Monetizing SaaS: Episode 7 with Paul Casinelli

Paul, it's great to be here. It's been so much fun getting to know you over the last year. You've had this really interesting career. You've been a product manager, you've led product marketing, you've run go-to-market ops and strategy, you've been a CEO, you've mentored startups. Can you tell me about the steps in the journey?

Sure.

Yeah.

Thanks for having me, Fynn. I think, you know, when I look back on my career, it really got started in a funny place. I graduated from college in 2009 when the economy was kind of bottoming out after the financial crisis. And I was a poli-sci major, which isn't the most obviously applicable skill set for the economy. But what I was able to do was I was able to parlay my research background looking at economic indicators for different companies. I was going deep into nuclear arsenals for the US and China and studying all of that. And I kind of parlayed that into a business analyst role at a tech company in Massachusetts that needed help with the exec team, needed help with business analysis. And so from there, I really just focused on adding kind of as much value as I could, taking on more responsibilities and growing, getting closer to the business. Side of it, whether it was in product or going into product marketing. And I think the common threads are I really enjoyed going to market, bringing products to market, and interacting with customers. And so that was what I focused on diving deeper into. And I guess that kind of culminated with running, you know, being in a go-to-market position, overseeing broad go-to-market, kind of the intersection of product marketing sales, customer success, account management. And that's really, you know, where I, where I ended up at Brightcove. And then from there, you know, starting to take those skills and that experience and help founders navigate the growth challenges, especially in the early stage where they might be coming from, like they might be a domain expert in one area, but they don't have the experience in customer success or in product or in pricing and those kinds of things. So that breadth of experience I found very helpful for for founders. Well, one thing I was thinking about before this, this call was that one thing I, I kind of made the hallmark of my, of my career growth was doing the stuff that the execs didn't want to do. So like a lot of people that like, you know, on my teams that I would mentor, I'd say, you know, people think it's the flashy thing that gets you to grow. And for me, it was the opposite. Like you earn the flashy thing, you earn the, you earn your shot at the flashy thing by doing the, the work that the execs don't want to do, combing through tens of thousands of lines of a spreadsheet, doing all these, you know, presentation, you know, PowerPoints for the board, those kinds of things, those earn you the right to get the big shot. So that's my advice I give people who are figuring out how to get to where they want to be is volunteer for that grunt work and earn your shot at the big shot.

I love that advice. So you've been working in SaaS for most of the last like 15 years. When you zoom out, I mean, you think about building SaaS companies, helping early-stage founders, you know, going into kind of like finding product-market fit, getting into growth stage, scaling. Are there inflections in software or big changes that you yourself have found, you know, kind of are particularly interested in? They really kind of light a fire for you?

Yeah, I think some of the companies I advise right now are working at the intersection of, of, uh, I know everybody's talking about this, working at the intersection of AI, and enterprise. And I've always found that really interesting since, you know, fooling around with Midjourney like 2 years ago, I was already thinking like, how is this actually going to impact the enterprise and SaaS companies? And so I think that the thing that I'm really excited about that I've encountered as I've been working with different founders is this kind of like this concept that SaaS is inherently kind of like these old SaaS products are kind of dumb from the standpoint of like, not as an insult, but like as a fact, you know, the original CRM, like, you know, Salesforce, HubSpot, those are just UIs on a database and people have to go in and get their call and log their call and log their notes. And they have to manage their opportunity and move it forward. And it's really, you know, and as someone who worked closely with sales, you know, you see they have to continually go back and manage this. And so it's not really like, it's called sales automation, but it's really not as much automation as it is like making sales do the work that like they used to just do on a pencil and paper or something. So I think that I'm really excited about, I think is a major inflection is this idea to make SaaS products smart. Like for instance, if you have a sales call and you're talking with your prospect in and prospecting in and qualifying them. And I get this because I get excited about this because of my product and pricing background. Why isn't your CRM configuring a quote for you based automatically based on what's going on in that call? That should absolutely be something that's happening, right? So that's it. The SaaS products are now giving back in some way. So that's kind of what I've been focused on. On a number of different startups. And the trends that I'm trying to find and capitalize on are getting away from just being like a wrapper, like everybody will say, on the AI and actually building it into the SaaS product so that it truly supplements and complements what your user is doing.

