Run the Numbers

Revenue Durability and Monetization Strategies in SaaS With CJ Gustafson

Aug 5, 2024

Discover the ins and outs of SaaS monetization models, from subscriptions to consumption-based strategies. Explore the nuances of product-led growth and sales-led growth, revealing their distinct impacts on financial decision-making. Learn why subscription contracts don’t guarantee revenue durability and the crucial differences between recurring and reoccurring revenue. Get insights on evolving financial management solutions that cater to high-growth businesses, ensuring you stay ahead in a competitive landscape.

35:51

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Quick takeaways

Understanding the distinction between recurring and reoccurring revenue is crucial for evaluating business performance and securing financial stability.

Product-led growth emphasizes demonstrating ongoing value during onboarding, influencing CFOs to prioritize immediate return on investment and customer engagement.

Deep dives

Monetization Strategies in Business

Businesses utilize various monetization strategies to generate revenue, including subscription, usage-based, and transaction models. Subscription models involve customers paying a recurring fee for consistent service, exemplified by platforms like Zoom and Adobe, which charge based on user access. In contrast, usage-based models, such as those employed by AWS or Twilio, bill clients according to the extent of service consumed, adapting costs to actual use. These monetization approaches highlight the importance of selecting the right model for a company's operational structure and customer engagement.

Value Requires Engagement: The Shift from Enterprise to PLG

01:24

Durability Trumps Duration

01:24

Intro

4min

Evolving Monetization Strategies in the Tech Sector

2min

Monetization Models in SaaS

8min

Financial Management Solutions Unveiled

5min

Navigating Product-Led Growth in SaaS

16min

Navigating Revenue Strategies in SaaS

2min

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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Planful is a financial performance management platform designed to streamline financial tasks for businesses. It helps with budgeting, closing the books, and financial reporting, all on a cloud-based platform. By improving the efficiency and accuracy of these processes, Planful allows businesses to make better financial decisions. Find out more at www.planful.com/metrics.

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Mercury is a financial technology company, not a bank. Banking services provided by Choice Financial Group and Evolve Bank & Trust®; Members FDIC.

NetSuite provides financial software for all your business needs. More than 37,000 thousand companies have already upgraded to NetSuite, gaining visibility and control over their financials, inventory, HR, eCommerce, and more. If you're looking for an ERP platform ✅ NetSuite: https://netsuite.com/metrics and get a customized KPI checklist.

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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