Product Management

Revenue Generation: How to Build Killer SaaS Products

February 22, 2024

5 mins read

Revenue Generation: How to Build Killer SaaS Products

You’ve got a great SaaS idea. Maybe you’ve even built an MVP. But now it’s time to start thinking about how you’ll actually make money. Building a product is one thing, but building a business that generates revenue is a whole different ball game.

In this article, we’ll explore time-tested strategies for monetizing your SaaS so you can start scaling your business. We’ll cover everything from pricing models to sales funnels to metrics that matter so you can go from ideation to profitability. Whether you’re just starting out or looking to improve an existing SaaS, you’ll walk away with actionable tips to boost revenue. So let’s stop dreaming about hockey stick growth curves and start mapping out a plan to make them a reality.

Understanding Your Target Audience for Revenue Generation

To build a SaaS product that generates revenue, you first need to know who you're selling to and what they really want. Define your ideal customer

Who is your target audience? Are they small businesses, enterprise companies or consumers? What challenges do they face that your product solves? Get very specific about the attributes of your ideal customers like job titles, company sizes and locations. The more you can define them, the easier it will be to build a product they need and market it to them effectively.

Analyze the competition

See what else is out there and figure out how to differentiate yourself. Maybe existing solutions are too complex, expensive or lack key features. Look for opportunities to provide better value to your target customers. Then survey your potential users

Once you have a good handle on your target audience and competitors, survey people who match your ideal customer profile. Ask them about their challenges, how they currently solve them, and what kind of solution they would be willing to pay for. Their input will be invaluable in designing a SaaS product that generates real revenue.

Focus on a must-have solution

The most successful SaaS products solve a burning need. They provide a solution that target customers can't live without. Look for those essential pain points in your research and build a product that makes a meaningful difference to your customers' businesses or lives. That's how you create a SaaS product that sells itself.

With a laser focus on your target audience, analyzing competitors and building a must-have solution, you'll be well on your way to developing a SaaS product that generates real revenue. Stay close to your customers, keep optimizing based on their feedback, and you'll have a winning formula for success.

Choosing the Right Monetization Model for Your SaaS

Subscription plans

The most popular model is a recurring subscription fee. Offer different tiers like basic, pro and premium so customers can choose a plan that suits them. Keep in mind factors like features, storage space and number of users. For a new SaaS, start with a simple pricing structure and adjust based on feedback.

Freemium model

Offer a free basic plan to draw customers in, then upsell them to paid premium plans. The free plan should be generous enough to hook them, but paid plans offer essential features for serious users. The key is converting free users to paying customers, so closely monitor how people are engaging with your product.

Usage-based pricing

Charge customers based on how much they use your service. This works well for SaaS that provide API access or infrastructure services. Track metrics like number of API calls, bandwidth used or compute hours. Set a reasonable base rate, then charge for usage above that threshold. This model is attractive for customers with fluctuating needs.

Bundled pricing

Group features and offerings into bundles at a discounted rate. For example, offer standard, professional and enterprise bundles with increasing features. Bundles are an easy way for customers to get everything they need in one package. Include your most popular or essential features in the basic bundle to drive sales.

The monetization model you choose depends on your product, target customers and business goals. Do some research on what competitors are doing, but don't be afraid to innovate. With the right combination of value, transparency and flexibility, you'll find a pricing structure that works for your SaaS and generates revenue.

Optimizing Your Onboarding Funnel for Maximum Conversion

Focus on User Experience

The key to converting free trials into paying customers is providing an amazing user experience. Make signup quick and seamless. Once someone starts a trial, the product should be intuitive to use. Clear documentation, tooltips, and onboarding tours can help new users get up and running quickly. If users have a great first experience with your product, they'll be more likely to convert to paying customers.

Demonstrate Value

Use the free trial period to show users the value of your product. Highlight the key features and benefits that solve their problems. You might set up onboarding emails to walk them through different use cases and examples. The more "aha!" moments you can create, the more likely they'll be to sign on as paying subscribers.

Offer Discounts and Promotions

People love to save money. Offering a discount or special promotion, like 25% off if they sign up today, gives them an incentive to convert during the free trial. You can also provide coupon codes for a percentage off their first year if they subscribe. These kinds of offers make people feel like they're getting a good deal, even if your regular pricing is fair.