Yeah, that's such a cool idea. The specific idea around like, you know, some type of product should know what the quote should be is super interesting. I feel that every day., you know, kind of pushing my own deals through the funnel and trying to then kind of come back, do a lot of manual work to try to understand what I learned in the past 30 days. And it feels like at this point, so much of that should actually be automated, should actually be really smart and help me get smarter and help me get faster. Yeah.

I mean, you think about it, part of that is what are the products they're actually interested in and talking about, but they're the art to sales and go-to-market and business development is who also is the customer? What's the company profile? How big are they? You know, I'm not going to waste my time with a year-long sales cycle with a mega conglomerate if I'm only selling a $500 a month product. So there's, you know, there's that art of the exploration and understanding the customer. All that data, you know, you can automate the capture of that and then, make recommendations of what should be presented to them based on that.

You know, one of the things that I think is both interesting and unique about your career is that you've operated in product, you've operated in go-to-market, ops and strategy, pricing, monetization, but you've also operated in product marketing. So you've kind of like occupied most of the roles that are kind of really crucial to creating alignment within a business. Can you talk a little bit about the techniques, uh, you mentioned earlier, like doing the grunt work, but what are the techniques that you've found to be most effective to building trust and building alignment, particularly between product and go-to-market?

Yeah. So I think, uh, when you're in that position between the product org and the sales org, that's kind of how I think about marketing is it's in between the product org and the sales org. The kind of advice I give everybody, the secret sauce is you want each team to think that like you have their back over the other team. So like, that's how I always operated. And the reality is like, I do actually have both their interests, their best interests in mind. And I try to bridge the gap between those orgs and building that kind of like trust with them is is critical. Part of it is just the personal, like, relationship building and that kind of thing. But I think specifically with product, the area that I found to be the most, uh, the best opportunity to build that trust is in product launches, right? Because obviously they're focused on product and the marketing team, like, the most relevant action that we do, uh, to support the product team is bringing that product to market. And so product's not going to necessarily be like super involved on the brand and like marketing campaigns around the launch. That's like what the marketing team is going to do and support the sales team in that or support the sales team with that. But what you can do is an internal launch. And so internal launch is something that I focus on a lot. I found a lot of success doing that. Uh, and, and the idea is before you launch anything, you need to meet internally and get the whole company on the same page. And this is a real opportunity for, especially for you to get the product team in front of the sales team. And this, this, they actually love this because it's, you know, people don't want to just throw their product over the, over a wall and then like it goes to market and the sales team doesn't even have a face to the name of the product manager and the engineering teams. So it's a great way to come together. Talk about the product, talk about the benefits, and you can work on this with the product team in advance. So it's something that you can help guide the product team to keep things focused on what the sales team is going to be most interested in. And so that internal launch, so that's everything from, you know, what are the sales materials we're going to use? How are we going to enable them? What's the pricing and packaging? How are we going to pitch it? Trainings, especially the product team will take the lead on training the customer success team and customer support teams on how to navigate this and common things to troubleshoot. And that kind of thing. When you do that, like, you know, that's the goal that everybody's thinking about. But to actually do that successfully, you have to know the roadmap. You have to know what's coming down the pipe. You have to give, you know, you can help create connections between the product team and customers that would be pilot customers or beta customers. You'll run the beta program with the product team, help support them in that. So there's kind of this trickle-down effect of doing this internal alignment, internal launch. All these things then trickle down from that and more opportunities for you to work more closely with the product team and build that relationship. And when you do that right, it really, like, you know, a couple of times, it really builds a strong relationship with the product team. And it kind of allays their fears that they're going to be shipping something that no one's going to hear about, right? So like, they want to know that you're bringing this to market and you're doing your best to do that. It's kind of like if a tree falls in the woods and no one's there, does it make a sound? Like the worst thing possible is to launch a— everybody's done this at one point, really. A product launches and you're like, oh crap, like we didn't know about this, we weren't ready, we didn't do this, we didn't do that. You only do that like once, hopefully very early in your career, and then you never let that happen again. And by doing that and building that muscle memory and process, uh, you can really build a strong relationship with the product team.

