on the initial deal.
[00:07:38.260] – Wolter
How do we close this customer? We often forget that this is for in a recurring business, the customer hopefully sticks with us a bit longer. What is the upsell potential? What is the long activity of this? What is the one-off revenue we will still get for this for the cash, especially early on? If you can get some extra man hours, that might be good for some of the money on your own cash account. Also, don’t focus all your energy on getting a very It’s good first deal. It’s sometimes better to close after revenue on signature date, but at 120 after one year because that is going to stay for more than one year. That’s another one. Then third, so three, I said at the beginning, two. The third is segmentation. When you check what is the best pricing and packaging, people often forget to segment their customer. You have a bunch of companies that you can sell to, and then usually you have an ideal customer profile maybe as well. Then even when that’s narrow, you have a small focus group of customers, and it can be only 1,000 companies in the Netherlands and 5,000 maximum in US or something.
[00:08:33.460] – Wolter
Even if it’s relatively small, there’s still going to be things that some of them have in common and some of them have completely different. And by segmenting your customer, Okay, what do these people have in common? How do they work the same with my tool? How do they operate the same industries and market and how do we align to the same story? That needs to be part of one package. So really trying to find ways to categorize your customers. Like, how many categories do I have? How many segments am I selling to? And I’m not necessarily talking about ad tech and fintech, something like that, or government, non-profit, blah, blah, blah. Really, how are they the same and how will my pricing story resonate? If I then do that, how many groups do I have? And then start asking the question, what pricing fits that? So start with segmentation. They often jump way too fast. But let’s grab a notebook, write down, start a professional enterprise, €50, €100, €200 done, right?
[00:09:22.350] – Joran
Everybody thinks about pricing indeed. But what you’re saying is think about packaging. So I think with all the three things you said, not enough iterations, you keep building features, you keep adding things on the package, so you need to change the pricing accordingly. Like the life cycle, as you mentioned, pricing be related to the life cycle of the client. So almost like a land and expand, get them in in a small package, know that you can expand them and then segment them based on the features which are going to be in a certain package. I think that’s really an interesting way to look at it.
[00:09:51.480] – Wolter
Yeah, and I think especially on the second one as well, sales has a fraction of time to try to persuade the customer for the value. They have maybe five meetings. I don’t know, when some customers may have 20, some have 2. I don’t know, but let’s say 5. They have five meeting to explain the value that your developers have spent thousands and thousands of hours building something cool. It is more likely that after first year, they have experienced those full 5,000 hours instead of the five. If you focus a bit of your effort on, okay, what is the upsell potential and what is the add-ons? First of all, it shortens your sales cycles because it’s an easier step into your tool. And second, you get the value discussions when the customer has seen the value. It just helps. It’s not bad for the cash, but that’s Thank God we are in a funding business. I know you’re bootstrapped, but many others just get money to solve that.
[00:10:35.970] – Joran
Yeah, even as a bootstrap, you can do this. We add a bit of land and expand where we are now selling something cheaply, but we’re building a feature which is going to be like four X the price of our base models, but we had to use the current package. We are creating packages. I’m now aware of that where they have certain needs and we’re going to build something around that, even though I thought we’re just going to price it, but we’re actually creating a package which fits their needs. I think that’s already one Probably best practice, create packages and have them align the pricing you add to it. Any other best practices you can share regarding pricing.
[00:11:07.700] – Wolter
We communicate a five-step process, pretty much, which one is the segmentation, which we talked about. How can we categorize our customers? How are they different in terms of what they need? Two is the package part. What is then the optimal package, product, feature, structure, bundles to meet these segments that we’re selling to? Three is then, okay, then if we have these beautiful packages, how do we price them? What What’s the best metrics? Reflector value because you have price metrics reflect their value? Because you have priced paper usage, a number of API calls included or all these metrics that you price on. Then comes also like the how do we sell it? Is it self-explanatory? If not, what is our discount Discount strategy. Okay, how can we get sales? We have this ideal price, but of course, there’s people, especially we’re in the Netherlands, everybody wants to negotiate. What is our discount strategy? Can we do something in advance? It’s less relevant for PLG, right? If you have fixed I don’t need to call the CEO of Netflix that I want to have a discount on my subscription. I don’t think he or she, whoever it is, will answer my phone call.
