Pricing Teardown: Elvium.com

Hey there

So we have a teardown of Elvium.com - a recruiting software doing about €500K in ARR, €4K ACV, growing 10% a year and with 12.5% churn.

51min video below 👇

The math goes like this:

10% growth at 12.5% churn = €110K new ARR per year.
+€110K ARR per year / 12.5% churn rate = they will cap out at €880K ARR and stop growing (I said €800K in the video).

Here is the proposed fix:

Bundle almost all current modules into a 'core tier', forcing base price up from 10K to 25K (DKK - about €1200 and €3200) = provide more to all customers.
Fence and split into 'Direct' and 'Recruiting' (didn't say this in the video, but Recruiting can be offered at a lower base fee and lower price per recruit, as their volume is way larger).
Build out 2 extra tiers - e.g. 'Marketing' and 'Enterprise based on jobs to be done.
Add various services and add-ons besides onboarding - e.g. 'Premium Support', 'Reporting', 'Whitelabel' etc.

Results should/could be:

Increase ACV from €4K to about €7K (but keep price for larger accounts almost the same).
This LTV/CAC should go from 5.7x to about 10.0x,
Churn should actually go lower after an initial shake out - could be from 12.5% to 10%.
This will allow Elvium to double marketing spend (without the same risk of driving metrics unprofitable) and get 3.5x the inflow = €380K or so.
At 10% churn the new 'cap out' level is €3.8M, but can of course be even higher with even higher CAC spend.

Big assumption is that the team manages to value sell a more 'all in' base package and value proposition to the customers. But at least now the packaging and pricing will support it.

Good luck to you guys!

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