It's a great example. It's a great technique. Something that I know you've, um, helped support at the companies you've both operated in full-time as well as the startups that you've consulted is pricing and packaging and monetization more broadly. And I think we can all agree like pricing, packaging, willingness to pay, this is at the heart of product market fit. It's also at the heart of accelerating product market fit once you've found it. Maybe as, you know, kind of just to start talking about monetization generally, could you kind of paint a high-level picture around why monetizing software is so complex for companies as they scale operationally?

Yeah, I think, you know, like when I, when I think about monetization, I think about it in two levels. There's the operational level. How are we actually going to implement our monetization within the product and, and, and those kinds of more technical things. There's also a philosophical level to it. And the philosophical level is the monetization is the basis of the transaction that you're going to have with the customer. And inherent in the transaction, in any transactions, there's two different parties with different interests, right? So everybody wants to get a deal done, hopefully, but the customer or the prospect is thinking about it much differently than you are. And so what you have to do is you have to, there's this tension there that monetization is supposed to solve. And that's why, you know, when people think like, why, you know, how is it possible this pricing is causing so much, such a challenge in my ability to bring this to market? It's because if pricing is done well, it's like greasing the skids so that everything's moving smoothly and both sides are aligned and they understand what they're getting and they both perceive that they're getting value from this transaction. And if you don't do that, even if the product hasn't changed, right? The product hasn't changed, the product's still doing the same thing. If that underlying pricing is not correct or not, doesn't align both sides properly, someone's gonna feel uncomfortable with that and not gonna be able to make that deal happen. And so the reality of that is then each customer is different and the market changes over time and your product is changing over time. And And so, you know, typically, you know, with the old way of doing things, you have to hard code that monetization strategy into your product. And it takes engineering cycles and to take it out or to change it takes more engineering cycles and you're taking that away from building more things or fixing problems for customers. And so that's the other layer on this is now that's a moving target, but the ability to operationalize the pricing. Is inflexible and takes time and takes a lot of resources. And it's, it's a, it can be an afterthought. People don't realize how difficult it is until you're in that position. You're like, oh, I came up with this great new pricing model, our customers love it. Now we got to make this change and we're going to increase our average selling price and all and increase retention. And then the engineers and the product team rightfully say like, okay, well, what order, we're either going to do this later or you're going to take something off that I know you don't want to take off the roadmap to be able to get this done. And so I think that's kind of the whole, you know, the whole complex situation there and how I think about it.

I totally agree with that. I think that aligns very much with my experience. And it forces these like really unfortunate trade-offs in business where it's like I'm trading off between new functionality or an innovation in my business model that may be more aligned to my customer's value. Like we end up pricing and packaging often based on our own internal complexity rather than what may be in the best interest of the customer. Yes.

That's a recipe to, you know, effectively will directly not scale.

Yep.

And I think, you know, people who get sophisticated or find success in pricing quickly find out that to do so, at least you have to quickly find out if you are putting those internal or forcing those internal metrics on the market. It seems it makes a lot of sense to you. But if you're not out there talking with customers about it and understanding how they see the product, you're going to be, you know, you're going to be talking in different languages to each other, essentially.

Yeah. What, so mistakes, what are common mistakes that you have seen from early stage companies as it relates to pricing and packaging? And then, then also second question, what about growth stage companies? Are they the same mistakes or are they different?