[00:12:08.140] – Wolter
That’s a fourth, how do we sell this? And fifth is actually implement, so the go-to-market. Maybe you can announce it to your new customers because they haven’t seen your pricing before. But existing customers, maybe there’s changes. Maybe some customers are in packages that will now pay less. How do we handle that? Are we going to make them happy or are we going to try to hide the fact that there’s a lower price bundle for the exact same Which is so how do we implement? And again, there you segment your customer base, which other companies at risk, which one will churn. And it could be you’re always going to end up with a churn risk customer group. But then it’s okay. Our upsell potential is €5 million. Our churn risk is €1 million. Should we make the decision? Yeah, sure. Educated guessing. So the implementation phase is the fifth, but that’s probably the largest.
[00:12:51.320] – Joran
In season one, we also interviewed Patrick Campbell as a lot of data as well with Profitwell on the pricing. And he also said, Keep increasing it, keep It’s implementing it in certain ways. But I guess to summarize, segment your clients, the packages, the price metrics, which you said reflect the value. I think that’s really important. You mentioned it just in between lines, but price reflects the value. How do we sell it? And then implementation. I think that’s a really good step process. Are there any, I guess, packages? Because you guys work more towards the more complex billing, right? Are there any things you see which are working really well, like certain models which work really well to get these things really to the best, I guess you can.
[00:13:34.800] – Wolter
Yeah, I think typically in SaaS, you see a lot of models. You have the all you can eat, one fixed fee for all of our solutions. So this is our solution and it’s a hundred euros a month. That is a bundle you don’t see a lot. I think what we see most in SaaS is the good, better, best. I will not have a favorite because for some others it might work differently, but we have the good, better, best, which I think most. So you have the starter bundle, which has one main feature, and then you have the better bundle, which has two main features, and the ultra bundle, the enterprise edition, limited platinum cool stuff edition with four features, and each of them has different price ranges. Then you have functional package. If you’re selling to, like I said, if your segmentation turns out like I’m selling to governments, I’m selling to education and I’m selling to charity. Then maybe also it makes sense to package your product that way. I have redditers for governments, I have redditers for… That would be then the titles of your packaging. You see a lot of things. What What works best is I think the packaging is super crucial, but the price metrics, do we do a user-based?
[00:14:36.010] – Wolter
We have number of active users, number of users in general, or do we have more of a usage-based? Depending on how many podcast people listen at redditers, they need to pay one euro per podcast or something. Then they translate value like, Yeah, one time listening to the podcast I’ve grown my company with 20% with all the wisdom from your run. They can relate that to value or it’s even success-based. You only pay our solution when your revenue It goes up. That’s sometimes now for this customer success tools. It is a link to the NPS core. If your NPS score increases by X %, your price increases. But then I don’t care if my price increases, if my customers are more happy because they’re going to pay me more. It’s more in terms of the pricing metrics where you see the real success. And I think the success stories are there. How are they? What is the price metrics?
[00:15:22.420] – Joran
Yeah. And maybe then a follow-up question on this. So let’s say you are going to work with a company or you have the ability to go in and basically build out the process or build out the strategy to determine the best pricing for that specific SaaS. What steps would you take to determine that?
[00:15:41.030] – Wolter
Do you have customers already in this case?
[00:15:43.200] – Joran
Yes, those are most of the listeners, probably. You will have customers, let’s say, to make it even more practical, 20K MR, for example.
[00:15:52.160] – Wolter
I think we often forget to just ask. We quoted you something two years ago when you became our customer. It feels so scary Sorry, because we’re afraid our customer might… In the Dutch, we say, Awaken the sleeping dogs. We don’t want a startup conversation we might not be ready to have. But I think in general, it’s just okay to ask your customers, Hey, do you feel the pricing reflects our value? Hey, do you feel happy with the product that we’re delivering for the value? I think just gage also, what would you change in our pricing? Well, ask the questions. If you have some customer success, it’s not doable if your customers are paying €5 a month. They get that you cannot then really call them. Then you do it by a max poll surveys with survey tools or something like that. But the best thing is ask, I would say, because then you get direct feedback, you get out of your bubble. Asking can be both to your customers, but it can also be to peers in SaaS industry. What did you do? What is your competitor doing? But the best thing is asking and get out of your whiteboard session.
[00:16:50.640] – Wolter
That’s where you get stuck and that’s where you make mistakes.
