[HN Gopher] Pricing Low-Touch SaaS
___________________________________________________________________
Pricing Low-Touch SaaS
Author : pvsukale3
Score : 155 points
Date : 2020-09-21 13:52 UTC (9 hours ago)
(HTM) web link (stripe.com)
(TXT) w3m dump (stripe.com)
| siftrics wrote:
| >Reduce decision fatigue for customers.
|
| I am a huge evangelist of this piece of advice. I'm the founder
| of a startup that offers ONE price --- and free trial credits, of
| course --- for each product. I think it has helped us
| tremendously.
|
| The amount of startups I see that use the 3-column pricing plans
| (or worse!) is mind-boggling. Perhaps there is empirical evidence
| supporting complicated pricing. But I've never seen it. I
| specifically went with one price per product because I think
| complicated pricing plans negatively affect sales and sign-up
| rates, not to mention operational complexity!
|
| If you're interested, here's our pricing page:
| https://siftrics.com/pricing.html
| teraku wrote:
| Haha I've built a very rudimental version of this for my
| personal documents. No grouping or categorizing of text areas,
| just PDF->OCR->Database. I do scan for letterheads, though, and
| save them in a separate table.
|
| A question, if I may: How big is your userbase?
| [deleted]
| CodesInChaos wrote:
| I don't see much difference between your "products" and "plans
| with different feature sets", except yours is priced per use
| instead of as a subscription.
| OJFord wrote:
| Also, 'First 1,000 pages free, then'. GP - I can put this
| into columnar format for you, if you want...
| jfk13 wrote:
| A minor nit, perhaps, but you have a jarring typo on the home
| page: "software devleoper".
| pkaye wrote:
| What would be the difference between Siftrics vs standalone OCR
| software? Does it handle complex documents better or something?
| siftrics wrote:
| >Does it handle complex documents better or something?
|
| Exactly. It can handle tables of information with a variable
| number of rows from document to document. It can also handle
| arbitrary rotation, skew, offset and cropping. To see an
| example of some extreme cases:
| https://siftrics.com/hydra.html
|
| >What would be the difference between Siftrics vs standalone
| OCR software?
|
| The reason I started Siftrics is this:
|
| Lots and lots of businesses need to put data from their
| documents into a database. Standalone text recognition gets
| you 75% there.
|
| I thought, at the end of the day, companies still have to
| hire engineers to write programs --- which _do_ leverage
| standalone OCR/text recognition --- that are specially
| tailored to their documents.
|
| I want to eliminate those specially-tailored programs. Now
| Hydra isn't perfect, but in many cases (people are willing to
| pay for it), Hydra reduces those specially-tailored programs
| to a single function call...
| client.recognize('avionics-invoice', ['invoice_1.pdf',
| 'invoice_2.pdf'])
|
| ...followed by your database insert. :)
| mbesto wrote:
| 3 column is used for anchoring you to get to the desired
| pricing (the middle one).
|
| https://www.nickkolenda.com/conversion-optimization-psycholo...
| m12k wrote:
| Also, if you can change the framing so the decision becomes
| 'which option should I go for?' instead of 'do I want to buy
| this at all?' then that's a valuable bit of sleight of hand.
| But it comes with the risk of decision fatigue
| teraku wrote:
| While this might be true from a sales perspective, I'm
| actually annoyed when there is a product I want to buy and
| then I see these tiers.
| pc86 wrote:
| But how many times have you said "I was going to give you
| money, but now that you're giving me options on how much
| money to give you, I'm not going to give you any."
| yjftsjthsd-h wrote:
| Wouldn't it be more like "I was _considering_ giving you
| money, but if you 're going to make me work for it then
| I'll reconsider"?
| capkutay wrote:
| 3 columns. Left-most = maximizing TAM. Center = optimizing
| revenue. Right = maximizing revenue on strong fits.
| The_rationalist wrote:
| Is siftrics using or considering to use the current state of
| the art?https://paperswithcode.com/sota/optical-character-
| recognitio...
