How SaaS architecture impacts pricing and profitability

By  Recuro
Aug 9th 2023
Read time: 
4 minutes
Table of contents
Weekly News Roundup
1. Storekey grows as a SaaS company with Axfood as a customer – Dagens industri
Founded in 2018, Swedish Storekey (formerly Lifvs) launched a technological platform to run a physical and unmanned store remotely. However, the company management has now decided to hand over the operation of Lifvs stores to franchisees – to give the SaaS solution, which includes contracts with SkiStar and Axfood, a greater focus.

“When we had demonstrated that it is possible to open and operate unmanned stores, it was quite natural to phase out store operations. Lifvs has become a concept that we have seen great interest in from franchisees, they get a complete package with a store module, agreements with suppliers and the Storekey platform for store operations.”

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2. Australian businesses are rescuing ‘imperfect’ fruits and vegetables to subscription boxes – The Guardian
Produce rejected by major retailers is increasingly being added to cut-price subscription boxes in Austrialia, where 2,600 gigalitres of water is used to grow food that isn’t consumed. Now supermarkets want a bite of the market.

“Major food retailers are getting on board the ugly food trend, with Coles and Woolworths joining overseas counterparts such as Carrefour, Tesco and Walmart to offer imperfect produce.”

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3. Apple hits 1 billion paid subscriptions  – Axios
Apple has methodically executed a long-term strategy of offsetting slowing hardware sales growth with revenue from software services, and recently announced that the company now has more than 1 billion paid subscriptions across all of its services, including Apple Music, iCloud, Apple News, Apple TV+ and more.

“Services revenue represented more than a quarter of Apple’s total sales last quarter. By comparison, services revenue represented just 10% of quarterly revenues eight years prior, in 2015.”

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3. Apple hits 1 billion paid subscriptions  – Axios
Apple has methodically executed a long-term strategy of offsetting slowing hardware sales growth with revenue from software services, and recently announced that the company now has more than 1 billion paid subscriptions across all of its services, including Apple Music, iCloud, Apple News, Apple TV+ and more.

“Services revenue represented more than a quarter of Apple’s total sales last quarter. By comparison, services revenue represented just 10% of quarterly revenues eight years prior, in 2015.”

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4. Munich-based startup is offering a hotel subscription as an alternative to a second residence – The Munich Eye
As an alternative to a second residence for people whose workplaces are significantly distant from their primary residences, Myflexhome is offering a hotel subscription in Munich and Berlin. The participating hotels are major chains primarily used by business travelers. The setup offers tax benefits – and according to the company, users can save up to 60 percent compared to traditional hotel bookings.

“In Munich, renters of a second residence are subjected to a hefty tax rate of 18 percent of the annual net cold rent. In Germany’s most expensive city, this accumulates to a substantial amount, which users of the hotel subscription model would be able to save. Moreover, this model could alleviate the congested housing market – after all, more than 30,000 people (as of 2021) have registered a second residence in Munich.”

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5. New York Times added 180,000 new digital subscribers in the latest quarter – New York Times
The company reported total revenue of $590.9 million, a 6.3 percent increase from a year earlier – and a total subscription count close to 10 million.

”Meredith Kopit Levien, the company’s president and chief executive, said in a statement that more than a third of the nearly 10 million subscribers were now subscribed to more than one Times product. The company now offers the core news report as well as Cooking, Games, Wirecutter and The Athletic.”

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Weekly Analysis Roundup
1. Can Mill’s subscription-based food waste bin find its way into kitchens? – Techcrunch

Mill’s aim is to eliminate carbon emissions that result from the decomposition of food waste. The startup isn’t the first company to tackle the problem, but it does have a unique approach. Where most other companies focus on large sources like grocery stores or restaurants, Mill is for people’s homes. Its bin grinds and dehydrates food, which the company then collects via the U.S. Postal Service and sells to farmers as chicken feed.

“The bin itself and any consumables are free, included in the subscription ($495 annually or $45 monthly, though the monthly plan tacks on a $75 fee to deliver the bin). Boxes and return shipping for the grounds are also included.”

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2. ”Tinder wants to sell a $500-a-month subscription. Can they justify that?” – The Guardian

Tinder has just announced it is moving ahead with plans to launch a new “high-end” membership for as much as $500 a month. Tinder’s users say long-term relationships are their number-one goal – yet dating apps are failing at finding people love, writes Nancy Jo Sales in The Guardian.

“Companies want to make money; that’s no surprise. And online dating companies are no different. What is different with these companies, though, is that they charge users for services that don’t necessarily give them what they want and expect they’ll get by using them. For example, relationships.”

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3. How SaaS architecture impacts pricing and profitability – Techcrunch

A poorly designed SaaS architecture creates limitations in setting the pricing strategy for the offerings and impacts new customer acquisition. Conversely, a good architecture sets the appropriate pricing model, writes Ratnesh Singh Parihar, principal architect at Talentica Software.

“Before setting up a SaaS architecture, it’s important to answer these questions first: How would the customers pay? For what services (computation and values) would the customers pay? How will the usage be measured and invoices be created for the customers?”

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