[00:16:52.870] – Joran
I think to go back to what you previously had, segment the companies, you probably have product analytic tools, so you know the features they’re using, so you probably can create those packages and then you can ask what they’re willing to pay. Fun story. I just mentioned we’re building this new package, right? We did 35 client calls in a week to get feedback on the thing we’re going to build. And we also asked them at the end, how much would you be willing to pay for it? I love that I asked the question, but the answers were so broad, as in one was, for example, willing… He actually said that he was willing to pay €3 per month and one was willing to pay €500 a month. So I guess this is why it’s important to segment the companies that you actually have your ICP in mind, even though there were our ICP. But then I learned maybe they’re not because you can’t build a feature for B2B SaaS where you’re only going to charge three euros.
[00:17:43.400] – Wolter
That’s not really it. No. It becomes even more complex if you’re like… When you’re selling to people, you sell to stakeholders, right? You usually have some decision maker. It doesn’t matter if that’s PLG-driven or something else-driven, like sales-driven or customer-led growth. It doesn’t matter where it comes from. But the stakeholder internal In the company, it’s usually not one person that needs to make a decision. So there’s multiple people. And you usually see that the champion buying your solution is sooner to get the value than the one that might need to sign the paperwork. I think it’s also good to take those two into consideration when you’re packaging price. We’re going to have the champion and he might think it’s okay, it’s 80% of what he expected, but we’re going to have this CFO person or whatever person, CEO, that needs to sign. It might be 120% of what he expected to pay for it. How do we take that into account? It’s a good to ask yourself as well.
[00:18:32.720] – Joran
This podcast episode is sponsored by Redditus. Redditus helps B2B SaaS companies to set up, manage, and grow an affiliate program. In short, it means you’re asking other people, affiliates, to promote your SaaS. You would only pay the affiliates a kickback fee when they deliver you paid clients, making it a very cost-effective and scalable way to grow your MRR. See more at getredditus. Com. This might be one of the common challenges SaaS companies run into I think, especially when you’re selling to a bit bigger companies, having multiple stakeholders. Are there any other challenges companies run into with their pricing?
[00:19:08.450] – Wolter
It usually comes down to it not being transparent, yes or no. I see a lot of SaaS companies struggle when they have a lot of flat fees. My startup bundle is €500 a month and my professional bundle is €1,500 a month. Yeah, but what is the difference then? Yeah, we have this and this included. Yeah, but I don’t need this. Okay, but then we solve it with discounts. Then we have people running around. If you ever bought a kitchen, You have this person that then pretends to go to his manager to get approval for the discount that you’re requesting. Then they just walk a block, grab a coffee, and then drink, say, Cheers to you all on buying a new kitchen. Then say, Yes, I got your approval. Try to avoid that thing and make it transparent and give sales mandate up front. Okay, these are the things you can discount on. If they don’t have, for instance, we sell our solution based on the number of revenue. The based on the number of revenue you do, we consider that value-based. The higher your company growth, our revenue, of course, also It shows up. That is, I think, super nice, and I think it’s understood by most companies.
[00:20:04.300] – Wolter
But then we also encounter companies that say, Yes, but, Walter, we have super high revenue, but that is because we have 15 customers that each have a contract of €1 million. So you’re We’re managing 15 subscription for us, and we’re paying the amount that a normal company would automate maybe thousands of invoices for. That’s when it becomes tricky. But then I would say, don’t build the process for the exceptions. Build the process for the bulk and have a thing in place where sales knows who to talk to when there is that exception. You shouldn’t have to cater for everything. So it’s okay if not everything is included, because that is also something you can do. You get so stuck on, Oh, but what if we encounter this? Yeah, how often does it happen? Three times a year? Ah, screw it. Move on. That’s another business.
[00:20:47.660] – Joran
Exactly.
[00:20:48.180] – Wolter
And getting stuck in the details. Because you’re working with people that are typically in product management roles can be detail-oriented, right? You’re technical, you’re thinking about the market, thinking about the industry, thinking about the edge cases you’ve seen over the years, you shouldn’t build pricing for your edge cases. You build them for the ball and deal with the exceptions.
[00:21:06.960] – Joran
Exactly. And ideally, you keep them as structured as possible in your billing system so you don’t end up with 100 subscriptions at the end of the year where you made exception over exception. So it’s hard to then segment them later on as well. Yeah, exactly.
