It is imperative for Product Managers to understand the business model equation of the product or company they are working. It allows Product Managers to do 2 things :
- Establish success criteria using right input metrics, directly under the control of product team, and establish how they correlate to output metrics like revenue which define the business success of products.
- Identify right levers : Depending on the state of product & business, PMs can identify the right levers/directions and bets they are going to take
Business Model Equation & levers of a typical B2B SaaS product that sells software by seats
If you build B2B SaaS products and sell product by seats try going through the below graph and identify key levers to improve your output metrics.
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💡 If you would like me to cover other Business models, reach-out to me on Twitter or LinkedIn .
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