CASE STUDY A:

+150% Growth in <2 Years

​COMPANY TYPE:
SaaS Address Verification​​

ARR:
$10M

GROWTH:
40%

HEADQUARTERS:
Utah, USA

SITUATION

  • Growing at ~40% per year and was on track to hit $10M ARR ​
  • Had profitably bootstrapped from creation​
  • Never strategically reviewed packaging and pricing nor optimized pricing

PROBLEM

  • No premium offer to capture enterprises’ higher WTP​
  • Not monetizing differentiated values in the market that carried with them higher WTP​
  • No tiering or bundling of offers—only volume-based pricing

SOLUTIONS

  • Introduced two new tiers sets (business and enterprises) with 3 offers differentiated by features, intensity of features, volume of units, and availability of add-ons​
  • Optimized pricing for both tiers sets and add-ons to influence higher price point​
  • Trained team on value proposition and discounting strategy/tactic for enterprises

KEY LEARNINGS

  • Packaging (i.e., offer creation and tiering design) are just as important as optimizing pricing. ​
  • Even high growth companies can perform better—especially with enterprise customers.​
  • Often there are value drivers and differentiators that should be monetized but aren’t. 

​

RESULTS

  • Increased ARR +150% from ~$10M to +$25M after 22 mo​
  • Increased enterprise customers’ average deal size by +200%​
  • Increased business customers’ average deal size by +40%​

CASE STUDY B:

+$32M in Annual Margin Growth

COMPANY TYPE:
Pharmaceutical Distributor

ANNUAL REVENUE:
$300M (focused business unit)

EBIDTA:
$145M (focused business unit)

HEADQUARTERS:
Ohio, USA

SITUATION
• Declining stock price and stagnant growth on profitable generics business
• Large portfolio of products with limited team to manage prices

PROBLEM
• No systemic process in place to actively manage long-tail of products
• High margin variation and leakage across product portfolio
• Complex rebates & off-invoice adjustments complicates net profitability

SOLUTIONS
• Optimized portfolio mix to increase sales on high margin products and removed products with low margins
• Incorporated rebate forecasts into price setting to eliminate negative margin deals
• Segmented long-tail products and set floor margins to maximize profitability and reduce variation

KEY LEARNINGS
• Companies have significant flexibility to drive price-growth on long-tail products
• It is difficult to avoid negative margin deals without a holistic picture on total deal profitability

​

RESULTS

  • Increased revenue and margins by $32M​
  • ​263% margin growth on long-tail products​
  • ​Eliminated $1M/month in unprofitable deals​​

CASE STUDY C:

Increased Margin By $2.3M

COMPANY TYPE:
IT Managed Service Provider

ANNUAL REVENUE:
$100M

EBIDTA:
$35M

HEADQUARTERS:
Maine, USA

SITUATION

  • Portco not seeing the expected value after multiple acquisitions​
  • Margins falling and customer service lagging​
  • Customer and staff churn​

PROBLEM

  • Lack of integration and a proliferation of SKUs hid true costs making it difficult to measure or manage customer and product profitability  ​
  • Product were not based on trackable units; bundles were not scalable; cost+ pricing

SOLUTIONS

  • Standardized the offer and decreased  the SKU count by 40% driving lower vendor costs, increased cost visibility, and increased service levels​
  • Provided pricing benchmarks (Hi-Median-Lo) from industry leading sources focused on mid to large competitors providing insight into pricing opportunities

KEY LEARNINGS

  • A perceived ‘pricing problem’ may be a symptom of deeper problems that need to be scoped​
  • Integrating a company well includes aligning product and pricing strategies​

​

​

RESULTS

  • Increased margin $2.3M in Y1 and estimated $3-5M in Y2 by reducing vendor costs and cost visibility​
  • Increased gross margin by using data-informed pricing strategy​
  • Establish foundation on which to achieve scalable growth objectives​

REFERENCES

1: FCIC Interview with Warren Buffett. May 26, 2010. https://fcic-static.law.stanford.edu/NARA.FCIC.2016-03-11/SCREENED%20Interviews/​

2: 2022 OpenView SaaS Benchmarks Report. https://openviewpartners.com/2022-saas-benchmarks-report/​

​3: McKinsey & Company. Pricing: The next frontier of value creation in private equity. October 21, 2019. https://www.mckinsey.com/capabilities/growth-marketing-and-sales/our-insights/pricing-the-next-frontier-of-value-creation-in-private-equity

​4: 2022 OpenView SaaS Benchmarks Report. https://openviewpartners.com/2022-saas-benchmarks-report/​