[00:21:21.200] – Wolter
Yes, segment them later on and especially push new iterations in because it means different for everyone. If you have all different contracts, different terms, different things, Our product could technically handle it, but I would still not recommend it because indeed, if you then have a new iteration, you need to go through those 100 customers or different subscription. How does this impact them versus them? Long story. Yeah.
[00:21:41.610] – Joran
Nice. Two-sided question. How do you see SaaS pricing going in 2024 and maybe even a bit beyond that? How do you see the future of SaaS pricing?
[00:21:49.720] – Wolter
I think SaaS is a modern industry. We meet each other at events, we meet other people at events, and there’s usually some energy in the SaaS industry. There’s people that are driven, they’re eager. What these people have in common typically is they jump aboard trends. There’s trends, and then let’s do that, let’s test that, let’s test it for ourselves. Especially now, there’s a very hard trend towards usage-based pricing. Usage-based pricing is Fantastic in a state where we’re in, in my opinion, getting much better in the economy situation, but there’s still a lot of uncertainties in the market. Funding is still tough, there’s inflation, there’s lots of things. What usage-based pricing then does, it drops your base entry-level platform fee to a bottom and then links the additional to value, which I think is a super good thing, but I don’t think it’s super sustainable because it also does a number on your revenue forecasting. It does a number on your cash flow. Normally, if you have issues with cash flow, you go for funding, make it up. Now, that’s more tricky as It does. Then if you go for funding, you also have tough revenue figures because half of it is later revenue because it’s usage-based.
[00:22:51.220] – Wolter
I think this is one of those things where we see a trend, but we also see a trend back at some point. That’s the longer term. I think 2024 will be about growing the usage-based pricing. There will a lot more companies reflect on that. But 2025 and ’06, I expected to already decrease drastically in people reverting back to predictability because they just jumped on the trend and didn’t really realize this is really relevant for us. This is really something our customers need. I always use the Netflix example in these discussions. Let’s say you have Netflix, right? There’s a pricing model now that is, I think, I don’t know, we are paying now that it’s 12 € a month. I have no idea. But with those €12, I have full access to all movies, shows, whatever Netflix has to offer is for me. Let’s say Netflix calls me and says, Hey, Walter, good news. We’re going to lower it to €3, and then you’re going to be charged for €1 per season, per movie, per something. You do. And then my sense of, okay, but then if I have a Saturday or a Sunday, lazy at home, and I just want to just switch it on, scroll my phone and leave the movies going, and every now and then I peak at the TV.
[00:23:53.010] – Wolter
I will not do that anymore. Will I still enjoy my Sunday? So with the usage trend, there’s a lot of psychology which people forget to include. Do our customers feel safe because some customers might, and that again comes down to segmenting, right? Some customers might like the fact that they have a very low base floor and really impact the detail of the amount they’re going to end up paying. If there’s a number of seats included, okay, let’s just have less seats using the software and we can control the cost and the expense we make. But some customers really feel like, Yeah, but I want predictability. Especially if you talk to larger companies, if you’re targeting enterprise companies, they have cash flow stability. They just want predictability. So they might feel more like, I don’t want to bother with… I don’t want to get an invoice for the overusage of €50 and have accounts payable people go and manage that invoice. That’s a waste of my time. So again, segment. Think of the psychology of the usage-based. If it’s really something for you because it’s not always the answer, even though it’s a big trend. It can be the answer.
[00:24:49.420] – Joran
How nice. You really put my brain to thinking here because the thing you said, users base might hold them back on getting value. I think with the Netflix, right? Like you watching a movie is getting the sell you out of the tool, but you might actually hold back on doing it because you’re being priced on it, which I think you will see a lot in SaaS as well. Should we actually do this because we’re going to pay more? Or should we maybe not invite these users to the CS tool because they’re not going to be active anyway? Or you’re going to find ways to avoid pricing, or at least that’s the Dutch way how we do it. Exactly. Yes. Nice. We’re going to close off with the final four questions. I think they’re almost becoming famous. Let’s just start with the first one and talk about SaaS pricing. What advice would you give somebody who’s just starting out and growing to 10K monthly recurring revenue?