|
| https://paperswithcode.com/task/scene-text-detection
| siftrics wrote:
| Yes! We handle human handwriting and more than 100 languages.
|
| I encourage you try it yourself. After all, you get 1,000
| pages for free :)
| PaulHoule wrote:
| Much of the time I know I need to do 10,000 API calls and do
| them in the next week. I don't want to get "X API calls a
| month". I love the simplicity of AWS pricing where you pay for
| what you use -- except for the "free use" part which leads
| people to spend $5000 worth of time to save $5. (I would be
| richer than Jeff Bezos if I had a penny for every time somebody
| did something stupid or wasteful to stay within the free use
| tier.)
| michaelt wrote:
| This is the first time I've seen someone call AWS pricing
| simple :)
| PaulHoule wrote:
| It is compared to the "pick one of three plans none of
| which make any sense".
|
| I know investors like recurring revenue, I sure do.
|
| For many things I have no idea how much I am going to use
| them in six months if at all, but it seems they feel
| compelled to price something at "$X a month" even if I just
| could spend $Y on it this week, solve my problem, and maybe
| buy some more later. I am thinking in terms of $Y.
|
| There are just so many monthly bills out there that the
| only service anyone needs now is one that cancels all the
| services you don't use.
| ClikeX wrote:
| As much as I enjoy the thought of a Netflix where I'd pay
| for how much I actually watched (like how cloud hosting
| is billed). I think it also opens the possibility that
| they'll be creating content that abuses that notion.
| Like, longer content for pay per minute. Or longer
| seasons for pay per episode.
|
| But the idea sounds great to me.
| PaulHoule wrote:
| Frankly Netflix scares me and I am scared more by the
| proliferation of the Netflix model to video games.
|
| What I saw happen with television is that it went from a
| ratings based model (they had to make stuff people wanted
| to watch) to a model where the "cable bundle" was
| determined by cigar-chompers in a dark room somewhere. I
| can say I want this group of 20 channels, but I can't say
| I want CNBC but not CNN, Fox and MSNBC.
|
| They get paid anyway so now there is no connection
| between "what I want as a consumer" and "what I get". So
| of course you get slow decline like we've seen with the
| cable industry -- the only meaningful conversation you
| can have through the market is "exit".
|
| Netflix has only "exit" and "not-exit", it doesn't have
| market signals that say you can do 1% better and make 1%
| profits. So ultimately it gets a dull edge.
|
| So many firms are falling over each other to offer you
| all the Madden NFL and Assassin's Creed you could
| possibly play and I am frustrated that people don't
| perceive that this has happened to MTV and most of the
| other cable channels since the 1980s: when I was a teen
| we watched music videos, but a 70-year old man bought the
| network and decided that he didn't want us to watch music
| videos. Once Youtube let people chose what to watch we
| found that people still love watching music videos: does
| anyone watch MTV? I'm sure there is somebody long past
| youth in Hollywood who thinks they can stay in touch with
| "youth culture" by watching MTV. I suspect there is a TV
| set in a Nielsen home that blasts away 24 hours a day
| with nobody watching. Other than that I don't know.
| nemothekid wrote:
| > _when I was a teen we watched music videos, but a
| 70-year old man bought the network and decided that he
| didn 't want us to watch music videos._
|
| That's funny, but empirically that's not what happened. A
| quant working at MTV realized that reality TV like Real
| World, Jackass, and The Osbournes were way more lucrative
| and way more popular. At the same time music exploded in
| access (Napster). People voted with their eyeballs.
|
| To make sense of the decisions that the TV industry makes
| you should also consider what their moat is and how they
| tried to protect it from the internet.
|
| Studios still made content people wanted to watch,
| monetizing it became a lot harder which is why (strictly)
| ratings became less important. Bundling came around
| because it was easier for Disney to force Comcast to
| swallow channels like Lifetime and Toon Disney if they
| needed that to get access to ESPN. ESPN (live sports) has
| no digital compliment and for many people is the only
| reason they pay for Cable. The name of the game then
| became "How much money can we extract out of the
| remaining ESPN subscribers".