I think they're different mistakes because I'll just say growth, like the assumption being that growth companies have more revenue, have more customers. So you can assume that they've, they've hit some kind of, or on the right trail with pricing. They've, they've gotten a first initial pricing model that gets them over that hump. We'll come back to growth in a second though, but that's what I'll say about like how I think about the difference between that. With the early stage customer or early stage companies, it's what I found is it's kind of like a Goldilocks scenario. They've either not thought about pricing at all, or they're thinking about it way too much. And it's holding them up from getting in front of customers and just closing a deal. If you're super early, you need to get customers signed up. You need like case studies and references. You need some— show some revenue, show something coming in the door. And so the goal, like, like for me, the goal when I'm advising companies on this is get a couple models. That you're comfortable with, that get you to a price point that you believe is reasonable for the service that you're offering. It's aligned with the value that you're offering. And just get that. Once you come up with two really solid models, and they shouldn't be too far apart, they should be only changing a few things and nothing like drastically different. Get that in front of customers and prospects and see what they say. If you're early, you know, these are probably design partners. They're companies that you've, you're building rapport with. You want them as advisors, that sort of thing. They're more likely to be open with you and, you know, kind of take up that advisory role versus when you're later in the game and you're doing multimillion dollar deals, they're not going to be giving you advice on. I mean, I've had customers telling me, oh, that new pricing model is good. And yeah, we would pay a little bit of a price increase here because of XYZ. Like when you're doing a million dollar deal or your big six figure deal, that's like your breakout deal. There's no way they're going to be telling you that kind of information. So that's what I would say for the early stage customers, companies is get a couple of things that are reasonably solid, get in front of customers and then hold them to it too. Like when they say, yeah, that's something I would do. Say, okay, let's sign then. Yeah. Not like that abruptly, but that's, you know, hold them to it. You said you would sign for this. You can sweeten the deal a little bit. I'll give you half off the first year and then renew you at the full price or something, but get them to put some skin in the game too and back that up. When it comes to the growth stage companies, I think the thing that I see is that they, the common mistake is that they're not open to being flexible or they haven't realized that the market has changed, their position has changed and it's time to make some big changes. That's what I did at Brightcove when I got in there. The first thing I did was besides this kind of launch of a new business unit into the enterprise instead of the media space, we led a project that redid pricing entirely and our pricing was very internal focused. What was our bandwidth costs, what was our storage costs, how much did it cost to stream a video, how much did it do XYZ thing, all these things. And when we were talking with our new types of customers and this new use case for the enterprise, it became clear that they didn't understand any of that complexity. And it turns out they actually didn't need to because they weren't doing 2-hour-long videos like a media company did. They were doing very short videos. And so we basically distilled everything down into one pricing metric, rolled all of the usage on average, like on average, this type of customer will use this many other entitlements. So let's just price clicking play for when someone clicks play on the video, price that only and erase everything else and not worry about overages. Don't worry about weird billing. Don't worry about any of these headaches. And friction around pricing. And that was a huge success for us. And that was like, I felt the leadership team there was brave for doing that because it was throwing out a pricing model that was, that had made them very successful in the past. It takes a lot to be able to do that. Although, you know, we de-risked it. We did a lot of investigation and research and that sort of thing. But that's a good example of really, you know, re-envisioning your pricing at that stage.

That's such a good— I mean, it's so true. And I have talked to a lot of CEOs and founders who have grown their businesses to $20, $30, $40, $50 million in ARR. And, you know, that's taken them 2, 3, 4 years. And during that time, the market has changed. And maybe more competition is coming to the market or whatever it is. And you end up having to kind of be A, really sort of sober in the way you kind of assess the constraints on the business, but also you do require, to your point, some bravery in those moments. I want to shift from mistakes to misconceptions. What are the most important misconceptions you've seen companies have around pricing and packaging?

So this is kind of funny because I've done a lot of pricing analysis in sheets upon sheets of Excel spreadsheets and surveys and all this stuff. And that's kind of, I think, what people really get excited about with pricing is the analysis piece of it. And this idea that the more data you're looking through, the more likely you are to find some silver bullet that no one saw coming. But what I've actually found is that your gut feel, if you understand the business, your gut feel, and especially the feeling that the sales team has about pricing are often great pointers for where you need to go. And the analysis should follow that to find out why is that the case. So like, I feel like this is causing an issue. I feel like we're leaving money on the table here. I can't close a deal because of XYZ thing. That's actually really important information. A lot of people will just brush that off like, oh, it's not scientific, it's just the salespeople complaining about something. But guess what? When it comes to pricing, actually sales and the pricing team have 100% aligned incentives if you have a great sales team because they want to close more deals at higher ASP faster to make more money. So the sales team should actually be some of your closest partners when you're doing pricing work. And I've, you know, I've worked very closely with the sales team when I do this, whenever I do kind of pricing work. And I use that as a guide, what they're feeling or what they're seeing in the market as a guide, and then substantiate that with the research. So for instance, you know, when we're talking about different usage profiles and paying for all these things, all these overages that you don't want to pay for. That was like, okay, well, let me, they're not using any of these entitlements and they're getting overages on things that they don't expect to be getting overages. We don't want that. Let me go look into that and figure out how I can fix that. That's the way you do it rather than like, let's do this 6 months of data crunching and I don't, and then don't have any kind of compass for where you want to go. It's also, you know, there's very simple things too. Like you can think about, you know, other things not related to the pricing metrics themselves and how those can fit along different, you know, pricing and packaging, whether it's related to security or contract reviews and other like negotiation friction that can be introduced into a deal. You can move those things around in pricing as well. Those are like strictly sales sales negotiation related issues that you're not going to really find in a data dump of your product usage either.