[00:25:35.320] – Wolter
You’re probably struggling or working on your product market fit. So review your packaging a lot. So the packaging of your SaaS is even more important than pricing at the moment. It is okay if you lose a bit of extra euro, you have one unhappy customer that pays too much and then renegotiate to the proper value next year. I would spend your efforts on the packaging a lot. Make sure you have your ideal customer profile. That’s usually something that when you’re still growing, is still something that is… You had an idea when you start your product and then later on you can get distracted like, Oh, but this can also be used for this segment. Don’t get too distracted because it also means you cannot really test your pricing model if you have all these separate types of companies using your solution because then you can never really understand the value or you can never really gage what their value is. Keep your focus in your packaging and pricing. Don’t deviate too much at the beginning, what I would say, and test, test, and reiterate. Don’t feel that, Okay, I cannot change my pricing twice a year.
[00:26:28.060] – Wolter
That’s too much. I don’t think that’s so much. It’s fine.
[00:26:30.920] – Joran
I think that’s definitely a good way to also see the willingness to pay becoming higher and higher as soon as you involve the product more. Yeah, exactly. Nice. So let’s assume we just passed the 10K money of your current revenue. We are going to make a big jump towards 10 million ARR. What advice would you give a founder here?
[00:26:50.010] – Wolter
Partly the same. So still segmentation is important. Reviewing and reiterating your pricing is still going to be equally important. It doesn’t need to be three times a year, probably. Maybe once a year is enough. Now it becomes a bit more on maturity, I would say, of your pricing model. You cannot have really the cowboy mentality anymore. We’ll see it when we speak to a customer, if it’s still perfect, you need to have something structured. So now it becomes more strategic. How do we talk about our pricing in terms of conditions? How can we upsell mid-term if we feel like it? How do we deal with indexation? It’s boring, but it’s part of it and can grow your revenue. It becomes more of that, how is our discount policy? What is our mandate for C-levels? What is our mandate for mid-level, senior levels, et cetera, and AEs themselves? It becomes a bit more on building maturity around it and the strategic decisions. Should we have it on our website? Should we have all of it on our website? Or should we just have the base plans and then starting from €500 on our website? Those discussions is what you should focus on at that stage, because I hope you have at least your pricing in a place where it’s not going to require drastic changes every year.
[00:27:53.110] – Wolter
It just needs optimizations.
[00:27:54.920] – Joran
Yeah. And I think here as well, first thing you said, segmentation and iteration means keep Keep involving your pricing, keep involving your pricing, but also keep increasing it, I guess, as well. We become more strategic, so no cowboy mentality. So make sure you also have the way on upselling. The discount policy you mentioned become maybe more transparent. I like it and all very, I think actionable. When we zoom out, and this could be anything, so it doesn’t have to be specific towards SaaS pricing, would you have any general advice towards SaaS founders who are on their journey right now?
[00:28:26.720] – Wolter
I think learn from your business. You don’t have It’s really process automated in the beginning. You don’t have a subscription management solution maybe from day one. You maybe don’t have big 24 legal entity supporting finance system. I think that’s all good. But start measuring success of your business from day one. Start writing down customer testimonials as soon as you can. Start setting up referral programs as soon as you can. Be okay with not having processes for everything, but have some then authorisation things in place. Really get your results on paper, measure Almost everything. How long does it take on average from my first meeting to a deal close? How long does it take for this marketing campaign to result into a deal or to result into a meeting? Start measuring as much as you can to really see. I’m really a fan of measuring things. We have almost at Junium internally, we have 300 KPIs that we’re looking at with the management team, and that is all we’re looking at the management team. Okay, A, these numbers were off. What happened? Why did Denmark perform so much worse than Germany? What’s up with that? Really become a data-driven, metric-driven organization instead of gut feel.
[00:29:34.100] – Wolter
Because gut feel, even if you’re the smartest CEO, is never transferable to your employees. Because some people have a strong gut and they have an entrepreneurial spirit, and I believe in that exists, but it’s not transferable to your lower-level employees that need to do your job every day.
[00:29:48.370] – Joran
Nice. To add on that, it probably builds a lot of transparency as well. Because you are measuring, because you become data-driven, it is transferable, as you mentioned, but it also builds a huge transparency. How is the What are we actually doing and what do we want it to do?
