SaaS companies scale revenue not by adjusting price points, but by creating distinct packages for different segments. The same core software can be sold for vastly different amounts to enterprise versus mid-market clients by packaging features, services, and support to match their perceived value and needs.

Founders often mistakenly start with low-margin, mass-market products (the "save the whales" syndrome), which makes the business look damaged. A better strategy is to start at the high end with less price-sensitive customers. This builds a premium brand and generates the capital required to address the broader market later.

For a true AI-native product, extremely high margins might indicate it isn't using enough AI, as inference has real costs. Founders should price for adoption, believing model costs will fall, and plan to build strong margins later through sophisticated, usage-based pricing tiers rather than optimizing prematurely.

The Castos founder decided to build a second product only after a year and a half of failing to grow his core business, even after hiring top marketing talent. This ensures a new product isn't a premature distraction from a solvable growth problem.

Standard SaaS pricing fails for agentic products because high usage becomes a cost center. Avoid the trap of profiting from non-use. Instead, implement a hybrid model with a fixed base and usage-based overages, or, ideally, tie pricing directly to measurable outcomes generated by the AI.

Founders often mistake $1M ARR for product-market fit. The real milestone is proven repeatability: a predictable way to find and win a specific customer profile who reliably renews and expands. This signal of a scalable business model typically emerges closer to the $5M-$10M ARR mark.

Investors and acquirers pay premiums for predictable revenue, which comes from retaining and upselling existing customers. This "expansion revenue" is a far greater value multiplier than simply acquiring new customers, a metric most founders wrongly prioritize.

Basic Capital initially used a $25/month subscription fee not for revenue, but to filter its user base. The fee made the product mathematically unattractive for small investments (e.g., under $5k), ensuring that only customers with sufficient capital to make the economics work would sign up.

The conventional wisdom for SaaS companies to find their 'second act' after reaching $100M in revenue is now obsolete. The extreme rate of change in the AI space forces companies to constantly reinvent themselves and refind product-market fit on a quarterly basis to survive.