Monetization Models in SaaS

This chapter explores the diverse monetization models within the SaaS industry, including subscription, consumption, and transaction-based systems. It highlights real-world examples and essential metrics to assess their effectiveness, while discussing how companies adapt their strategies to meet evolving market demands.

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In this solo episode, Run the Numbers host CJ Gustafson breaks down all the different ways software businesses make money. He does an overview of the different monetization models including subscription, consumption, hybrid, transaction-based, and advertising models. He then zooms in on subscription contracts and references the piece he wrote “The ‘Planet Fitness’ Era of SaaS is Over” to discuss professional services, examining the differences between product-led growth (PLG) and sales-led growth models. He talks about the three key things that PLG has influenced CFOs to push for when evaluating buying decisions. He also explains why subscription contracts don’t equate to revenue durability and what real durability is in SaaS, also spelling out (literally) the major differences between recurring revenue and reoccurring revenue, and why you may want a blend of both.

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@cjgustafson222 (CJ)

HELPFUL LINKS:

Deep Dive on Usage Based Models with Gladly's CFO Todd Rakow

The "Planet Fitness" Era of SaaS is Over

BlackRock Managing Director on the Secrets of Durable Companies

Mostly Multiples

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TIMESTAMPS:

(00:00) Preview and Intro

(03:01) Sponsor - Maxio | Leapfin

(05:43) Monetization Models