While I was unable to make SaaStr Annual this year, I am pleased to announce that I will back at SaaS Metrics Palooza, an entirely virtual conference (where I don’t need to walk on my recovering knee) focused entirely on SaaS metrics, and hosted by my SaaS Talk co-host Ray Rike.
I’m speaking this year on The Impact of AI on SaaS Metrics at 9:00 AM Pacific on 10/8/24.
I picked this topic because I wanted to force myself to learn more about it (the reason I write many Kellblog posts) and that process seems to have worked. I started out asking how will SaaS metrics change because of AI? That led me quickly to pricing models. And that led me all the way back to the existing weaknesses in SaaS metrics created by violations of the simple SaaS model (e.g., usage-based pricing, or anything else that drives variation in monthly spend).
Here’s what we’ll cover:
- How we got here: a brief, salient history of SaaS metrics
- When SaaS metrics break — e.g., when monthly spend varies or contracts are prepaid
- How ARR has become the Achilles’ Heel of SaaS metrics, a big problem given that virtually all top SaaS metrics depend on ARR
- How proxies for ARR have emerged as a result
- How and why public companies don’t generally report ARR, and how analysts use Implied ARR instead
- The four impacts of AI on SaaS metrics, specifically (1) rethinking ARR, (2) the need to consider cost (he says, gasping), (3) rethinking pricing model drivers, and (4) how the heavy lifting will move to the pricing model
- A quick case study on Piper, the impressive AI SDR from Qualified, how she is priced, and some nuances in estimating the value she delivers when you “hire” her.
The presentation will feature a brief moment of melancholy, a reflection back on the history of software gross margins.
The best aside will be when I present my three rules of pricing.
You can register to attend SaaS Metrics Palooza here. My session is at 9:00 AM Pacific time on Tuesday, October 8th. I will do a separate post after the presentation with a link to the video and a link to the slides.
I hope to see you there and thanks for attending!
Excited to welcome Dave back to SaaS Metrics Palooza ’24!
Dave, I just attended your session and was hoping you could articulate the difference between value-based pricing and outcome-based pricing. How would you distinguish the two and practically speaking what would be an example? Is it possible for a company to derive revenue from both methods? Thanks!
I use value-based pricing as the capstone concept for attempts to price based on value delivered. Two days of doing that are unit-of-work pricing (e.g., SMS messages sent, knowledge base articles read) and outcome-based pricing (e.g., invoices processed, oppties created). Hope you’re well Wendell.
Many thanks Dave. I’d love to connect with you on LinkedIn (if you wouldn’t mind initiating). I might have a consulting engagement project related to this topic where your services could be very useful :)