[00:30:02.680] – Wolter
No, and indeed, like you say, transparency also goes down through all employees, which you saw last year, 2022, is the economic uncertainty impacted SaaS a lot. What I heard from a lot of peers is that within the organization, people were asking, Do you think it’s going to affect us? Do you think we get laid off? Do you think there’s going to be lay off at our company? I think if you have these metrics and you have them in a place where all employees can see them and you take them aboard the journey and you tell them which ones are important to you, what is the highlight goals for you? One, even if shit hits the fan, it’s never going to come. If it’s a shock and people will proactively jump onboard the train, Hey, there, whatever, you’re on, whatever is the CEO’s name of the company, we need to fix this. We see this increasing and we’re concerned, what can we do? That transparency will also just stop the water-cooler rumors like, Oh, we’re probably also going to get laid off. And negatively, it’s transparent indeed. So I like that you said that we’re transparent.
[00:30:53.410] – Wolter
I cannot talk enough about that. It’s very important.
[00:30:55.710] – Joran
Guys, yeah. And not every company like Union will have 300 KPIs they can track because that’s really difficult, especially if you’re early stage. But the way you got there is probably by doing it step by step. I think that’s maybe one thing to add here as well. We definitely do not track 300 KPIs. I wouldn’t have the time for it yet, but I definitely want to get there. So we’re just building it step by step.
[00:31:17.630] – Wolter
Yeah, makes sense.
[00:31:18.560] – Joran
Final question, what is one thing you wish you knew 10 years ago?
[00:31:23.110] – Wolter
That software is so fun. So you said in the intro, I worked at Technetix, which is telco and it’s a super cool company, great people to work with. But SaaS industry is amazing. Software industry is amazing. I wish I knew that sooner. I would have probably spent a bit more of my career in software than I already have. You meet the most amazing people, and I think it’s one of the most selfless industries as well. So when you go to these SaaS events, people just share knowledge. Here you go, for free, that’s where it is. There’s people like you who make their business out of people sharing knowledge. It’s fantastic. You don’t see that so much in other industries. Maybe speaking 10 years, I wish I knew this 10 years ago that SaaS software industry would be so cool. I would have worked there much sooner.
[00:32:02.430] – Joran
Nice. It’s probably also because of all the events because I see you at all the events, right? So we both go there. That has something to do with it as well. But I love, I guess, what you said, the selfless industry. I think that’s really true.
[00:32:14.950] – Wolter
I think like you said, I worked in telco and I had to travel to Taiwan and to US and I had to wear this cool fancy suit and I felt, Okay, why am I wearing this? I’m 20 something. Now you have you with ready to show you carry your blue shirt and your frames. I think it’s It’s okay. It’s a great industry because people like it. It’s okay to be yourself and have fun because work can be fun. I just love software. I love SaaS. I don’t know why. I do not like it.
[00:32:41.030] – Joran
Nice. Let’s see how long I can keep wearing the blue hoodie. Everybody Everybody recognize me with that.
[00:32:46.990] – Wolter
Yes, of course.
[00:32:48.270] – Joran
Yes. Nice. I guess the final question, if people don’t see you at an event, how can they get in contact with you? What is the best way to do?
[00:32:54.620] – Wolter
Linkedin is usually the easiest because if I have to spell my last name and email address, it’s always going to be tricky. Linkedin is the most easy. I check my inbox regularly, so it’s the easiest.
[00:33:05.090] – Joran
Cool. We’re going to link to Union. We’re going to link to Walter’s LinkedIn, Walter Reber, for the people, but we’re going to make it easy and just make a clickable link. Thanks for coming on to the show today, Walter.
[00:33:15.740] – Wolter
My pleasure. Thank you so much for having me.
[00:33:17.640] – Joran
Cheers. Thank you for watching this show of the Grow Your B2B SaaS podcast. You made it till the end, so I think we can assume you like this content. If you did, give us a thumbs up, subscribe to the channel. If you like this content, feel free to reach out if you want to sponsor the show. If you have a specific guest in mind, if you have a specific topic you want us to cover, reach out to me on LinkedIn. More than happy to take a look at it. If you want to know more about Reditus, feel free to reach out as well. But for now, have a great day and good luck growing your B2B SaaS.
We’ll show you a step-by-step process to find a profitable niche for your affiliate marketing business. Wether you are beginner or expert.
Referrals are 4x likelier to result in a purchase than any other marketing channel. Learn how to set up an Referral program for your SaaS.