Fintactics Ventures’ Post

NEW BUSINESS OR RETENTION? Can you even make a choice in SaaS? Background: 1. New business is increasingly coming from displacing competitors and migrating their logos. 2. While adding new logos is crucial, preventing reverse migration is imperative—retention isn't optional; it's essential. What led to this? 1. Low cost of entry: Disruptive entrants are giving legacy players that haven’t innovated enough a run for their money. 2. AI: AI is slowly transforming from just a buzzword to some meaningful use cases. 3. SaaS fatigue: Enterprises have an average of 150 to 300 SaaS subscriptions. Consolidation of offerings, either by existing providers or newer providers, is increasingly common and is taking away market share from incoherent providers. 4. Market conditions: With disposable budgets behind us, companies of all sizes are prioritizing sustainable growth and optimized balance sheets, leading to complementary SaaS providers being displaced by essential SaaS providers. How should we respond? 1. Customer-centric innovation: “How can the customer get more out of us, possibly for less?” I think every company must brainstorm on this and align towards more revolutionary thinking than evolutionary. Whether it is pricing, features, compatibility, use cases, market placement, or simply positioning; innovate, innovate, and innovate— we must learn to put the customer at the center of our innovation think tank. 2. AI: Don’t make AI just a buzzword. Leverage the technology to improve customer workflows, ease their use cases, and improve efficiency via automation; either via innovation if budgets allow or via integrations and partnerships. 3. Value: Any company that prioritizes value over anything will be hard to replace. Focus on creating immense value that cannot be displaced or is hard to displace. Leverage the lion’s strategy versus the fox’s tactics. Cheap tactics often result in cheap results. If we are one of the essential providers of the lot, we are unlikely to be replaced. 4. Innovative pricing: Price it in a way that it screams value. The experience of freemium customers is as important as that of premium customers. It is a journey from freemium to premium or minimum to maximum. We must focus on incremental NDR via exponential value elevation. 5. Partnerships and Collaborations: it’s time we partner with providers that the customers need to fully leverage our offering. We would rather sell the package than let the customer find the provider. Just like apple partnered with Verizon and AT&T and sold phones with provider networks, we must partner with providers that are hence our customer efficiency. What is your take? #SaaSStory #GrowthStory #SaaSTalks

The True Cost of SaaS for Enterprise Clients: Is Custom the Better Option? For enterprise clients, software solutions are key to daily operations. SaaS (Software as a Service) has been revolutionary, promising lower upfront costs and easy scalability. But as SaaS products have matured, the question arises: Are the long-term costs of SaaS subscriptions truly beneficial compared to custom solutions? SaaS Cost Challenges SaaS initially attracted enterprises with its low upfront costs and subscription model, which seemed ideal for budget planning. However, as organizations grow, the costs of SaaS can escalate. Pricing is often based on per-user fees or consumption levels, which can quickly become a burden for large enterprises. For example, a popular CRM might cost $100 per user per month—for 1,000 users, that's $1.2 million annually, not including added costs for advanced features or data storage. Moreover, enterprises may need functionalities not offered by existing SaaS products, leading to multiple subscriptions and further costs. This complexity adds up, making SaaS less cost-effective over the long term. Hidden Costs of SaaS SaaS platforms often have "pay as you grow" models that lead to cost escalations as data or user needs increase. Vendor-driven changes in pricing or features can also create unpredictability, complicating long-term planning. Relying on third-party SaaS providers means enterprises lack full control over their software, which can be risky for compliance and data sovereignty. The Case for Custom Solutions Custom solutions can address many SaaS pain points. While the initial cost is higher, it offers long-term savings by eliminating recurring subscription fees. For example, custom software development might cost $500,000 upfront but can save millions over years, especially for enterprises with thousands of users. Custom solutions are tailored to an enterprise's specific needs, avoiding costs for unnecessary features. They also provide full control over modifications, integration, and compliance, making them a compelling option for enterprises looking to optimize costs. Balancing Convenience and Cost The choice between SaaS and custom solutions depends on each enterprise's needs. SaaS offers convenience and rapid deployment, while custom solutions provide flexibility, control, and potential cost savings in the long term. Enterprises must evaluate the value they derive from software compared to the ongoing costs they incur. Is it time for enterprises to reconsider their reliance on SaaS? The decision hinges on whether the convenience of SaaS justifies the escalating costs compared to the autonomy custom solutions can offer.

