Marketing for SaaS and Web Apps / Freemium / Pricing

Web Apps must have a primary revenue stream - usually subscriptions - just don't neglect the other 6 when building your revenue model!

I posted yesterday about the power of Network Effect Data in SaaS, spurred on by the announcement that Intuit had agreed to purchase Mint.com for $170M. I wrote about how the exit for Mint.com was based solely on their unique leveraging of Network Effect Data derived from their SaaS platform. After reading this post on alarm:clock indicating that Mint.com had raised $32M in three rounds of funding, something I didn't know yesterday (I could have looked it up, I guess), it makes the sale to Intuit a bit less attractive than I originally thought.

One could argue that a 5x exit is okay, even good these days, and it is probably better than a slap in the face, but remember that the investment they took was over three rounds. Given that, this exit potentially speaks to the overall lack of revenue generated by the reported 20% of their users that took advantage of the credit card and other offers they presented. If Mint.com had been leveraging multiple revenue streams, rather than just their pseudo-Advertising/Affilate program streams, perhaps they could have improved their valuation and/or reduced the need for so much external funding.

So, the lesson to take away from this is to look at all of your potential revenue streams (there are seven) early and figure out how and when each one will come into play. We use our proprietary SaaS Revenue Matrix for this purpose. No matter how you do it, It is critical that as a SaaS vendor you learn to leverage and monetize Network Effect Data, otherwise you are missing out on a big opportunity, but don't neglect the other six revenue streams in the process. Don't miss out on future revenue opportunities by trying to make a quick buck early, but don't give everything away up front for that "long-tail" or back-end revenue to the detriment of your enterprise in the short-term. Its a balancing act; a process.

If you need help optimizing your revenue model, or determining what revenue streams are available to your SaaS company, give us a call at (972) 200-9317 or get started today.