How To Perfect Your SaaS Pricing Using The 10-5-20 Rule

Still struggling to price your SaaS? Execute the 3 Step Formula in this vid to maximize profit, keep clients happy, and motivate the heck out of your team

Never got the "rocket demo thingamajig" to the email I put in. BTW It's criminal you don't have more views and subscribers. Test more baity titles and thumbnails.

I always enjoy and appreciate your videos, Dan! I agree that most entrepreneurs are probably underpricing their product when first starting out. I like your 10x rule, as when you think about the amount of value you're adding to your customer's life, you can justify charging a higher price, both to them, and to yourself. I'm not sure about the 20% rule though. I wonder if a better way might be to really know your numbers and how much real net/net cash flow profits you make off a customer each month, AND their projected lifetime profit value, and then use that info to test your pricing in relation to your conversion rates? (and I'm talking real profits and real spendable cash flow, not just bogus accounting numbers here) For example, let's say each new customer nets you a residual real cash net/net profit of $15/month at a price point of $39, and a real cash net/net profit of $25/month at a price point of $49, then you can plug these numbers into your conversion rates to see what yields you the highest overall profit per 100 customers. So maybe you can convert 30% of leads who sampled your product when the price is $39, and this drops by 20%, to a 24% conversion rate when the price is $49, so the math per 100 leads is then: 100 leads x 30% conversion x $15 profit = $450 total monthly profit, versus 100 leads x 24% conversion x $25 profit = $600 total monthly profit. So having the higher price, even though you lose 20% of your customers, still makes a lot of sense. In fact, you could justify this price increase until you lose/get pushback from 40% of your customers, and your conversion rate drops all the way down to 18%. (because 18 customers x $25 profit = $450 profit, the same as 30 customers at $15 profit) I guess if you're running a business to extract profit to live on, getting a few dollars more of pure profit from each customer is often worth significantly more pushback and a significantly lower conversion rate. It might be different of course with a SaaS business where you are hoping to sell it (in which case revenue & growth are usually way more important than profit anyways) or you're building a business that has a model dependent on network effects and capturing the market quickly. In any case your video gave me something to think about and made me more aware that in my case, where I'll need profits to live on, I can't be afraid to test higher pricing. Thanks!

I found this incredibly useful Dan. Makes total sense. My SaaS product is priced per unit. 99p per unit per month. Some customers would have 200 units on the system at any given time. Others may have 3,000. Is there a formula for discounting that you know of? The ceiling would probably be 8,000-12,000 units. Maybe discounts could be kicking in at 1,000 2,500 5,000 10,000 etc. I want it to make mathematical as well as commercial sense. Any ideas Dan?

awesome advice...practical and can be executed and tested easily.

Dan these are amazing resources for our company. Please keep it up.

Very informative video. 👍

Great stuff dude, you’re shaping my startup

That is quite a shirt!

Great video Dan thank you

Great vid. The only thing I would add is that the inverse can also be true. Someone might have a scalable, impactful offer and the low hanging fruit in the beginning can be to shoot for a lower price if the margins make sense and it's high ticket enough.

Thank you for your advice!🤩

Sass academy

What's pushback by the customer? Churn?

Great video sir.

Where are your other 930k subscibers?

Great video. Extremely helpful without the bullshit. Thank you.

Great video thanks

Love this! Pricing is very arbitrary and must be aligned with the value you offer. Love the 10X rule b/c it also forces you to think about "what is the value the product is adding?" And the idea to keep testing it in the early stages is great to help find that sweet spot.

Gold 👍

Helpful, thanks!

The email for The Rocket Demo Builder doesn’t seem to deliver - any way I can download it some other way?

Thank you so much I appreciate your video, excellent information. I have a question, I offer discounts on the Per Mo Per User fee if my customer contracts with me for 2-5 years. But since I offer that discount, I would like my customers to be locked into the number of users they are contracting with. Is this a good idea or not? The staffing does fluctuate 1-2 staff here and there.

Nice tips!

Great advice I knew I should be pricing more but had issue with figuring the math to not lose a lot of money and it turns out I hit the golden ratio on my own and this info gave me a clear perspective and confidence to set my prices that way. Thanks again ❤

This is an amazing framework for pricing! I definitely needed that

This really helps.