Follow Up and Provide Support

Don't just sign people up for a free trial and leave them alone. Follow up with emails to see how they're doing and if they have any questions. Provide helpful resources and how-to guides. Make sure your support team is available to quickly answer any technical or product questions. Good customer service and support during the free trial will make people more likely to stay on as paying customers for the long run.

Optimizing your onboarding funnel is key to converting free trial users into long-term customers. Focus on user experience, demonstrate value, offer discounts, and provide great support. Do these things well, and watch your subscriber numbers—and revenue—climb.

Driving Engagement Through Smart Feature Prioritization

To increase revenue, you need an engaged customer base. Prioritizing the right features that match your target customers’ needs is key. Think about what would excite your customers and keep them using your product.

Focus on Must-Have Features

Concentrate on building features that solve your customers’ biggest problems or needs. For example, if you’re building project management software, focus first on core features like task lists, calendars, and reporting. Leave the bells and whistles for later. Your customers will pay for a product that helps them do their job.

Get Feedback

Talk to your customers and see how they’re using your product. Look for patterns in their feedback to determine common feature requests. Release surveys and analyze usage data to discover what features customers want next. Make data-driven decisions on what to build.

Release New Features Regularly

To keep customers engaged, release meaningful updates every few weeks. This shows you’re actively improving the product and responding to customer needs. Release notes also market the new features, encouraging customers to log in and try them out.

Consider a Freemium Model

Offering a free trial or freemium version of your product is a great way to drive engagement. Customers can try before they buy, and you can gather valuable data on how they use the features. Upselling customers to paid plans once they’re hooked is an effective monetization strategy. The key is providing enough value in the free version to keep customers engaged, while holding some features back for paying users.

By focusing on must-have features, gathering customer feedback, releasing updates regularly, and offering freemium trials, you can build a product that customers love and will pay for. Keep your customers engaged, and the revenue will follow.

Analyzing Metrics to Continuously Improve Revenue

Customer Metrics

To build a successful SaaS product, you need to understand your customers and how they use your product. Monitor metrics like churn rate, lifetime value, and customer acquisition cost. A high churn rate means customers are leaving quickly—fix it fast. Lifetime value shows how much revenue you can expect from a customer, helping determine how much to spend on acquisition. And keep your CAC lower than your LTV.

Usage Metrics

See how people actually use your product. Track metrics like monthly recurring revenue, average revenue per user, conversion rates, and stickiness. MRR shows your predictable income and growth over time. ARPU helps determine pricing and packaging. Monitor how people convert from free trials to paid plans. And stickiness, like days logged in and features used, shows how engaging your product is. The more people use it, the less likely they are to leave.

Financial Metrics

Revenue and costs drive the success of any SaaS company. Track sales revenue, profits, expenses, cash flow, and funding. Make sure sales revenue and profits are increasing over time. Keep expenses in line with your budget. Monitor your cash flow and burn rate to ensure you have enough to keep operating. And know how much funding you have and how long it will last.

Optimization

The key to building a revenue-generating machine is constant optimization. Regularly analyze your metrics to see what’s working and not working. Make incremental improvements to things like:

  • Pricing and packaging: Consider adding or removing plans, changing prices, adding or removing features.
  • Marketing initiatives: Double down on the channels and campaigns bringing in the most new customers. Drop or improve underperforming ones.
  • User experience: Look for points of friction in the app and smooth them out. Add helpful tips and guidance for new users.
  • Sales process: Refine your sales presentations, materials, and follow-up to close more deals. Give sales reps the training and tools they need.

Continuously optimizing all parts of your SaaS business based on data-driven insights is the secret to building a product that generates more and more revenue over time. Monitor your key metrics, make incremental improvements, analyze the results, and repeat. That’s how you build a revenue machine.

Conclusion

There you have it! Building killer SaaS products that drive revenue takes work, but with the right strategy and execution, it's totally doable. Stay focused on solving real customer problems, build an amazing product, make it easy to use, provide awesome support, and keep improving. Pricing and positioning are key too - find the sweet spot where you maximize value. SaaS takes constant optimization, so keep tweaking and testing. But with the right foundation, you'll be well on your way to subscription success and serious revenue generation. Now get out there, talk to customers, and start coding - your killer SaaS awaits!

