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How to build a $1M+ vertical SaaS business (step-by-step guide)

The Startup Ideas Podcast

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Value Pricing: Understand the Cost to Unlock Profits

Effective pricing in software requires a deep understanding of the costs associated with the problems being solved. Before establishing a pricing model, identify the current expenses or losses incurred by potential customers. For example, by analyzing a dilemma such as student retention in educational institutions and recognizing the financial impact of lost tuition, businesses can establish a compelling value proposition. Calculate the ROI by forecasting how many clients can be saved through the solution and relate that directly to your pricing strategy. Aim to capture a portion of the value created (ideally 20-50%), starting with a more aggressive 50%, and remain flexible to market feedback to adjust accordingly. Focus product development on solutions that contribute to revenue increase, cost reduction, customer retention, or compliance, as these areas yield clear, quantifiable returns on investment, ensuring your product aligns with customer priorities.

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