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A recent report commissioned by payments infrastructure company Paddle identified “agile pricing” as one of the key ways that SaaS companies can improve their bottom lines — experimenting with different pricing models allows companies to hit the right mark and establish the true value of their product, and ensure that they’re not undercharging.
Ultimately, there isn’t a one-size-fits-all SaaS business model. Usage-based pricing (UBP) is an increasingly popular proposition given that it allows businesses to simply pay for what they use. But it’s not always easy to establish a “unit” cost to charge under UBP, particularly for more nuanced products with lots of different features and functions, in which case a monthly subscription might make more sense.
Within all of that confusion around which model will work best, questions linger around how much to charge, which features to bundle under each pricing tier, and how best to acquire the data to inform all these decisions.
Pricing and packaging
This is something that fledgling startup Stigg is setting out to solve, by offering the tools necessary to fine-tune the pricing and packaging of features within SaaS software.
Founded out of Tel Aviv, Israel, last June by two former New Relic executives, Stigg is emerging from stealth today with $6.4 million in seed funding as it looks to further iterate on its product through an initial early access program.
At the heart of the Stigg platform is the notion that the SaaS pricing problem is “rooted in code, not billing,” as the company puts it. What this means is that Stigg is targeting developers with an easy-to-integrate API that decouples pricing from the billing process.
“We are confident that the problem of pricing starts with the code, and that in a modern go-to-market environment, pricing and monetization are the craft of product and growth teams who are now struggling to support increasingly complex pricing models and countless pricing and packaging iterations,” Stigg cofounder and CEO Dor Sasson told VentureBeat. “Stigg unlocks the ability to introduce any buying experience, without requiring ongoing developer support.”
Through Stigg, customers can experiment with different pricing and feature bundles; gain granular usage observability into their product; iterate with feature limits and free trials; fiddle around with different metered pricing models; manage alerts to inform users about their free trial status; and automatically keep the website pricing page up-to-date as the company A/B tests various pricing and packaging combos.
And at the heart of all of this is data, which allows companies to figure out how much of their product’s value they can give away for free, and at what point to start charging.
“Finding value-based pricing is a data-driven mission — it cannot be achieved without the right infrastructure to support it,” Sasson said. “Introducing freemium, self-service or even free trials into your customer’s buying experience requires iteration. It can’t be a one-off effort — it is an ongoing optimization process, informed by relevant data and automation.”
In addition to the core API, Stigg offers server and client SDKs (software development kits) spanning most popular environments and frameworks, and ships with pre-built integrations for CRM tools, subscription management and billing platforms, data pipelines, customer support, and more.
“This essentially means that every change made through Stigg seamlessly permeates to all the important knobs in a modern GTM (go-to-market) stack,” Sasson said.
Open for business
A quick peek across the SaaS pricing management landscape reveals a flurry of activity of late, with the likes of Metronome and M3ter launching out of stealth in February with more than $50 million in funding to serve as the infrastructure for usage-based pricing. Elsewhere, Subskribe launched its adaptive quoting and billing platform backed by $18.4 million in funding; subscription management and recurring billing platform Chargebee hit a lofty $3.5 billion valuation off the back of a $250 million fundraise; and subscription management giant Zuora secured $400 million in fresh funding.
While Stigg certainly jives with many of these young and old incumbents, the company is approaching things from a more holistic perspective in a market category that is constantly evolving — and Sasson says that it’s more likely to supplant a concoction of in-house tools that have been messily cobbled together.
“Stigg is not competing with other companies so much as in-house developers who spend way too many painful hours building and maintaining platforms internally,” Sasson explained. “These platforms are typically designed by hard-coded access control checks, and by stitching together different tools and applications, which fall apart as the business grows and scales.”
Stigg’s seed round included investments from Unusual Ventures, Emerge Ventures, and a host of angel investors from companies including New Relic, Calendly, and Snowflake. The company’s early access program is open for early access applicants now.