Deliver's growth stagnated until they shifted from complex, variable fees to a simple flat rate. This treated pricing not as a billing model but as a product feature that solved the customer's core need for financial predictability, which became their primary growth catalyst.
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After 9 months of stagnation, Deliver implemented two key changes based on customer feedback: a "Prime-like" badge to surface the value of fast shipping earlier in the funnel, and a flat-rate pricing model for predictability. These two changes combined created an immediate inflection point, leading to explosive growth.
Assembled launched with usage-based pricing and no minimums. When the pandemic hit, customers scaled usage to zero, and revenue flatlined. The team initially blamed their product, only later realizing their pricing model made them vulnerable to customers' cost-cutting measures, independent of product value.
Instead of absorbing labor and commission costs, a service business can bundle them into customer-facing "bin" and "initiation" fees. This shifts the financial burden of acquisition to the new customer, allowing the business to collect enough cash upfront to cover all costs and become immediately cash-flow positive on each new sale.
Many businesses over-index on marketing to drive growth. However, strategic price increases and achieving operational excellence (improving conversion rates, average tickets) are equally powerful, and often overlooked, levers for increasing revenue.
Instead of setting prices at launch and letting them erode, Novonesis implemented a discipline of having annual conversations about the value their products deliver. This shifted pricing from a 1-2% annual erosion to a 1-2% revenue growth contributor.
Effective pricing is not just a number; it is a value story. The ultimate test is whether a customer can accurately pitch your product's pricing and value proposition to someone else. This reframes pricing from a simple number to a compelling narrative.
Constantly delivering custom solutions is inefficient and destroys profitability. Instead, define a standardized, repeatable service package that can be sold and delivered consistently, maintaining high margins and simplifying operations.
Pricing is your most powerful lever. For a typical service business with a 10% net margin, a simple 10% price increase goes directly to the bottom line, effectively doubling the company's total profit without any additional operational cost or effort.
The macroeconomic shift to a high-margin, high-interest-rate environment means SaaS companies must abandon the 'growth at all costs' playbook. Pricing decisions, such as usage-based models that delay revenue, have critical cash flow implications. Strategy must now favor profitability and immediate cash generation.
