Optimizing SaaS Revenue Management: A Comprehensive Guide

The SaaS industry is growing at exponential rates, despite being a relatively new arena in the business sphere. But, with this high growth potential, there is also great market competition. To fulfill your revenue growth goals and reach new heights, you need to strategize your revenue management.

However, most SaaS companies today have a sales operations team (RevOps). This complicated little term is nothing but an amalgamation of marketing, sales, finance, and product to provide your product or service with the best chance of earning the most money. Let us go over the revenue management system in depth so that you have a complete revenue management guide for your SaaS business.

Let us begin with the very basics, and then delve into how to tackle specific problems in the revenue management department.

What is SaaS Revenue Management?

The aim of revenue management is to maximize profitability by utilizing data analytics. It relies on customer behavior at the micro-market level and uses that to alter product pricing and availability to increase revenue.

By adjusting product availability, pricing, and market placement, a SaaS company may better understand its consumers and connect its products with ICPs. Because of its technique, the SaaS sector is currently rapidly increasing sales.

What is a Revenue Management System?

As the name suggests, in simple terms, it is software that aids in revenue management. It entails product placement, pricing, and availability software that allows you to perfectly match product placement, pricing, and availability across many marketplaces and market segments.

The market is flooded with a plethora of such systems. Each one is just as challenging as the one before it. Price points start around $10 per month, depending on your business needs, the number of users, and the length of your contract.

The Challenge of Revenue Management for SaaS – An Introduction

SaaS as an industry particularly has a complicated relationship with revenue management. In this section, we’ll take a look at the reasons why it is so, and then in our next section, we will look at solutions to these problems.

Simple Strategies Evolve

When your product is less sophisticated, you can start with a simple pricing model, but as you grow—adding more features and acquiring larger clients with more nuanced requirements—your simple pricing model might introduce difficulties that make it difficult to assess and anticipate revenue.

This can quickly become too much for your teams to handle manually because different clients will be on different pricing plans and will be charged in different periods. It also becomes increasingly complex to simply design and plan customized features for a much larger audience than the one you began with.

Pricing Experimentation is Difficult

How are you meant to test new pricing and effectively evaluate the market’s response when you already have so many distinct variations of your pricing model? It is possible, but it is too complicated for most SaaS companies’ present billing systems.

As a result, many people rely on manual tracking to determine the impact of increased pricing. Manual price tracking is not only time intensive, but it also does not provide the same amount of actionable information as automated price tracking. It also drains your employees and time, compromising efficient and quality of services.

The Products and Tansactions Associated with SaaS are Extremely Sophisticated

SaaS pricing strategies aren’t as straightforward as those of traditional industries. Consumption occurs on a vast scale on a regular basis, and everything can alter overnight as corporations try new price packages and bring out new items or features. Scaling pricing schemes as market share grows can be difficult.

An Infinite Number of “Recurring” and “Usage” Price Combinations

One of the most appealing parts of SaaS is the opportunity to allow your clients to pay in their preferred method. However, accommodating individuals who like to pay as they go as well as others who wish to pay a regular weekly/monthly/yearly charge makes monthly bookkeeping a headache.

More Data is Required for SaaS Companies.

Without data… a lot of data… SaaS companies cannot make informed decisions. Because of the intrinsic complexity of their product and market, this data is frequently abundant but hidden or inaccessible. Data on product uptake, customer usage trends, signups, and attrition indicators are frequently dispersed across several systems and are difficult to access for deeper research.

Most teams just lack the tools and processing power required to collect, analyze, and apply data on this scale. This prevents them from making the connections necessary to build new hypotheses and test the original pricing models that could be critical to their success.

Usage-Based Pricing can Make Things More Complicated.

SaaS firms try to be flexible by offering pay-as-you-go pricing alternatives, but their sales force isn’t always thrilled with this because usage-based pricing might muck up commission calculations.

Billing Can be an Impediment To Product Release

When teams fail to prioritize developing and/or upgrading pricing models alongside new features and product releases, severe (and annoying) delays can occur. Your hands are tied until you’ve analyzed your market and client base to decide the finer specifics of your pricing model, allowing competitors to sweep in and grab your market share before you can unveil your latest advancements.

Resolving these Challenges with SaaS Revenue Management Software

When it comes to SaaS revenue management, the optimum solution is one that fully integrates all revenue management components, from operations to analysis. If you’re a SaaS business owner looking to maximize your revenue streams, you need to ensure that the software you invest in meets your specific business needs and is adaptable enough to handle a scaling company and its data.

SubscriptionFlow is a powerful platform that was designed expressly to assist SaaS enterprises in navigating all of the aforementioned obstacles, effortlessly integrating all aspects of revenue management into a single solution.

We want our clients to maximize their revenue while not devoting all of their time to billing. As a result, we created our platform to enable SaaS companies to generate complicated price offers without having to write a single line of code. SubscriptionFlow allows you to adjust the price in a variety of ways, including generating recurring discounts and billing simply (i.e. basic flat rate pricing) or as complexly (i.e. usage-based billing). Everything is handled within a single system so your data is consolidated.

We’ve also set out to enhance interdepartmental relationships (particularly, those between the various RevOps departments in charge of revenue generation, retention, and accounting) by providing each of these teams with the resources they require to succeed. We also offer multiple other services like dunning techniques, revenue maximization alerts, growth automation activities, compliance and accounting certainty, and tax automation.

Measuring Strategy Success with SaaS Revenue Management Software

A robust software for billing & revenue management for b2b SaaS will be able to provide detailed analytics and reporting that can help you track multiple metrics like CLTV or Customer Lifetime Value which would indicate if a customer’s investment with you is increasing or not. If the CLTV is increasing, you already know your revenue strategy is working.

Likewise, other metrics like ACPA (cost per acquisition on average) and MSR (marketing source revenue can also be tracked using revenue management software. ACPA and MSR usually work together and can indicate the success of your marketing efforts aka the money each marketing channel is bringing in. It also indicates when the ACPA gets too high, which means you should start focusing on organic methods of digital marketing instead.

Final Word

So, if you’re looking for a SaaS revenue management system to handle all the complicated issues that arise due to the complicated nature of SaaS transactions, look no further. SubscriptionFlow is a fully equipped subscription and revenue management software that allows for billing and invoicing automation, allows you access to important KPIs, and basically makes your job easier for you.

To get started on a better revenue management journey, take a leap of faith and book a demo with us!