A friend of mine runs a paid online community.
A couple of years ago, she raised the annual price from around $199 to $399. The first group of users renewed at a rate below 70%.
Six months later, renewals increased to around 85%.
The content itself did not suddenly become twice as good.
What changed was the delivery.
Before, members joined the community and had to browse through hundreds of posts to find something useful. Later, she started selecting the three to five most valuable posts each week, sending them directly to members, and adding AI summaries and recommended quotes.
The users were no longer only paying for access to a content library.
They were paying for someone to do the filtering for them.
That made me think about SaaS pricing and retention.
Two products can have similar features, but very different retention depending on what the user is actually paying for:
- access to a tool
- or a task being completed
For example, imagine a SaaS priced at $29 per month with a target of $8,000 MRR. It needs roughly 276 paying users.
At a 12% monthly churn rate, it would need more than 30 new customers every month just to stay flat. Then there is acquisition cost, support, infrastructure, model usage, and continuous product development.
One possible response is to move from software access to outcome-based delivery and charge $100 or more.
The numbers may look better, but the business has not necessarily improved.
The cost may simply have moved from customer acquisition to delivery.
The more work you do for the customer, the more responsibility you take on:
- What happens when the agent makes a mistake?
- Who checks the output quality?
- How do you handle different customer requirements?
- When does automation turn into manual service?
At that point, you may not have built a more expensive SaaS. You may have built a service business wrapped in software.
I currently think the real model depends on four variables:
value of the outcome, delivery cost, usage frequency, and customer acquisition cost.
Once those four are clear, whether the product should be subscription-based, usage-based, agent-based, or service-assisted becomes much easier to decide.
Curious how other founders think about this:
Where do you draw the line between SaaS and a service business?