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The Complete Guide to SaaS Pricing Strategy

Tom Tunguz

AWS, Twilio, Heroku, etc. Third, contracts mitigate churn rates because the customer is only making a renewal decision once per year, instead of 12x per year. Similarly, Salesforce began with a usage-based approach before shifting to annual seat contracts when churn rates became significant and revenue predictability faltered.

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Why It’s Year 3 When You Lose Your Customers

SaaStr

Recently I was catching up with a good friend who used to be CEO of an enterprise-y SaaS social networking company — and the usage and engagement numbers of his business were just awful. If not, the customer would churn – but not until month 24. Churn is a lagging indicator.

AWS 337
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5 Interesting Learnings from Digital Ocean at $700,000,000 in ARR

SaaStr

Many have used Digital Ocean at the cheaper, simpler version of AWS-Azure-Digital Ocean to get going fast and quickly. Digital Ocean is only growing 16% now at $700m ARR, and churn is up and NRR down. Churn Stable. Churn did grow from 12% to 15%, but NRR fell far faster, from 118% to 96% in just one year. Or at least.

Scale 291
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The Hardest Part About SaaS Companies, At Each Stage

SaaStr

Enough to pay some salaries and AWS bills, but it’s not that much. And human churn. Yes, you now know how to make customers successful and happy now. But it is so slow. You have 2,000 customers now. But at $10/mo, that’s still just $20,000 a month. From $1m-$10m in ARR, the hardest part is you don’t have enough people or patience.

SaaS 350
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A Look Back at Q1 '24 Public Cloud Software Earnings

Clouded Judgement

It’s worth pointing out that Azure is a bit above the long term trendline, while AWS is still below (but accelerating up). For businesses selling predominantly to SMB customers, these benchmarks are all slightly lower given the higher-churn nature of SMBs.

Cloud 318
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The State of Subscription Apps with RevenueCat’s CEO Jacob Eiting and Growth Advocate David Barnard

SaaStr

Churn is much higher on consumer subscriptions, but you have higher expansion revenue. If you’re in consumer, how can you go upmarket and get a small cohort of users paying more, churning less, and expanding revenue? B2B is finding more consumers and prosumers paying, and B2C is finding Enterprise and business use cases.

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5 Interesting Learnings from Xero. As It Crosses $650m in ARR.

SaaStr

Churn is 1.1% Most of the companies in this 5 Interesting Things Series have had net negative churn from SMBs (e.g., Xero’s SMB churn isn’t zero. Inclusive of upsells and churn, their ARPU is $29.25 remains an important but smallish market for Xero, at only $44m and 195k of their 1.8m subscribers.

SMB 270