Profitability has become paramount for SaaS companies. Now is the time to steer your SaaS/XaaS business model to a sustainable posture.
The path to profitability for XaaS providers will not be easy, but it is doable. And there are real world examples of profitable XaaS companies following the principles we outline here.
In the paper, "The State of the Technology Industry 2023: The Year of Profitable SaaS" TSIA asserts that there are three levers XaaS companies will need to pull to become profitable:
- Monetize services: Charge customers for aspects of professional services, customer success, education, and premium technical support.
- Migrate commercials: Move low-complexity commercial transactions (e.g., simple renewals) from the sales department to lower cost channels.
- Modify the growth engines: Move beyond leveraging sales representatives and invest in next-generation capabilities to grow revenue.
The plays outlined in this paper will fall under one of these three main levers. They will be presented from the easiest to run (in terms of time and treasure) to the most challenging:
- Monetizing Professional Services
- Monetizing Premium Technical Support
- Monetizing Customer Success and Eduation Services
- Migrating Renewals from Account Executives
- Assigning Expansion Targets to Customer Success
- Increasing the Account Ratio for Sales
- Optimizing Service Operations
- Offer Rationalization
- Customer-Led Growth
- Product-Led Growth
- Channel-Led Growth
- Establishing Managed Offers