Your financial model is more than just a spreadsheet; it's the operating system for your business. I'm sharing the exact financial model template that we use to run our SaaS company, track our progress, and make critical decisions about our growth.
The Counterintuitive Truth
In SaaS pricing, the best practitioners often do less, not more.
The lesson: most founders overthink this and underspend on execution. It sounds simple. It's incredibly hard to execute.
What I've Learned From 125 Companies
A few patterns in SaaS pricing come up again and again.
The founders who handle SaaS pricing well understand that the data tells a different story than your gut.
What I Tell Founders
Before deciding anything about SaaS pricing, start with three questions:
What's your timeline? Because the right approach for a company with 6 months of runway is very different from one with 3 years.
What have you already tried? Most founders have tried something. Understanding what didn't work is often more valuable than knowing what might.
Who on your team owns this? If the answer is "everyone" or "no one," that's your first problem to solve.
These questions seem simple but they reveal a lot about where a company actually stands.
This connects to broader themes around AI infrastructure costs, AI pricing models, usage-based pricing, cloud AI services that I've been thinking about a lot lately.
What's Next
Best practice in SaaS pricing is changing fast. What worked last year might not work next year. That's both the challenge and the opportunity.
My advice: stay curious, stay humble, and stay close to the people who are actually doing the work. Read less thought leadership and do more experiments. Talk to fewer consultants and more practitioners.
If you're building in this space, the best time to get SaaS pricing right is before you need to. Don't wait for a crisis to force your hand.
I'll keep sharing what I learn. This stuff matters too much to keep to myself.
Frequently Asked Questions
Q:How has this view evolved over time?
My thinking on most topics has changed significantly over the years. Early in my career, I held many conventional views that experience proved wrong. I try to update my beliefs when the evidence changes.
Q:How can I apply this thinking to my own situation?
Start by identifying the core principle behind the opinion, not the specific example. Then ask yourself: does this principle apply to my context? If yes, test it in a small, low-risk way before going all in.
Q:What experience informs this perspective?
This perspective comes from over a decade of building companies in Silicon Valley, two successful exits (RemoteTeam to Gusto, MovieLaLa to Gfycat), and investing in 234 startups including Anthropic, OpenAI, and Scale AI. I write about what I've lived.
Q:Do all experts agree with this view?
No, and that's fine. The best ideas in business are often contrarian. I share my perspective based on my experience and data, but I encourage you to seek out opposing viewpoints and form your own conclusions.