If you thought egg prices were out of control, SaaS inflation is outpacing the economy as a whole.
In the US, SaaS costs are growing 3.5 times faster than market inflation. The founder and CEO of Vertice has five times as many in Australia and the UK, according to Eldar Tuvey.
“If reducing SaaS costs is a top business priority in 2023, improving your software negotiation strategy is the place to start,” he wrote.
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Finding meaningful ways to save money can extend your runway and even avoid layoffs. This article contains tactics and strategies for working with vendors to shorten contract terms and arrange more favorable terms.
“By negotiating each contract that makes up the SaaS stack, we can realize long-term savings by mitigating the impact of price increases,” says Tuvey.
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When to create a freemium plan and how to do it properly
There are three types of SaaS pricing. A traditional sales-driven model, a free trial that ultimately forces users to decide, or a freemium plan that hopes to provide enough value for users to come back.
“Given the obvious differences between these models, choosing between them is fairly easy,” writes Konstantin Valiotti, Product Director of Growth at PandaDoc. “But current market conditions do not support having a single model.”
In this TC+ article, he explains how to identify when it’s the right time to roll out a freemium plan and when it’s not. He also includes a tactical framework for developing freemium products with limited and unrestricted use cases.
“Every strategy is unique and depends on the company’s idea of how it wants to proceed,” writes Valiotti. “So we should look at freemium as an extension of our strategy and see if it’s a good fit.”
What do recent state tax changes mean for US SaaS startups?
For SaaS startups, taxable time can create challenges.
Some states consider software-as-a-service products to be services, while others classify them as products.
“There is also the issue of the bundle itself,” says Ardy Esmaeili, a startup tax accountant. “SaaS may not be taxed, but when combined with hardware it is.”
To help founders better understand their responsibilities, Esmaeili shares tips on how to identify a company’s physical ties and lists multiple SaaS categories it says are likely to be taxed. doing.
“Seek professional help as soon as possible,” he wrote. “Don’t think you don’t have to worry yet, because waiting can have big consequences later.”
Where should sales sit in a product-driven company?
Early-stage startups that adopt a product-driven growth strategy may not need a sales team to build a customer base.
Before his company was acquired by Salesforce, Slack CEO Stewart Butterfield said:
Slack now has an “extended product team” that brings together product, data science, and sales operations.
According to Elena Verna, Amplitude’s interim head of growth, “product and sales are starting to work very closely together as one unit, like brothers and sisters.”