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Product Management

Revenue Generation: How to Build Killer SaaS Products

February 22, 2024
5 mins read
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IN THIS ARTICLE:
  1. What are product discovery techniques?
  2. 8 key product discovery techniques link
  3. Conclusion
IN THIS ARTICLE:
  1. What are product discovery techniques?
  2. 8 key product discovery techniques link
  3. Conclusion

You’ve got a great SaaS idea. Maybe you’ve even built an MVP. But now it’s time to start thinking about how you’ll actually make money. Building a product is one thing, but building a business that generates revenue is a whole different ball game.

In this article, we’ll explore time-tested strategies for monetizing your SaaS so you can start scaling your business. We’ll cover everything from pricing models to sales funnels to metrics that matter so you can go from ideation to profitability. Whether you’re just starting out or looking to improve an existing SaaS, you’ll walk away with actionable tips to boost revenue. So let’s stop dreaming about hockey stick growth curves and start mapping out a plan to make them a reality.

Understanding Your Target Audience for Revenue Generation

To build a SaaS product that generates revenue, you first need to know who you're selling to and what they really want. Define your ideal customer

Who is your target audience? Are they small businesses, enterprise companies or consumers? What challenges do they face that your product solves? Get very specific about the attributes of your ideal customers like job titles, company sizes and locations. The more you can define them, the easier it will be to build a product they need and market it to them effectively.

Analyze the competition

See what else is out there and figure out how to differentiate yourself. Maybe existing solutions are too complex, expensive or lack key features. Look for opportunities to provide better value to your target customers. Then survey your potential users

Once you have a good handle on your target audience and competitors, survey people who match your ideal customer profile. Ask them about their challenges, how they currently solve them, and what kind of solution they would be willing to pay for. Their input will be invaluable in designing a SaaS product that generates real revenue.

Focus on a must-have solution

The most successful SaaS products solve a burning need. They provide a solution that target customers can't live without. Look for those essential pain points in your research and build a product that makes a meaningful difference to your customers' businesses or lives. That's how you create a SaaS product that sells itself.

With a laser focus on your target audience, analyzing competitors and building a must-have solution, you'll be well on your way to developing a SaaS product that generates real revenue. Stay close to your customers, keep optimizing based on their feedback, and you'll have a winning formula for success.

Choosing the Right Monetization Model for Your SaaS

Subscription plans

The most popular model is a recurring subscription fee. Offer different tiers like basic, pro and premium so customers can choose a plan that suits them. Keep in mind factors like features, storage space and number of users. For a new SaaS, start with a simple pricing structure and adjust based on feedback.

Freemium model

Offer a free basic plan to draw customers in, then upsell them to paid premium plans. The free plan should be generous enough to hook them, but paid plans offer essential features for serious users. The key is converting free users to paying customers, so closely monitor how people are engaging with your product.

Usage-based pricing

Charge customers based on how much they use your service. This works well for SaaS that provide API access or infrastructure services. Track metrics like number of API calls, bandwidth used or compute hours. Set a reasonable base rate, then charge for usage above that threshold. This model is attractive for customers with fluctuating needs.

Bundled pricing

Group features and offerings into bundles at a discounted rate. For example, offer standard, professional and enterprise bundles with increasing features. Bundles are an easy way for customers to get everything they need in one package. Include your most popular or essential features in the basic bundle to drive sales.

The monetization model you choose depends on your product, target customers and business goals. Do some research on what competitors are doing, but don't be afraid to innovate. With the right combination of value, transparency and flexibility, you'll find a pricing structure that works for your SaaS and generates revenue.

Optimizing Your Onboarding Funnel for Maximum Conversion

Focus on User Experience

The key to converting free trials into paying customers is providing an amazing user experience. Make signup quick and seamless. Once someone starts a trial, the product should be intuitive to use. Clear documentation, tooltips, and onboarding tours can help new users get up and running quickly. If users have a great first experience with your product, they'll be more likely to convert to paying customers.

Demonstrate Value

Use the free trial period to show users the value of your product. Highlight the key features and benefits that solve their problems. You might set up onboarding emails to walk them through different use cases and examples. The more "aha!" moments you can create, the more likely they'll be to sign on as paying subscribers.

Offer Discounts and Promotions

People love to save money. Offering a discount or special promotion, like 25% off if they sign up today, gives them an incentive to convert during the free trial. You can also provide coupon codes for a percentage off their first year if they subscribe. These kinds of offers make people feel like they're getting a good deal, even if your regular pricing is fair.