I think it's a really good example. If you're advising a founder and they want to know a single exercise that they could start to deploy or employ to get better at pricing and packaging, many founders are just not good at pricing and packaging. It doesn't come intuitively to them. What's the single most important exercise that you think that they could drop into the way they're operating to make improvements?

Hmm. Well, I don't know if I can answer what the single most important is, but I will say one that is a surprise, which is I've found a lot of success making a, this is not around the price point, but this is more around packaging and feature differentiation. You're going to have multiple versions of your product, like a good, better, best, something like that, multiple tiers. I always create a very detailed feature differentiation list, which shows how every single feature aligns with each tier of the product. And it's also things like, you know, customer support, you know, is it 24/7? Is it just business hours? You know, whatever that could be. SLAs, contracts, security reviews, all those kinds of things. I lay that out in a in a very long, it's usually very long spreadsheet and maintain that accuracy all the time. And the thing that's great about that is it really helps you. And if you, if you color code it so that like it's bright green wherever you have a feature, so you can see like as it's, you know, trailing off and only the enterprise is getting certain features and that sort of thing, it's very easy to start thinking about like, hey, this, you know, this tier of our product's getting like pretty feature rich. It's too rich compared to the others. Or like, there's actually not enough differentiation between our mid-tier and our top-tier product here. And this becomes a great foundational document for your pricing work over time and aligning product launches and feature development with the product team on where you can put features to align with your different tiers and the customers who are going to be good fits for those tiers. So it's kind of a, it's kind of a, like a little secret, or not a secret thing, but a little unexpected, unexpectedly useful tool that I found.

I love it. I want to talk about 3 tactics. One is price model, one is packaging model, and one is contracts. How should companies select and evolve their, their value metrics? So this is really kind of trying to understand how should companies think about price model? How should they select and evolve their value metrics?

Yeah, so I think when it comes to pricing model, you know, you have the range of pricing metrics from usage all the way to very abstract pricing metrics, or even, you know, at the highest tier, different things called like adjustable flat rate pricing, where you kind of like lock in your pricing at an anticipated level and we see what you actually do. And then we re-up it or mark it down the next year based on your actual usage and projected growth. So you can really go from like the most, like, I guess like art and science, right? The one that's the most artistic, which is like, you know, a strict negotiation all the way to the usage-based. The way you select that is by understanding your customer deeply. If you're working with developers, they're going to want to pay for the usage. They do not want to see this complex contract negotiation. They're going to have to go up the chain and be with legal. All the time, you know, looking at that kind of thing. If you're dealing with a customer who's more of a business user who doesn't want any irregularities or unexpected charges, you're going to want something that's on that other end of the spectrum where they're locking in a price, set it and forget it. I don't want to think about it until next year. You're only going to understand that by understanding who your customers are. And I'd say you should also have, you know, as you get more sophisticated as a company or as you have more different types of customers, you're probably going to want multiple pricing models that can support the different people that you're going to be selling to. You don't want to get boxed in by the pricing model. You don't want the pricing model and have it to be too rigid that you can't close the deal. The pricing should always be something that supports closing the deal. It doesn't get in the way of it.

That's great. What about packaging? How should companies think about packaging and the different components of packaging?

