📕 Learn from Netflix's mistakes, SaaS pricing 101; VC alternatives
This week has been dominated by news headlines on Avengers: Endgame, Game of Thrones, and WeWork’s IPO filing, so we’re here to give you a fresh breath of SaaS air and only make ONE Game of Thrones reference. Believe us, it was hard to not completely go for it.
Heads up, we’re launching The SaaS Playbook on Product Hunt next week and could use your help! Expect an email with details on when it’s going to happen, and what you can do to make it awesome.
🙈 In a classic case of monkey see, monkey do, 80% of startups go with per user pricing just because it’s what everyone else is doing. Instead of guessing, try a pricing discovery survey to find your key value metric (what defines and separates your pricing tiers). Building qualified buyer personas can also help show what features matter most to different customer subsets.
☀️ On the topic of poor pricing tendencies, we’ll add pricing too cheaply to the top of the list. There’s a misconception that selling on the high end will scare prospective customers to cheaper alternatives, when in reality it can make them take you more seriously. Just don’t fly too close to the sun Pricerus - use the Price Sensitivity Meter to find an acceptable range to sell at.
📺 Another way to tell your product is underpriced is an increase followed by little to no churn. Just ask Netflix, who upped prices roughly 15% and came out as unscathed as the Night King post a Drogon fire blast. They clearly have more room to optimize, and might find their optimum price value if they charged by the different variables consumers derive value from.
👁️ Amid Silicon Valley’s VC frenzy, there’s a growing contention that raising venture dollars isn’t always the best move. Founders can struggle to quickly spend the capital in ways which create sustainable growth while under the watchful eye of new investors. And if growth isn’t there, you’re faced with the challenge of raising another round with a dwindling bank account.
🌎 As a result, more alternative capital providers have entered the market, with debt as one of the more prominent forms. Folks like Lighter Capital, SaaS Capital, and our Venture Finance Fund offer a multiple of a company’s MRR without the stringent collateral required by banks. While the landscape is shifting, 2018 was still a record year for the global VC market.
Making quick, calculated decisions and being able to live with them is a priceless skill, which is why we love Decisive’s process for improving decision making. The book is worth a full read, but our favorite 3 hacks you can start using today are:
The 10-10-10 Rule: estimate the consequences of a decision 10 minutes, 10 months, and 10 years from now to get some distance on the decision.
Try Ooching: instead of jumping headfirst into a decision, conduct a number of small experiments to test your hypothesis first.
Remember your Obstacles: narrowing your frame, confirmation bias, short term emotion, and overconfidence have a history of thwarting our decision making process.