Episode Transcript
[00:00:00] Introduction: Yo, mic check. What's up, everybody? You're listening to the street pricing podcast, the only show where proven SaaS leaders share their mindset and mistakes in pricing so we can all stop guessing and start growing. Enjoy, subscribe and tell a friend. Now let's break it down with your host and sought after slayer of bad pricing, Marcos Rivera.
[00:00:23] Marcos Rivera: What's up and welcome to the Street Pricing podcast. I'm Marcos Rivera, author, founder and pricing coach. And today I want to give you my five B2B SaaS anti predictions for 2024. We're going to take a different cut. And thinking about it out there, there's a lot of noise, a lot of people talking about what's going to happen in 2024. I want to talk about what's not going to happen in 2024 and what it means for B2B SaaS leaders like you all. All right, so listen up because I disagree with a lot of the stuff, a lot of the pundits that are out there. So let's jump right in. All right, so my first anti prediction for 2024 is that sales will not get easier in B2B SaaS. All right. What I mean by that is it was an uphill battle in 2023, right? The last stat I read was 34% of sales reps hit quota. And that's a scary number. And a lot of folks are saying, oh, we'll bounce back in 2024, things will get a little bit easier, the belts will start to loosen up. But I don't think that's true. I think that's a bunch of BS. I think that's a bunch of hopeful thinking. It's not going to happen. Sales will still remain tough. I think in Q1, a lot of the results of all this fiscal responsibility and this geared towards profitability is going to start showing some really nice numbers. Folks are going to like it. That's going to play well into 2024. They're going to keep the ship steady and continue to make it tough on new sales. And so the bar is going to be high. What does that mean? That means for you all in B2B SaaS world, you don't want to take this for granted. You have to keep your friction super low in your pricing and packaging and in your contracting. Right. So be careful. Long term commitments, CPI plus 5% is going to be really hard to get. All these key things I would resist discounting, but I would make sure that you remove any friction points, especially in contracting. All right. My second anti prediction for 2024, moving into the second one, I'm going to get into AI for a second because everyone's talking about how AI is going to continue to explode in 2024.
AI adoption will not outpace last year. I think it's still going to keep going. People are still going to keep grabbing it. But in my point of view, it's going to start moving from play eye to may eye.
What I mean is I don't see this continued rapid adoption without the really hard truths of how people change behavior. And the hard truth is that it takes effort to change, okay? It takes time to change. People can pick something up and they can find it cool, but until they apply it to something and actually change their habits, then they're really not going to fully change their processes around it, which means they're not going to fully integrate it, which means you can't adopt it. And so the point here is that I think the wall of scrutiny is going to start coming up. I think you're going to see a lot of worries about which use case am I really going to apply this in and is this safe? Is the information and privacy and all the security aspects around it going to be addressed? And as that begins to play out, you still have, by the way, heavy costs. Like AI is not free to produce. Like all this processing power comes from somewhere and it takes time for those costs to go down as well. So AI is going to keep on moving. Great. It's going to keep plowing forward. I don't see it outpacing 2023. What that means for you is that if you're a B, two B SaaS company and you're trying to implement some kind of AI in your product, I would be careful about trying to over monetize it this year, okay? Continue to make it easy for people to come in and adopt and heck, even take some of that AI and make it part of your core product so they can taste it without a lot of friction, and then you can begin to monetize that as they discover the right use cases that they want to apply it to.
Number three, my third anti prediction for 2024, it's all about these startups. And the big word out there is, look, all these startups are going to crash and burn in 2024. I think startup apocalypse will not happen in 2024, okay? I think startups will fail at the same rate they've always been failing, which is still pretty high. Like last stat I read was like 86%. Okay. So most of them are still going to fail, but there was a huge influx in the last few years, especially last year. So yes, there will be more coming out. And what does that mean for you as a B two B SaaS company? I would lean in to your tenure and to your established reputation and to your customer base. Okay? It is more valuable when you see a lot of companies shutting down and crashing and burning. Then the buyers start to look and say, ooh, there's a lot of value in someone who's been around for a little bit, who we know is going to be around for a few years more. So lean into that. And I would start thinking of some promotional or leaner entry points into your product to scoop up a lot of those customers. All right, so that is number three, my fourth anti prediction in 2024. A lot of talk about usage based pricing too. Okay. And nothing wrong with usage based pricing. I think it has its place. I think consumption based pricing has been making a lot of waves. I do not think usage based pricing will overtake subscription in 2024. I think it's still going to keep moving along, grabbing attention of certain companies that I think will really need it. But let's be real here. I think looking at the trends, I saw a report, 22% growth in usage based pricing across B two B SaaS companies, and that was flat year over year. And they actually even came down a little bit from the COVID years. And so it's relatively flat. I think companies are still trying to adopt it, but it takes time. The implementation of the infrastructure, the tracking of it, the selling of it, the positioning of it, the predicting of how much usage, like all those things don't happen overnight. So I think it's going to keep making headway, not going to overtake subscriptions. So what does that mean for you as a B two B SaaS company? I mean, look, I think you should already be testing usage based pricing as part of your models. But going and leaning into, say, a hybrid model is where you want to start first. You don't want to completely leap into usage based, especially if you're still building out the capability and the infrastructure. So test a few hybrid models. That is usage and subscription flat mixed, and that is going to lead you one step closer to usage based pricing. All right, now for my fifth and final anti prediction for 2024 is on PLG. And listen, y'all, I am not fully on this train that everything's going to be PLG in the next five years. Listen, I think PLG also has its place. I think especially for smaller deals, ACVs under ten K, maybe ACV is under 25k. PLG works really nicely. I do think it starts to fall down when you get into bigger, larger, more complex enterprise software. Think of like bank erps and all those kinds of things. And so plgs will still move, but it will not see a huge wave in 2024. All right? And you think about a lot of great stats that are propelling PLG, right? 83% of 100 million dollar companies and up were PLG. You also want to look at the snowflakes and AWS and data. Dogs of the world have a lot of elements that make PLG very easy for them, meaning very quick, easy entry, very easy adoption and monitoring and tracking of all that. And a lot of products, especially those that were built maybe more than five, six years ago, don't have that already built in. They have to go in and expand, build it. And also that changes the sales motion, that changes the customer success motion, that changes positioning, that changes a lot of things. And you got to be careful because remember, they still have a big customer base that they will also need to address and either migrate to the new model and so on again, doesn't happen overnight. And so I think PLG will continue to plow ahead, it will continue to gain share and people will start adopting it, but not to the pace everyone's talking about. It is not going to take over in 2024. All right, so as a B two B SaaS company, I would say invest in PLG, invest in easier onboarding, maybe also invest in some self service capabilities in your product, but you're not going to flip that switch overnight. I would say just keep moving to making your product easier and quicker to adopt and to make it easier to sell and buy. All right, so those are my big five anti predictions for 2024 in B two B SaaS. And look, I owe it to you guys to keep it real and offer some real perspective. So I know these are different than what you may be reading out there, but there's still a lot of good stuff. So I would continue to keep your eyes focused on the prize for 2024. Stay lean, keep friction low, experiment in the right places, and keep delivering that value right. That's all I have to tell everybody here and take these lessons forward, please, and make sure that you have a fantastic 2024. All right? So remember, stop guessing and start growing. Until next time, thank you and much.
[00:09:34] Speaker A: Love for listening to the street pricing podcast with Marcos Rivera. We hope you enjoyed this episode and don't forget to like and subscribe. If you want to learn more about capturing value. Pick up a copy of street pricing on Amazon until next time.