I think the way that I think about packaging, and it kind of goes back to that feature differentiation guy that I was just mentioning, packaging, the best packaging is when the product differentiation and feature differentiation enables customers to self-select into the tier that makes the most sense for them. And that might seem kind of obvious,, but it's actually not. And most companies get it wrong. And there's often like very small things that you could switch in between these different tiers of the product in the different packages that can really, you know, help when you're going to market. And that's, I'm always thinking about how is the pricing going to help go to market? So for instance, a company that I was at, we decided to move, um, any and all contract negotiations up to the third tier of our product. Any kind of advanced security review was moved into the most advanced tier of our product. And in doing that, we, instead of causing issues and causing friction with customers, which is what the fear that we had was going to happen, we actually, by forcing that issue and saying, hey, this is, you know, we spend this time on customers with complex security needs, complex negotiation needs, and it has to match the deal size. It was actually a very easy conversation for the salespeople to have. It empowered them and it closed— it increased the close rates for both the mid and the top tier product and subsequently increased the selling price overall because we were forcing— we're not forcing, but putting— moving those customers into that third tier. So I think when the packaging actually supports self-selection and very having a very confident, clear discussion track with your prospect about what kind of tier they're in and why they should be there. That's the best way to do that. And then the last thing I think you said was about contracts. I just like talking about contracts because it's not in the product. Not all these things that are in the contract are going to be in the product. And so the contract is a great way for people who are even exploring pricing to introduce different elements, different, you know, service level agreements, different terms that can support pricing and support your business. So like you might be saying, okay, what are some of these things? Well, auto renewals are super important. I mean, yes, I guess you can technically build auto renewal into the product, but that's mostly a contract term. Annual price increases. So building into your contract, the fact that we expect the price to increase, you know, 5 to 7% every year. Overages, limits, all those kinds of things. You know, you can, you might not have an overage or even like a limit to trip the overage hardcoded into the product. You can start exploring overages by saying it's in the contract monitoring usage. And when someone exceeds that, you send them the bill. And even if you don't end up, you can just use that as a way just to upsell them. Like, okay, yeah, we won't.

Okay.

If you just upsell, uh, increase, you know, upgrade to the next tier, we will just, you know, roll this overage into that. Degrees. And you haven't done any product change or anything. Um, they did that all with the contract. So I think contracts are kind of a dark horse or underlooked, underutilized, and they're actually a really powerful tool in the pricing game.

Yeah, that's such a powerful tool for learning. I love that idea. Maybe the last question here is, you know, if, if you've got a bunch of founders on the other end of the line here and they're thinking about how they can, you know, sort of in the pursuit of constant improvement, how can they continue to get better at pricing and packaging and building the practice and the discipline around how they monetize? What would you say to them? How can they, how can they kind of implement processes or procedures that help them get better month over month, quarter over quarter?

That's a great question. I think the way that I would recommend them thinking about it is first psychologically make pricing a thing. You know, we as a company take pricing seriously, and it's important for how we go to market. And because it's important for how to go to market, maybe we have a quick half-hour check-in scheduled every single month just to talk about what we're seeing, um, as we go to market and the feedback we have for the pricing. And just have like Maybe those meetings will end up becoming an hour every month, but don't do an hour first so that people start to get another hour out of my limited schedule already. So if you just make it that half hour touchpoint and say it's something we take seriously and we look at it, just for that forcing function is actually super important. And then with that, make sure the right people are in the room for that meeting. It should always be cross-functional. Make sure, you know, if you have a pricing meeting, you don't have sales there because you're just thinking about it as like a as a product thing, that's not going to go over well. You can never make a pricing change without the input of sales in some capacity. So make it a great cross-functional representation of the company and the different groups that are in the go-to-market motion and in customer success. And then I think the last thing I'd say is like in that meeting, have some opportunity to evaluate what's been going on, what's going well, what's not going well, what are we hearing? And don't, like we said earlier, be brave. Don't be afraid to question things. Even just throw an idea out there. What if we got rid of this metric? What if we added this metric? What if we started charging for this use case? What if we split these things out because we're hearing in our close lost report that this extra feature people don't want to pay for and so they're they're not, you know, signing on the dotted line. I'd say be brave and evaluate those opportunities and those challenges that you're facing and be honest about it. And you're not going to commit to anything in that meeting. That meeting is not going to be like, yeah, we're moving out of here and we're changing it. Just start discussing and thinking about it so that you can set the stage for, you know, for changes in the future.

It's so good. I can see a title for this conversation being Be Brave, which I really like.

Pricing is intimidating. Pricing is very intimidating, but it can be a lot of fun if you do it the right way.

I think you're right. This has been so much fun. Thank you for being a part of it.

Thank you.

Where can people find you and learn more about you?

Yeah, I would say the best place to go is LinkedIn. Just Paul Cassinelli on LinkedIn. I check my LinkedIn in-mails and connection requests all the time, so feel free to hit me up and love to chat pricing and go-to-market and, and see if there's any way I can help.

Awesome. Paul, thank you again.

Thanks, Fynn Glover.