Hacking SaaS by Eric Mersch

Author:Eric Mersch
Language: eng
Format: epub
Publisher: Houndstooth Press
Published: 2023-05-23T00:00:00+00:00

The second part of this analysis is to look at the Contribution Margin for deals with an ACV below $100,000. Our annual sales quota assumption begins to break down with deals priced between $50,000 and $100,000. Specifically, a product priced at $50,000 would require the AE to close 2.5 deals per month to meet a $1,500,000 annual quota, and this is an unreasonable number of deals to expect one person to close. The upper limit on annual new customer count for one AE is around fifteen. This number of deals at a $50,000 average ACV means an annual Sales Quota of $750,000. The AE would make $195,000 in this arrangement, but the theoretical Contribution Margin falls to just 3.6%. Any change to the negative would easily make this strategy unprofitable. At these lower price points, Enterprise SaaS companies need to incorporate more sales-efficient strategies.

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