Adoption Challenges of SaaS Products in the German Real Estate Sector: Part - 2 TL;DR: Customers prefer a unique style of data analytics, and they choose Excel as their tool to achieve it. A B2B SaaS struggles to provide it without impacting the bottom line. There is a quote from the great Sam Walton, founder of Walmart: “We’re really not concerned with what they’re doing wrong; we’re concerned with what they’re doing right and everyone is doing something right.” This post will try to understand how Excel creates an enormous lock-in effect among customers. Some well-known answers to this question include low subscription costs due to Microsoft’s bundle approach, no high level of skill required leading to easily replaceable employees, high compatibility, strong security, etc. However, I want to go one step further and explore another subtle but acute USP (Unique Selling Point) of Excel. Real Estate is a highly consultant-driven industry. From design to due diligence, consultants play a crucial role in the ecosystem. The USP of any consultant is their experience and, most importantly, their unique way of solving problems and consulting clients. Not just consultants, but also the asset owners and asset managers try to position themselves as unique entities in the market. The question is, in a market where all stakeholders are striving to be unique, why is everyone using one software—Excel? In my opinion, the answer is that Excel provides the utmost freedom to create your “unique” style of data presentations and calculations, and eventually create templates for the company with minimal effort. Companies can showcase their skills and experience in the market through their complex yet comprehensive Excel tables, which set them apart from others. And the best part for them is, if they want to change their style, they can practically do it with almost zero capital expenditure. Now, let’s think about the basic principle of a B2B SaaS company. It creates a standard product by spending a substantial amount of money and then delivers it to a maximum number of clients at a low cost to achieve economies of scale. By definition, a standard solution is the foundational pillar of B2B SaaS business models. The conflict arises because the industry demands customized solutions, but software performs best within a standard framework. If the SaaS company tries to provide customized solutions to its customers, its gross margin is severely impacted due to high development, support, and overhead costs, making it vulnerable to the risk of going out of business. Therefore, finding the sweet spot between standard and customized products is what a SaaS company looks for to attract customers. In the next post of this series, I will discuss best practices by leveraging generative AI that might make customers reconsider replacing Excel. If you are already aware of any of these features, please share them in the comments. #Sustainability #ESG #PropTech #SaaS

Adaptive Pricing Models: Fueling Enterprise Growth with Scalable SaaS Solutions 🚀 👉 Imagine this: you've built a revolutionary SaaS product, a game-changer for businesses like yours. You're excited to conquer the market, but a nagging question lingers: how do you price your solution to attract large enterprises without alienating smaller businesses? 📌 This, my friends, is where the magic of adaptive pricing models comes in. It's a pricing strategy as dynamic and adaptable as the businesses it serves, perfectly suited to the ever-evolving needs of the US and UK markets. 👉 Why Ditch the One-Size-Fits-All Approach? Traditional, static pricing models often leave businesses feeling like they're getting the short end of the stick. Small companies might pay for features they don't need, while large enterprises crave the scalability to support their growth. It's a recipe for frustration and lost customers. 👉 Adaptive Pricing: The Hero Your Business Needs Adaptive models break the mold by tailoring pricing to a company's needs. Here are some popular options taking the US and UK SaaS scene by storm: Per-User Pricing: Ideal for businesses with varying user needs. You pay for the number of users accessing your platform, making it cost-effective for both small and large teams. ✅ Tiered Pricing: Think "packages." Offer different tiers with varying feature sets and user limits, catering to businesses of all sizes and budgets. ✅ Feature-Based Pricing: Give customers control! Let them choose the features they need and pay accordingly. This approach is perfect for businesses with specific needs and avoids paying for unused functionalities. ✅ Usage-Based Pricing: This model charges based on actual usage. Think "pay-as-you-go" for the cloud age! Perfect for businesses with fluctuating needs or those wanting to experiment with your platform before committing. 👉 The Power of Scalability: Grow with Your Customers Adaptive pricing models don't just attract customers, they grow with them. As an enterprise scales, its needs evolve. Adaptive pricing allows them to easily upgrade their plan to access additional features and user capacity without the hassle of switching platforms. This creates loyal, long-term customers, a win-win for everyone! ✅ Ready to Embrace the Future of SaaS Pricing? Adaptive pricing models are no longer a futuristic fantasy, they're the present and future of successful SaaS solutions in the US and UK. By offering flexible pricing structures, you unlock a world of possibilities for enterprise growth, fostering long-term customer relationships and securing a thriving future for your business. 📌 Discover how our scalable SaaS solutions can support your enterprise growth. 👉 Visit codemoly.com or contact us at [email protected] for more information. #AdaptivePricing #SaaSSolutions #BusinessGrowth #TechInnovation #Codemoly

