Historically, SaaS companies have used ARR or Annual Recurring Revenue as their key metric. As pricing models diversify and access, usage and outcomes are combined with subscriptions to build hybrid pricing models ARR becomes less relevant. At the same time, more volatility in churn numbers is undermining the utility of ARR as a predictor of future revenue. We need a new metric. Ibbaka proposes that this be APR for Annual Predicted Revenue.

Many companies are adding predictive analytics capabilities to their offers. We all want to know more about the future, there is more and more data available and deep learning style AIs have been described as prediction machines. How should this new functionality be priced? There is no one answer, but by following the basic value based pricing process one can get to an answer.

Good pricing decisions require data. By the time you need to take action, it is often too late to collect the needed data or data collection adds to costs and delays. You can avoid this by setting up your CRM, financial data, user surveys and most importantly your SaaS offer to collect the data you will need.

Looking back at pricing predictions for 2018 we see how good our crystal ball really was.

Cost plus pricing is the best pricing method when the customer has control of the deliverables and when only the customer can know the value of the offer.