Navigating Tariff Turbulence

Hey legend, I hope you’re living the dream.

It’s April 3rd. My phone lights up. It’s the founder of a SaaS business serving Original Equipment Manufacturers.

If you’re feeling the same whiplash, you’re not alone. The new wave of tariffs is causing abrupt uncertainty for many SaaS operators.

I’ll go over what I shared with the founder in this letter. It might help you steady your ship and keep growth on track.

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We’ll cover three things today:

1. The impact of new tariffs on your SaaS business.

2. How to tackle churn, long sales cycles, and rising OpEx in turbulent markets.

3. Illustrating the value your business gains by reducing churn, speeding up sales, and optimizing OpEx.

The latest tariff volley has SaaS founders bracing for impact. If you serve manufacturing, distribution, or energy, you may feel the tremors—pipeline jitters, CFOs freezing budgets, and questions about every dollar spent.

End Market Exposure to Tariffs (as of 4/23/2025)¹

Here’s how it’s playing out in the arena:

• Churn is climbing: nearing the 2022 downturn level, when they peaked at 20.5% over the prior average, as customers cut “non-essential” tools due to market changes and uncertainty².

• Sales cycles are stalling: deals are now taking 30-45 days longer to close³, with buyers demanding sharper ROI and more CFO sign-off.

• OpEx is creeping up: Hardware tariffs are pushing AWS and Azure infrastructure costs higher—some experts project a 7-12% increase by 2026 as cloud providers pass those costs downstream⁴.

¹Data provided by tax foundation, Yale budget lab, & carnegieendowment.org ²Churn study conducted by Paddle, ³Sales cycle data by Rev Ops Scoop, ⁴IT cost data by Computer Weekly

We’ve prioritized three focus areas to mitigate risk and sustain growth in the choppy market:

1. Combat churn.

2. Keep new deals moving.

3. Control operating expenses (OpEx).

This starts with getting ahead of the problem, not reacting after the fact.

• Proactive Customer Health Scoring: integrate tools to monitor key signals—logins, feature usage, and support trends. Create dashboards that highlight early warnings and automate alerts for your customer success team.

  • Why it matters: lets you spot at-risk accounts before they’re out the door, so Customer Success can intervene with targeted retention plays, personalized check-ins, or tailored offers.

• Flexible Contract Structures: offer multi-year agreements with fixed pricing, or tiered discounts—like 5% off for two years, 10% off for three.

  • Why it matters: It gives customers a reason to stay. These “cost predictability guarantees” are especially compelling in uncertain markets. Equip your sales team to position these as a win-win: customers get budget certainty, and you lock in retention while protecting your margins.

Key takeaway: churn is inevitable, but with the right systems and incentives, you can turn it from a threat into a manageable metric.

Want to play around with the model we whipped up for this letter?

To keep deals from stalling in a market where every purchase is under the microscope, lean into two proven tactics:

• Structured Expansion Playbooks: Don’t leave cross-sell and upsell to chance. Use your product analytics to map each account’s unique ROI levers—like automation-driven cost savings or workflow efficiencies. Equip your customer success team with playbooks that tie every expansion conversation to a concrete customer outcome.

  • Example: if a manufacturing client is sweating supply chain costs, show how your inventory optimization module directly offsets tariff pain. This approach keeps your solution top-of-mind and essential, not optional.

• Flexible Pricing Pilots for New Features: Lower the barrier for hesitant buyers with short-term pilots or success-based pricing.

  • Example: launch a 90-day premium feature trial at a reduced rate, or structure renewals around proven results. This lets prospects experience value firsthand, reduces perceived risk, and gives your sales team a powerful lever to accelerate stalled deals.

Key takeaway: In a market where every purchase is scrutinized, SaaS businesses that win are the ones that make it easy for customers to say “yes”—by leading with ROI and flexibility.

Rising infrastructure costs don’t have to eat into your margins if you get proactive about optimization and automation.

• Infrastructure Optimization: Integrate tools to audit cloud usage and identify underutilized resources or unexpected spend. Create dashboards to highlight cost-saving opportunities and set up alerts for budget anomalies. Shift non-critical workloads to spot or reserved instances, and renegotiate vendor contracts for long-term discounts.

  • Why it matters: this helps you proactively control infrastructure costs, freeing up budget and preventing overruns before they become a problem.

• Automate Customer Success: Next, let AI do the heavy lifting. Deploy chatbots powered by platforms like Intercom to handle tier-1 support questions and routine onboarding. Build out self-service portals packed with guides and ROI calculators.

  • Why it matters: automation reduces customer support costs and allows your team to focus on high-impact work, maintaining quality service while scaling efficiently.

The result? You keep your support quality high, your infrastructure lean, and your margins intact—no matter how hard tariffs push from the outside.

Navigating tariff turbulence isn’t easy. But if you stay disciplined—prioritize where you focus, where you adapt, and where you invest your resources—you won’t just survive it; you’ll come out stronger than ever.

As mentioned in my last letter, it will take me some time to get this letter right. Please bear with me as I get my writing, rhythm, and cadence in order.

Cheers to building together,
—Sanket

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• I’m actively looking to buy one that meets these criteria and have $10M–$30M to spend.

• I can offer the fastest and most flexible exit that exists today. Entrepreneur.com called it a “reinvention of software exits.”

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Needless to say, your employees, customers, and legacy will be in good hands. Book a confidential call with me to get a free evaluation.

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