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!