• The Hack

    TranSaaSi…Shit! How Do You Spell That Again?

  • AARRR stage

    Revenue

  • Growth Problem

    How to Enhance the SaaS Pricing Model

Haxplanation:

The SaaS subscription. That steady-paced revenue workhorse of the startup pricing world. When it began coming into vogue at the start of the third millennium, most tech companies were still peddling perpetual licenses at a few hundred or thousand dollars a pop. Where is your perpetual licensing now, Microsoft Office?!

Well, it still haunts certain dark corners of the B2B space. But, for the most part, startups view one-off licenses in the same way they do buying a Windows laptop over a Macbook. Namely: it’s something your dad did back in the 90s for the purpose of being able to work from home *cough* play non-stop Doom *cough* over the weekends. And those days are long gone… Or in the words of some unnamed startup hipster: “if it ain’t Mac, it’s whack!”

In the same way, the thinking around SaaS subscriptions has also evolved over the years. An example of this is the rise of subscription ecommerce startups. Shaving-as-a-ServiceShoes-as-a-ServiceKids-Clothing-as-a-ServiceCup-a-Joe-as-ServiceVino-as-a-ServiceBro-as-a-Service? Holy-moly-flying-chihuahua, where does the madness end?!

But more importantly, what’s next? Where is the new frontier of SaaS pricing? Apparently, just like in the auto industry, the immediate future may be in hybrids. Now let’s take this slick, new TranSaaSional pricing model for a spin, shall we?

 

Just Hack It:

  • This ungodly-sounding linguistic creation is a portmanteau of transactional and SaaS. TranSaaSional. Get it?! Uh… yeah… Let’s just move on.
  • The gist of this pricing approaching is that it’s about supplementing your fixed subscription revenue with a volume-based variable pricing scheme.
  • What does TranSaaS… What does TranSaaSas… Ugh, forget it. What advantages does this pricing model have over a straight-up SaaS subscription then?
  • Oh, not much. Just the ability to blow your annual revenue forecast out of the water. Not to mention the ability to finally throw away your cardboard sign that reads “will provide XX features for a few pesos per month.”
  • Adopting TranSaaSional pricing allows you to remove the revenue ceiling as your sales are now directly tied to that of your customer. Pretty nifty revenue hacking, huh?
  • There can be slightly different ways of implementing this depending on your overall business model. Publishing your pricing may or may not be the best solution for your particular startup.
  • The trick is to demonstrate just how much value your product delivers in exchange for the added transaction fees the customer will have to pay. Find a way to tie your scalable pricing to measurable results and you have a surefire formula for a revenue fiesta.
  • Now, if someone could only give this tongue-twister a better name…

 

Source or Inspiration:

http://johngreathouse.com/saas-subcriptions-are-great-transaasional-pricing-is-better/

http://labs.openviewpartners.com/transaasion-new-take-on-saas-pricing-model/

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