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How do most SaaS companies manage to charge between $29-$299 per month and still get to $50 million or even $100 million in ARR?

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JASON LEMKIN

You are asking the right question.

It is sort of mathematically impossible, unless:

  • You own the market and have huge penetration; and that market is medium or large sized. If 100k – 1m businesses can and do buy you … the math works out great; see Dropbox; or
  • You go upmarket (and charge each customer a lot more). This is what happens 8/10 times. Box went upmarket to get to $50m-$100m ARR. New Relic started doing the same. Github began that march. Drive net deal sizes up 10x-100x or more. Sometimes, you can also do this also by selling multiple products to the same customer, but for most this is hard and too distracting.

You either have to be everywhere, or go upmarket.

Otherwise, you’ll never get to $100m ARR.

Even Slack, which go to $100m on the first point, is now doing the second to get to $200m and then $1b in ARR.

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Published on January 23, 2017
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