Sunday 5 February 2023

3 revenue models for B2B SaaS Startups

3 revenue models for B2B SaaS Startups

I have built a multi-million dollar revenue business from scratch. Here are the top 3 ways to generate revenue for your B2B SaaS Startup:

1. Pay-per-outcome model: In this model, you charge on a per-outcome basis. For instance, if your Product helps the business generate more leads, you charge on a per-lead basis. For this, you need to have a sound knowledge of the domain because the cost of a lead in say banking, would be very different in the Edtech industry. So you should be aware of that for your industry. An example of such a pricing model is Google PPC (pay-per-click) ads.

2. Pay-per-usage model: In this model, you are basically the infrastructure provider to the customer and so, the risk of the outcome is on the customer. You only charge on a per-usage basis. A simple example is WhatsApp Business API where Meta charges on a per-conversation basis. Meta doesn't get into the specifics of how the conversation is helping your business. They will deliver the message and charge you for that. Other examples - Cabs, AWS, etc.

3. Pay-per-seat model: In this model, you charge the customer on a per-user basis. As the customer grows in size, you generate more revenue. An example of this pricing is Slack. Other examples include Google Workspace and a dozen other tools. This is quite a common pricing model simply because it helps you build a steady revenue stream from the customer, irrespective of usage or outcome.

There are a few other ways to increase revenue from your customers:

1. Upselling more users: If your customer is on a 100-user plan, can you convince them to add 20 more users/agents? If your product is doing well, most customers would automatically increase the number of users.

2. Upselling a higher plan: If your customer is on a basic plan, can you explain to them the value of your premium plan, so that they upgrade? For instance, your basic plan could have limits on the data storage or the type of analytics you provide. The premium plan will have higher limits.

3. Cross-selling your other products: Do you have other products that you can sell to the same customer? Go and showcase it to them. If they are the buyer, they are more likely to buy from you, than someone else, simply because they already know you and are comfortable working with your team. If they are not the right buyer for the other product, ask them for references.

What other ways do you think you can add more value to your customers so that you can get more revenue?

#startups #business #entrepreneurship

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