Discount Rate Formula
Calculating Discount Rate [2020 Guide + Formula]
If you plan to secure investment to help you grow your SaaS business, the discount rate is a crucial metric of which you will need to have a grasp.
Everything related to Upodi and the Subscription Economy
If you plan to secure investment to help you grow your SaaS business, the discount rate is a crucial metric of which you will need to have a grasp.
YOU ARE SLOWLY COMING to your senses: “What’s going on?”
Your head is buzzing… and you struggle to see things clearly.
Gradually your surroundings emerge before you:
A story from real life – that ended in revenue loss…
Once there were (and still is) a Danish company – more specifically a chain of gyms. Our chain of gyms, let’s call them Fitness X. They were successful.
❓ Do you know this?
💡 You have a brilliant idea. [your brilliant idea] on subscription!
You just need a website, a payment solution and a subscription engine, and you're ready to:
One of the most challenging aspects of marketing and selling a product is deciding its price.
Pricing can represent a puzzle and is one that every SaaS business will face.
However, pricing your SaaS platform doesn’t have to be a stab in the dark.
Getting your pricing right is essential in any business. In a SaaS context, where a change in price can trigger cancellations of subscriptions or push potential customers in the arms of your competition, it can make or break your business.
There was once an entrepreneur who was successful in his home market. Each month, a box of inspirational products was sent out to his subscribers and they got value, inspiration and motivation to try new things.
[PSP = Payment service Provider red.]
A question I often receive is if Upodi is a PSP (Payment Service Provider).
The short answer is: no it is not.
Historically, the term dunning had a very different context to which it would be in a SaaS context today.
What Did Dunning Previously Mean?
The historical use of dunning relates most typically to the collection of debts.
SaaS businesses that have the most significant long-term success, and always seem to innovate and find ways to keep their customers happy, have one massive thing in common.
They obsess over their metrics and take continual action to improve them.
At first glance, the subscription business seems simple. Customer chooses a plan, gives you their payment details and you charge them once a month. But how would this work under the hood?
A story from real life.
We have success – we internationalize!
But can we do that?
Dynamic pricing is a strategy most used in the retail industry. However, it may be a strategy that is worth exploring for your SaaS business. Dynamic pricing can be great from a business perspective.
There is so much jargon and so many different acronyms thrown about when it comes to SaaS that it’s easy to confuse yourself and your customers, when it comes to talking about various matters. In addition to causing confusion...
… That sounds boring.
Nevertheless, this is the reality in many companies - it takes an incredibly long time, it is manual (read: high risk of error) AND lack of proration means that you potentially lose revenue (read more about proration here).
Wouldn’t it be nice if you could have a glimpse into the future?
For example, wouldn’t it be nice if you could foresee missing payments before they were missing?
When we talk subscribers, many people think of mobile and the internet - and maybe Netflix, Spotify and fitness?
Classic subscription schemes where we pay and fast bend once a month, and then a form for goods or services is delivered.
Deciding on a pricing strategy for your SaaS platform can be tricky. It’s easy to look at other SaaS providers in your niche and simply undercut their pricing or offer a similar model. What works for one SaaS provider in terms of pricing won’t necessarily work for you.
Proration, is the term that covers: When someone signs up for your service, up-/downgrades on a “crooked” day of the cycle.
Imagine the following:
You have a good subscription business. Everyone is happy.
Using a subscription model is a fantastic way to help you compound the value of your customer relationships. Rather than working hard to get customers multiple times if you want them to make repeat purchases, a subscription model allows you to acquire the customer once.