More about SaaS 🚀 The SaaS industry has exploded like an overfilled balloon animal at a kid's birthday party, growing by over 500% in the past seven years! 🎈💥 📊 Did you know? Companies with 1,000+ employees use a whopping 150+ SaaS applications. That's more apps than the number of tabs open on my browser during peak procrastination hours! 🤯💻 💸 Money Talks: SaaS industry revenue is expected to skyrocket, reaching an estimated $195.2 billion by the end of this year. It's raining dollar bills for the SaaS giants! 💰☔ 🌐 Global Takeover: The US is dominating the SaaS game with around 8 times more SaaS companies than any other country. It's like SaaS is the Big Mac of the tech world and the US is the largest combo meal! 🍔🇺🇸 📈 Future Forecast: By 2025, it's predicted that 85% of software used by organizations will be SaaS. We're all going to be swimming in cloud-based apps like a digital Scrooge McDuck! 💻🏊♂️ In the fast-changing world of SaaS, where apps are everywhere, what new ideas can we expect as companies try to be unique in this busy market? https://lnkd.in/exebtPn4

In the world of SaaS, a troubling truth lurks beneath the shiny veneer of sleek interfaces and promised productivity gains: most SaaS products are far from perfect. Despite the hype and marketing speak, the reality is that many users don't actually want or need these products. They often represent little more than a crude collection of functionalities cobbled together by product managers based on their flawed perceptions of customer needs (I don't blame PM's for this - customers are notoriously poor at conveying requirements). The root of the problem lies in how SaaS products are typically conceived and developed. Product managers, eager to check boxes and add features, end up creating Frankenstein's monsters of software - an awkward assemblage of disparate functions that fail to elegantly solve real problems. The result? Bloated applications that confuse and frustrate users rather than simplifying their work. This issue stems from a fundamental misunderstanding of what customers truly need. In most cases, the problems we're trying to solve revolve around moving, transforming, or leveraging data - not interacting with a predetermined set of product features. The idea of a "product" with fixed boundaries and capabilities is at odds with the fluid, evolving nature of business challenges. Consider the typical enterprise SaaS offering. It likely includes a dashboard, some reporting features, user management, and perhaps integration capabilities. But does this really align with how people work and the outcomes they're trying to achieve? More often than not, users find themselves adapting their processes to fit the software, rather than the other way around. The artificial coupling of features and functions in SaaS products creates unnecessary complexity, forcing users to navigate convoluted workflows and juggle multiple tools to accomplish what should be straightforward tasks. This is the antithesis of productivity enhancement - the very thing SaaS purports to deliver. Fortunately, there's hope on the horizon in the form of AI and intelligent agents. These technologies have the potential to abstract away from the rigid feature/function paradigm and instead focus on automating the essence of the "job to be done." Imagine an AI assistant that understands your business context, accesses relevant data sources, and dynamically assembles the exact capabilities needed to accomplish a given task - without you ever having to think about which "product" to use. This fluid, adaptive approach aligns much more closely with how humans actually work and think. The future of software lies not in more features or shinier interfaces, but in invisible, intelligent systems that simply get work done. As we move in this direction, we can finally bid farewell to the era of subpar SaaS products that no one actually wants.

