• Ulrik Lehrskov-Schmidt

CASE: SaaS Pricing for Scalepoint Technologies

How we raised prices 50% for a $100M ARR insuretech leader with zero churn.


Company: Scalepoint Technologies A/S

Stage: Late stage growth - privately owned 'Centaur'.

ARR: $100M

Product:

Scalepoint provides software services to Europe´s leading insurers, cloud solutions that digitize and automate claims processes and furthermore drastically reduce claim-related costs while keeping the insured customers in focus.

Situation:

Scalepoint Technologies is a late stage insure tech growth company with a broad product portfolio. One of their core products - EasyClaims - is a claims management system for automation and workflow management of insurance claims covering both auto, health and property.

Scalepointed reached out to solve an issue with poor monetisation of their EasyClaims product, due to a poor fit of the existing pricing model with the budget structure of their core insurance customers. Average ACV of the EasyClaims product was about €400K.

“We mainly communicate with the claims department, but the profit from our software solution falls in the hands of the IT department. Our solutions are highly profitable for the IT departments, but it was the claims departments paying for it” - Sune Dyrlund Aagaard, Executive VP Sales

At the same time EasyClaims was not covering underlying costs on several instances, both across IT infrastructure, cloud costs and bespoke development for some of the larger insurance clients and was contractually unable to raise prices, preventing them from monetising future development.

“Scalepoint is handling everything, related to the claims. Before entering in contact with Ulrik we had a fixed price per claim, and sometimes this fixed price would have to cover unlimited storage of for instance photos from x-rays. So we would be paid for handling the claim once, but would have to pay storage costs indefinitely.” - Sune Dyrlund Aagaard, Executive VP Sales

Scalepoint wanted to increase the profit margin of the product and enable a more value-driven sales process as well as secure monetisation of future development. No customers could be lost in the process.

What we did:

Over a 3 month period we we reviewed the underlying product and cost model of Scalepoint, while we reviewed the business cases and the budget structure on the customers’ side. Then we designed a more appropriate pricing architecture, covering both a base platform fee, IT infrastructure fees, service fees, 3rd party data and license fees while keeping the core price per claim intact.

We also did a comprehensive review of the contract framework and ensured a dynamic model going forward, that would allow rip-and-replace of price lists, product specifications and certain SLA items.

“In collaboration with Ulrik we made a review of our costs, visualized the added value in a way that would make sense for the head of the claims department and ensured the legal framework of our contracts, so we would not have to renegotiate every time we had to adjust the prices” - Sune Dyrlund Aagaard, Executive VP Sales

Finally I supported Scalepoint over the next 12 months in negotiations with key customers, existing and new, to ensure that the execution of the new price list was done properly

The result:

We managed to raise Annual Contract Value per customer (ACV) on the EasyClaims product by more than 50% on existing customers with no churn. We also enabled a more dynamic model and contract framework that ensured Scalepoint could monetise future product development without triggering a re-negotiation with existing customers.

“It was important with a process that would underpin our collaboration with existing customers. At the same time it was equally important to ensure that the use of our software became and remained profitable, which meant raising our prices with 50% and setting up a pricing model, which could meet the development of future services.” - Sune Dyrlund Aagaard, Executive VP Sales

And further:


“The most important outcome is that we now have a hands on pricing tool, which our customers understand. We now have a profitable business, and we have the foundation and the framework to adjust the prices and a pricing strategy to implement on new services” - Sune Dyrlund Aagaard, Executive VP Sales

Finally we created the foundation for a more value focused sales process where the product and pricing structure was supporting the sales team in explaining the value and the underlying costs of delivery Scalepoint had concerning the EasyClaims product.

In conclusion:

“Initially we were hesitating to pull in external forces - “how hard can it be to set a price?” - but there is a lot to gain by adding the ‘outside-in’ perspective from an expert like Ulrik. The expert knowledge, which he possesses, is something you do not meet very often. At the same time he is extremely fast at adapting and understanding the business in dept.” - Sune Dyrlund Aagaard, Executive VP Sales


Update:

The EasyClaims product has in 2022 been rebranded as 'Scalepoint CORE' as part of a wider European go-to-market strategy.


More Cases ?

I do about 20 SaaS pricing projects a year and function as an advisor for about 5-10 SaaS companies on an ongoing basis, many of which I'm also an investor in. That said, most of my clients do not want to publish their results as openly as in this case (check logos on my front page) so if you can't find a case that matches your particular vertical or pricing issue - simply reach out and ask.