🎙️ Hey there, SaaSpreneurs!🎙️

In this episode, our host, Ben Murray, dives into a highly requested topic from the students in TheSaaSAcademy.com - price changes and their impact on software bookings. We'll explore the nuances of price changes and unveil what counts as a booking in the realm of SaaS.

Ben breaks down the different scenarios where price changes occur, be it through Master Subscription agreements or the sales process. We'll learn how certain price changes may or may not be considered bookings and their significance in revenue retention.

🎧 Listen now on your favorite podcast platform or visit our website to catch this insightful episode. Happy listening! 🎙️🔍📚

You can also listen to this episode here.

📓Key Concepts to Learn💡

1. Understanding Price Changes: Price changes can occur through various means, such as add-on sales orders and/or pricing language in master subscription agreements. 💰📜

2. Differentiating Bookings: We need to distinguish between price changes governed by official agreements (inflator language in an MSA) and those that occur as part of the sales process. Only the latter is counted as an expansion booking, as it involves a direct sales effort and a closed won opportunity. 📊💼

3. Impact on Retention Numbers: While some price changes might not be considered a booking, they certainly have an impact on revenue. By increasing the monthly subscription rate, the change will be reflected in the Monthly Recurring Revenue (MRR) schedule and contribute towards net revenue retention. 💹🔄Aggregate revenue retention schedules do not lie!

4. Revenue Retention: Ben cautions that even if a price change is not recognized as an expansion booking, it must be accounted for accurately in calculating revenue retention. This ensures that the true impact of these changes on overall revenue is acknowledged. 💵📈

This episode serves as a reminder that while we focus on tracking bookings accurately, revenue retention remains a reliable indicator of the financial impact of price changes. We hope you found this lesson on price changes and software bookings insightful and thought-provoking.

If you found this episode helpful, make sure to tune in to future episodes of SaaS Metric School to broaden your knowledge on essential SaaS metrics and finance topics.

Got any burning questions or specific metrics you'd like us to cover?

Drop us a line, and we'll do our best to address them in upcoming episodes.

Until next time, keep hustling and measuring those metrics!

Best regards,

Ben Murray
Host of SaaS Metric School

📝 Episode Recap 🎧

In episode 28 of SaaS Metrics School, Ben Murray dives into the topic of price changes and how they impact software bookings. Ben addresses a common question from students in his SaaS Metrics course regarding whether price changes should be considered as software bookings.

He explains that if the price change is simply governed by the Master Subscription Agreement or the Master Services agreement, and there was no direct sales effort involved, it should not be counted as a booking. However, if there was a sales process involved, such as signing a new multi-year agreement with a price increase, then it should be counted as an expansion booking in the software bookings report

Ben emphasizes the importance of being careful with what is counted as a booking, but also highlights that even if a price change isn't considered a booking, it still affects revenue and can be seen through retention numbers. If the price of a subscription increases, it will be reflected in the Monthly Recurring Revenue (MRR), impacting the net revenue retention.

Overall, this episode helps listeners understand the nuances of price changes and how they relate to software bookings. Ben provides valuable insights on properly tracking and analyzing revenue and retention numbers in relation to price changes.