Archivo de la etiqueta: ACV

Pricing, ACV and sales quotas

There is a trend in the SaaS B2B industry to hide the pricing of products and solutions, specially when targeting mid-market and Enterprise.

On the one hand, a web without public prices implies receiving a bunch of leads which will not qualify, say, lost time dealing with wrong expectations. On the other hand, showing a price to a prospect which has not invested the time to identify the value could block a potential nurturing and conversion of a right lead.

If the target customer is mid-market or Enterprise, and the value associated to the product is different depending on the use case, I would support not public prices and a call to action for scheduling a demo -ideally, after an automatic qualification process-.

Whether the pricing of our SaaS B2B to be hide or public, when the customer acquisition channels include an inside sales team (that is, pretty much always), the relevant metric is going to be more related with the Annual Contract Value or ACV.

According to a post by Tomas Tunguz from Redpoint, the smallest ACV to justify an inside sales team at a SaaS startup would be never below 3k€, for a feasible annual quota of at least 300k€.

Combine that number with another piece of savvy advice by Jason Lemkin, who claims that a quota of 5x the OTE (on target earnings, i.e. base + bonus) is a great target to achieve in SaaS, and 60k€ would the minimum compensation for a sales rep who reaches that bottom line quota.

Therefore, the right order when setting a salary and quota for an inside sales team starts with the target market, pricing and ACV.

Bonus track: And the role to work it out if necessary is product marketing.