In this solo episode, Run the Numbers host CJ Gustafson breaks down all the different ways software businesses make money. He does an overview of the different monetization models including subscription, consumption, hybrid, transaction-based, and advertising models. He then zooms in on subscription contracts and references the piece he wrote “The ‘Planet Fitness’ Era of SaaS is Over” to discuss professional services, examining the differences between product-led growth (PLG) and sales-led growth models. He talks about the three key things that PLG has influenced CFOs to push for when evaluating buying decisions. He also explains why subscription contracts don’t equate to revenue durability and what real durability is in SaaS, also spelling out (literally) the major differences between recurring revenue and reoccurring revenue, and why you may want a blend of both.

If you're looking for an ERP head to NetSuite: https://netsuite.com/metrics and get a customized KPI checklist.

—

SPONSORS:

Maxio is the only billing and financial operations platform that was purpose built for B2B SaaS. They're helping SaaS finance teams automate billing and revenue recognition, manage collections and payments, and put together investor grade reporting packages. 🚀 Request a demo at www.maxio.com/runthenumbers for 10% off your first year.

Leapfin is accounting automation software that automatically prepares and posts reliable journal entries. High-growth businesses like Reddit, Canva, and Seat Geek choose Leapfin to eliminate manual tasks, accelerate month-end close, and enable accounting leaders to provide faster insights to help their companies grow. To automatically standardize your revenue data with measurable business impact, check out leapfin.com today. 

Planful is a financial performance management platform designed to streamline financial tasks for businesses. It helps with budgeting, closing the books, and financial reporting, all on a cloud-based platform. By improving the efficiency and accuracy of these processes, Planful allows businesses to make better financial decisions. Find out more at www.planful.com/metrics.

Mercury is the fintech ambitious companies use for banking and all their financial workflows. With a powerful bank account at the center of their operations, companies can make better financial decisions and ensure that every dollar spent aligns with company priorities. That's why over 100K startups choose Mercury to confidently run all their financial operations with the precision, control, and focus they need to operate at their best. Learn more at mercury.com.

Mercury is a financial technology company, not a bank. Banking services provided by Choice Financial Group and Evolve Bank & Trust®; Members FDIC.

NetSuite provides financial software for all your business needs. More than 37,000 thousand companies have already upgraded to NetSuite, gaining visibility and control over their financials, inventory, HR, eCommerce, and more. If you're looking for an ERP platform ✅ NetSuite: https://netsuite.com/metrics and get a customized KPI checklist. 

—

FOLLOW US ON X:

@cjgustafson222 (CJ)

HELPFUL LINKS:

Deep Dive on Usage Based Models with Gladly's CFO Todd Rakow

The "Planet Fitness" Era of SaaS is Over 

BlackRock Managing Director on the Secrets of Durable Companies 

Mostly Multiples

—

TIMESTAMPS:

(00:00) Preview and Intro

(03:01) Sponsor - Maxio | Leapfin

(05:43) Monetization Models

(06:11) Subscription Models

(07:24) Consumption Models

(09:10) Hybrid Models

(10:51) Take Rate or Transaction-based Models

(12:35) Advertising Models

(13:39) Sponsor - Planful | Mercury | NetSuite

(16:41) Subscription Contracts: Product-led Growth Versus Sales-led Growth

(18:32) Getting to Value Fast or Before Purchase

(21:22) Flexibility in Amount of Software Purchased 

(23:01) Showing Clear Value on a Regular Basis

(25:19) What is Real Durability in SaaS

(29:01) Recurring Versus Reoccurring Revenue

(33:40) Wrap

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit cjgustafson.substack.com