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Requirement

Pre-built SaaS revenue model including common metrics such as MRR, ARR, Churn, Upsell, Downsell, ACV, ASP, Renewals

Functional Area

Planning

Industries
Technology
Tags
Revenue
DETAILS

Description

This requirement implies that the vendor offers a SaaS revenue model that is pre-built and ready to use by the customer. This SaaS revenue model matches the revenue structure of the customer. This means that the vendor's SaaS revenue model accommodates things like large B2B sales, subscriptions purchases on websites, consumption models, freemium models, tiered, users, and so on.

Example Use Case

Scenario: A technology company offers a SaaS product to business customers. They need to forecast renewals, upsells, downsells, new business, and associated metrics.

Solution: The CPM software offers a pre-built SaaS revenue model that matches their needs. It integrates with their CRM platform and imports opportunities for renewals, new business, and upsells. This allows forecasting for all the different revenue streams in the business without building something from scratch.

Considerations

There are several different types of revenue models for SaaS businesses. Below is a sampling of potential models. Most vendors offer one or two of the below. Make sure they can accommodate your use case.

SaaS Revenue Model Description
Subscription-Based Customers pay a recurring fee to access the software, with possible different tiers of service.
Freemium Offers basic software for free, while premium features require payment.
Usage-Based Charges based on the amount of service used, such as data storage or transactions.
Tiered Pricing Offers multiple pricing tiers, each with its own set of features.
Per User Charges a flat rate per user or seat on the software.
Per Feature Charges based on the features or modules the customer uses.
Ad-Supported Offers the software for free but includes ads within the platform.
Hybrid Combines elements of multiple revenue models for flexibility.

Also consider other factors in your revenue model. Is there implementation labor? What about shipping products along with the subscription? Does your consumption forecast factor in costs with your cloud provider? Be as holistic as possible with the CPM vendor.

Questions to Ask a Vendor

  • Model Robustness: How comprehensive is the pre-built SaaS revenue model? Does it include all common revenue-related metrics and types?
  • Customization: How much customization can we put into this model? At what point does it make more sense for us to just build one from scratch?
  • SaaS Metrics: Which SaaS metrics are available out of the box?