10/30/2023 0 Comments Tableplus pricing![]() Having a founding team that has worked with 20+ SaaS startups, we’ve learned that on average, CoGS typically accounts for around 30% of revenue. ![]() Things like cloud infrastructure, customer support, software engineering, and other product costs are typical SaaS CoGS. When people think about a cost-plus pricing method they tend to only think about their cost of goods sold (CoGS). It’s essential to any pricing strategy because your costs dictate the lowest possible price you can charge and still operate profitably. Hence, it’s important to understand the dynamics of cost-plus pricing in SaaS.īy definition, cost-plus pricing means you calculate your business’s costs and add a desired markup percentage to get to your product’s selling price. Yet, even in the software industry, if your unit cost of doing business is higher than customers’ perceived value, you won’t be doing business for long. ![]() Additionally, cost-plus pricing doesn’t require that you talk to any customers, which is generally frowned upon in any business. ![]() People typically dismiss the cost-plus pricing strategy in SaaS, but we believe that’s a dangerous mistake.Ĭritics argue that using a cost-plus pricing strategy “leaves money on the table” because software typically sells with higher value-based pricing, producing a healthy 60-80% gross margin. ![]()
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