If you think egg prices are out of control, SaaS inflation is outpacing the rest of the economy.
SaaS spending in the US is growing at 3.5x faster than market inflation. In Australia and the UK, that rises to 5x, according to Eldar Tuvi, founder and CEO of Vertis.
“If cutting SaaS costs in 2023 is a priority for your business, this is where improving your software negotiation strategy should start,” he wrote.
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Finding meaningful savings can extend your runway and avoid layoffs: This article contains tips and tricks to reduce contract length and negotiate more favorable terms with suppliers.
“Negotiating each of the contracts that make up your SaaS stack can provide long-term savings by mitigating the effects of price increases,” Tuvey says.
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When to build a freemium plan and how to modify it
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SaaS pricing comes in three flavors: the familiar sales-driven model, free trials that ultimately force users to make a decision, or freemium plans that hopefully offer enough value to keep them coming back.
“Given the clear differences between these models, it should be easy to choose one,” wrote Constantin Valiotti, director of product development at Pandadoc. However, the current market situation does not support having just one model.
In this TC+ article, he explains how to identify the right time to launch a premium plan and when it is important at the same time. It also includes a tactical framework for developing freemium products, including limited and unlimited use cases.
“Each strategy is unique and depends on the company’s idea of how it wants to proceed,” Valliotti writes. “So look at freemium as an extension of your strategy and see if it’s right for you.”
What do recent changes to state taxes mean for US SaaS startups?
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For SaaS startups, tax time can be confusing.
Some states treat software-as-a-service products as, um, services, while others classify them as, um, products.
“There is also the issue of self-wrapping,” says Ardi Esmaili, a junior tax accountant. “SaaS may not be taxed, but when combined with hardware it is.”
To help founders better understand their liability, Esmaeili shares tips on how to identify the company’s physical ties and lists several categories of SaaS that may be taxed.
“Get an expert involved as soon as you can,” he wrote. “Don’t think you don’t have to worry about it just yet, because waiting can have serious consequences.”
Where should sales be located in product-leading companies?
Image Credits: Nigel Sussman (Opens in a new window)
Early-stage startups that follow a product-driven growth strategy may not need sales teams to build their customer base.
Before his company was acquired by Salesforce, Slack CEO Stuart Butterfield said, “I think we can get away with not having a sales team in any traditional way.
Today, Slack has an “expansion product team” that integrates product, data science, and sales functions.
According to Elena Verna, Amplitude’s Interim Head of Development, “Production and Sales are starting to work closely together as one unit, like brothers and sisters.