Do’s and don’ts when picking a SAAS pricing model   No flash just content Download/save and when you have time give it a read. Please check out Topic 18: 31 SAAS Pricing models, in the featured section in my LinkedIn profile. Selecting the optimal business model for your startup is a decision that can significantly impact your success.  Here are some steps to guide you in making the right choice: Understand Your Product and Market: Begin by thoroughly understanding your product or service.  What problem does it solve?  Who are your target customers?  What sets your solution apart from competitors? Analyse the market dynamics, including existing players, customer needs, and trends. Know Your Customer Base: Identify your ideal customer profile (ICP).  Consider factors such as company size, industry, budget, and pain points. Understand your customers’ preferences regarding pricing, flexibility, and value. Explore different revenue models: Subscription-Based:  Recurring payments for access to your SaaS product. Freemium:  Offering a basic version for free and charging for premium features. Pay-Per-Use:  Charging based on usage (e.g., data, API calls). License Fees:  One-time purchase or annual licensing. White Labeling:  Allowing others to rebrand and resell your software. Customisation Services:  Offering tailored solutions. Consider which model aligns with your product and customer expectations. Assess Your Costs and Margins: Calculate your operational costs, development expenses, and ongoing maintenance. Understand your profit margins under different models. Ensure that your chosen model allows sustainable growth. Analyse Competitors: Study successful SaaS companies in your niche.  What models do they use? How do they price their offerings? Learn from their experiences and adapt their strategies to fit your startup. Factor in Scalability: Consider how well your chosen model scales as your customer base grows. Some models (e.g., subscription-based) offer predictable revenue, while others (e.g., pay-per-use) adapt to usage fluctuations. Customer Feedback and Iteration: Gather feedback from early adopters.  Understand what they value most. Be open to iterating your business model based on real-world insights. Risk Tolerance and Experimentation: Recognize that no model is foolproof.  Be willing to experiment and adjust. Start with a hypothesis, test it, and iterate as needed. Legal and Regulatory Considerations: Ensure compliance with data privacy laws, licensing agreements, and industry regulations. Please see the attached doc for further details. Please repost to help fellow founders. Good luck, and remember, we're all in this together! David Slowey Pro Bono, Slowey Start-Up Process Programme. #Founder #entrepreneur #VentureCapital #investment #fundraising #Innovation#learning #CustomerAcquisition #BusinessGrowth #BusinessStrategy #BusinessEducation #mentorship #Startup #Startups

Does the Rule of 40 tell a good story about your SaaS? It strikes a good balance, right? Maybe not. If you’re serious about long-term success, you’ve got to dig deeper than the standard metrics. Numbers can paint a picture, but they rarely tell the 𝐰𝐡𝐨𝐥𝐞 story. To achieve sustainable growth, you need a multi-dimensional approach to financial health that extends beyond the Rule of 40 📊. Here’s what to consider: 𝟏. 𝐍𝐞𝐭 𝐑𝐞𝐯𝐞𝐧𝐮𝐞 𝐑𝐞𝐭𝐞𝐧𝐭𝐢𝐨𝐧 (𝐍𝐑𝐑) 𝐚𝐬 𝐚 𝐆𝐫𝐨𝐰𝐭𝐡 𝐋𝐞𝐯𝐞𝐫 Growth is more predictable when it comes from within. Focus on Net Revenue Retention—an indicator of customer satisfaction, upsell opportunities, and expansion potential. High NRR means you’re not just replacing lost revenue; you’re building on top of it. Target a 120%+ NRR to fuel organic growth without the high costs of new customer acquisition. 2. CAC Payback Period: A Deeper Look 💰 CAC (Customer Acquisition Costs) Payback is often overlooked but vital. The shorter the payback period, the quicker you can reinvest in growth initiatives. If your CAC Payback is stretching beyond 18 months, it's a sign that your sales and marketing engine needs tuning. Look for efficiencies, consider customer lifetime value (CLTV) optimisation, and reallocate spend where the ROI is highest. 3. Gross Margin and Unit Economics: The Core Metrics Gross margin isn’t just a profitability metric; it’s a measure of your business’s operating efficiency. In SaaS, targeting a 70-80% gross margin is ideal, allowing you to reinvest in growth-driving areas like R&D and sales. Meanwhile, ensure that unit economics (LTV) are positive, ideally at 3:1 or higher. This ratio will guide your decision-making around scaling. 4. Cash Flow Efficiency Ratio: Managing for Longevity The Cash Flow Efficiency Ratio—operating cash flow relative to net new ARR— is the new "growth at all costs" mantra. For every dollar you spend, how much ARR are you adding? A ratio above 1 means you're generating more ARR per dollar spent, which signals efficient growth. 5. Operational Scalability: Think Ahead, Plan Ahead 📈 Growth is great, but can your operational framework support it? Your systems, processes, and teams must scale in line with revenue. Investing in scalable infrastructure like your cloud architecture is crucial for long-term financial stability. Map out the costs associated with scaling and ensure they're aligned with your revenue trajectory. The Bottom Line: A Holistic Financial Strategy 🌱 The Rule of 40 is only one metric. It's better to focus on a basket of metrics such as the ones above to position your company for sustainable, and consistent growth.