Follow Up and Provide Support

Don't just sign people up for a free trial and leave them alone. Follow up with emails to see how they're doing and if they have any questions. Provide helpful resources and how-to guides. Make sure your support team is available to quickly answer any technical or product questions. Good customer service and support during the free trial will make people more likely to stay on as paying customers for the long run.

Optimizing your onboarding funnel is key to converting free trial users into long-term customers. Focus on user experience, demonstrate value, offer discounts, and provide great support. Do these things well, and watch your subscriber numbers—and revenue—climb.

Driving Engagement Through Smart Feature Prioritization

To increase revenue, you need an engaged customer base. Prioritizing the right features that match your target customers’ needs is key. Think about what would excite your customers and keep them using your product.

Focus on Must-Have Features

Concentrate on building features that solve your customers’ biggest problems or needs. For example, if you’re building project management software, focus first on core features like task lists, calendars, and reporting. Leave the bells and whistles for later. Your customers will pay for a product that helps them do their job.

Get Feedback

Talk to your customers and see how they’re using your product. Look for patterns in their feedback to determine common feature requests. Release surveys and analyze usage data to discover what features customers want next. Make data-driven decisions on what to build.

Release New Features Regularly

To keep customers engaged, release meaningful updates every few weeks. This shows you’re actively improving the product and responding to customer needs. Release notes also market the new features, encouraging customers to log in and try them out.

Consider a Freemium Model

Offering a free trial or freemium version of your product is a great way to drive engagement. Customers can try before they buy, and you can gather valuable data on how they use the features. Upselling customers to paid plans once they’re hooked is an effective monetization strategy. The key is providing enough value in the free version to keep customers engaged, while holding some features back for paying users.

By focusing on must-have features, gathering customer feedback, releasing updates regularly, and offering freemium trials, you can build a product that customers love and will pay for. Keep your customers engaged, and the revenue will follow.

Analyzing Metrics to Continuously Improve Revenue

Customer Metrics

To build a successful SaaS product, you need to understand your customers and how they use your product. Monitor metrics like churn rate, lifetime value, and customer acquisition cost. A high churn rate means customers are leaving quickly—fix it fast. Lifetime value shows how much revenue you can expect from a customer, helping determine how much to spend on acquisition. And keep your CAC lower than your LTV.

Usage Metrics

See how people actually use your product. Track metrics like monthly recurring revenue, average revenue per user, conversion rates, and stickiness. MRR shows your predictable income and growth over time. ARPU helps determine pricing and packaging. Monitor how people convert from free trials to paid plans. And stickiness, like days logged in and features used, shows how engaging your product is. The more people use it, the less likely they are to leave.

Financial Metrics

Revenue and costs drive the success of any SaaS company. Track sales revenue, profits, expenses, cash flow, and funding. Make sure sales revenue and profits are increasing over time. Keep expenses in line with your budget. Monitor your cash flow and burn rate to ensure you have enough to keep operating. And know how much funding you have and how long it will last.

Optimization

The key to building a revenue-generating machine is constant optimization. Regularly analyze your metrics to see what’s working and not working. Make incremental improvements to things like:

  • Pricing and packaging: Consider adding or removing plans, changing prices, adding or removing features.
  • Marketing initiatives: Double down on the channels and campaigns bringing in the most new customers. Drop or improve underperforming ones.
  • User experience: Look for points of friction in the app and smooth them out. Add helpful tips and guidance for new users.
  • Sales process: Refine your sales presentations, materials, and follow-up to close more deals. Give sales reps the training and tools they need.

Continuously optimizing all parts of your SaaS business based on data-driven insights is the secret to building a product that generates more and more revenue over time. Monitor your key metrics, make incremental improvements, analyze the results, and repeat. That’s how you build a revenue machine.

Conclusion

There you have it! Building killer SaaS products that drive revenue takes work, but with the right strategy and execution, it's totally doable. Stay focused on solving real customer problems, build an amazing product, make it easy to use, provide awesome support, and keep improving. Pricing and positioning are key too - find the sweet spot where you maximize value. SaaS takes constant optimization, so keep tweaking and testing. But with the right foundation, you'll be well on your way to subscription success and serious revenue generation. Now get out there, talk to customers, and start coding - your killer SaaS awaits!

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