In recent months, SaaS companies are facing new challenges. As a partner at a VC firm and pricing advisor, I’ve seen firsthand how selling SaaS is becoming more difficult. But is this really "the end of SaaS"? Not quite. The model is evolving, and SaaS leaders need to adapt. Here's why and how: Why SaaS Is Struggling: 1️⃣ Slower Growth 📉: SaaS growth has slowed, with many companies now growing at less than 20% annually(SaaStr 🔗👇). Customers are scrutinizing budgets more carefully, making every renewal a challenge 2️⃣ Commoditization ⚙️: AI and low-code tools have made it easier to replicate SaaS offerings. As a result, software is increasingly seen as a commodity(Forbes 🔗👇) Customers are questioning why they should pay premium prices for something that could be built or bought more cheaply. 3️⃣ Myth of Infinite LTVs 💼: Retaining customers is no longer a given. Competitive pressures and pricing challenges are making customer retention a constant battle What SaaS Executives Should Do: 💣 Deliver Real Value 💡: Companies like Klarna are cutting out third-party SaaS tools in favor of building their own AI-driven solutions (Klarna Plans to ‘Shut Down SaaS Providers’ and Replace Them With Internally Built AI 🔗👇). SaaS companies need to show they’re driving true value—whether through automation, cost savings, or boosting productivity. If your software doesn't demonstrably improve customer ROI, it’s time to rethink your approach 💣 Leverage AI Effectively 🤖: AI is more than hype—it’s becoming essential for driving efficiencies. SaaS companies that incorporate AI in meaningful ways, such as automating processes or enhancing productivity, are staying ahead. Customers expect AI solutions that reduce costs and improve outcomes. 💣 Rethink Pricing Models 💰: Traditional subscription models may no longer cut it. SaaS companies should consider flexible pricing, such as usage-based or value-based models. Klarna’s shift to AI-driven, internally developed solutions highlights the need for cost-effective options 💣 Think Beyond SaaS 🚀: Sam Lessin from Slow Ventures suggests that software isn’t just a product but a strategic tool to improve real-world businesses. SaaS companies should explore how their tools can help optimize and enhance other industries, rather than just selling subscriptions. SaaS isn’t dead, but the landscape is changing. Companies must deliver tangible value, embrace AI, and rethink their pricing strategies to survive. Those that adapt will not only survive—they’ll thrive. Let’s start a conversation—how is your SaaS business evolving? What strategies are you experimenting with? Drop a comment below, and let’s discuss how SaaS can continue to evolve in today’s competitive market! 💬👇 ----- 📢 Curious about navigating the dynamic world of pricing and staying ahead of the curve? Hit the 🔔 icon and follow me to receive timely updates on pricing strategies, industry trends, and more!

Saas has a roughly $50 billion problem. And it’s getting even worse. I might go as far as calling it an epidemic. Companies invest in platforms and tools that show game-changing promise for results and ROI….but without a REAL plan for adoption. From there the result is simple: the tool ends up gathering digital dust, or simply never establishes proper sticky factor. And poof, churn notice. There are many reports that show different figures but let’s say that current Saas spend is $200B (most likely a lot higher). And if “lack of usage / adoption” accounts for roughly 25% of churn reasons… That’s $50B annually of churn. Waste. And it’s getting so much worse. Since early 2022, I’ve heard this over and over and over from companies “We have many tools we’ve purchased which we’ve not really used, so budgets are now tight and it makes it hard to justify new tool implementation.“ **So, what can saas vendors do?** They MUST make adoption a priority from day one. They cannot leave it in the hands of their customers who are strapped for time resources headcount and priorities. It’s lazy to just hand over the keys. Vendors need to ensure their customers are implementing the solution correctly, and following up to encourage adoption through ongoing support and enablement. They must be a partner, not just a provider. Work closely with customers to understand their challenges, tailor support and implementation to their needs TLDR stop being obsessed with “proving ROI” and just focus on adoption and usage. (We at Sales Assembly are focusing on this HARD right now. Mutual success plans, adoption best practices, additional onboarding support, more complete customer journey mapping etc) **What can companies do?** Well if you’re a leader and you ever want to get allocated budget again from your CFO, listen up! Take the responsibility yourself to outline a success plan in partnership with the vendor before you sign. Make sure you know exactly what needs to be done to ensure success with the tool. Otherwise, it’ll be wasted budget and your team will be annoyed. And perhaps the easiest thing to do, take the time to assign champions. Have internal advocates who lead the charge, ensuring the tool is being used and driving value across the team. The best solutions in the world only work if they’re adopted and integrated into the business. Both companies and vendors need to take responsibility to make sure that happens. When they do, that’s when the real ROI shows up.