| PaulHoule wrote:
| I think the last part is right. In reality it is slow
| motion suicide to lose engagement with your customer.
|
| That is, the industry would have transitioned to a
| "harvesting" model with increasing cable bills and
| fleeing subscribers no matter what the competitive threat
| (internet, netflix, ...) is. The competitive threat
| determines where the crisis happens, but the crisis is
| built into the product.
|
| I don't believe it about MTV. I don't think anybody
| watches the Real World, Jackass, or the Osbournes. They
| read in the newspaper that somebody got killed acting out
| a scene from Jackass or they watch the highlight reel for
| the Osbournes on Entertainment Tonight. The meaning of
| that kind of television is not in the watching, but in
| being a subject for the rest of the media.
| anonAndOn wrote:
| Music royalties and professional VJ's (read, unionized)
| eat into those profit margins. That 70 year old man
| figured out he could cut costs by hiring unprofessional
| "reality" actors and running his network on the sweat of
| young perma-lancers.[0]
|
| [0]https://www.dailykos.com/stories/2020/8/12/1968730/-Su
| mner-R...
| reaperducer wrote:
| You're not wrong, but it's more complicated than that.
|
| TV networks initially embraced reality television because
| of the Hollywood writers strike. The writers stopped
| writing, so the networks turned to content that didn't
| require writers. Then they discovered that reality
| television is cheaper, too. The rest is history.
| siftrics wrote:
| > if I had a penny for every time somebody did something
| stupid or wasteful to stay within the free use tier.
|
| You make a good point. I suppose it doesn't apply in quite
| the same way here, since we offer lifetime free credits ---
| they don't refresh each month. 1,000 free pages, then you
| have to pay.
| PaulHoule wrote:
| Lifetime? Really?
|
| I'll still be able to use this service in 2075?
|
| Do you expect anyone to believe that?
| the_jeremy wrote:
| Lifetime is never the lifetime of a person. It's the
| lifetime of the account (limited by the lifetime of the
| company).
|
| If a company gives me "free X for life", I can't expect X
| if they declare bankruptcy. If they get acquired, the
| acquiring company will probably be within their rights to
| cancel my free X, and this has been done time and again.
| You can try to die on the hill of "lifetime means my
| lifetime" but I don't know what you expect to gain.
| cercatrova wrote:
| Lifetime of the company, presumably, not lifetime of the
| user necessarily.
| PaulHoule wrote:
| Thus it's meaningless. Put "lifetime" or "unlimited" into
| a pricing plan and the one thing I know is that neither I
| nor the vendor can think rationally and honestly about it
| at all.
|
| Thus it is a reason to look for another vendor who shows
| signs of realistic planning. If I can pay $50 for
| something that costs them $25 and it is obvious that it
| is roughly like that, I know I am partnering with a
| 'sustainable' business.
| IanCal wrote:
| Seems like pretty realistic and sustainable planning to
| me, they give you at most 50 cents of credit to see if it
| works for you without a forced time limit.
| cercatrova wrote:
| That's why it's just better to have time-based pricing,
| like a monthly subscription. As long as you keep paying,
| you'll be able to access it.
| ClikeX wrote:
| I assume the free credits are for trialing and testing.
| turkeywelder wrote:
| We did the same, it's I think one of our best moves because
| everyone just gets the same price, nobody feels like they're
| missing out and it's super easy to administrate so we can
| concentrate on the product, not the pricing.
| siftrics wrote:
| I have to say -- nice product. It's very clean. I can see how
| people are convinced to try it. I want to sign up just to
| experience more of the buttery-smooth UI.
| didip wrote:
| wow, your product offering is great!
|
| I could see it being very useful to small businesses that work
| with paper a lot.
| tiffanyh wrote:
| Thanks for sharing your company, https://siftrics.com
|
| I'd never heard of your company but this service looks GREAT.
|
| I wish you financial success.
|
| Question: your price points are sooooo low (which is great for
| the consumer) but I get concerned it's too low for your company
| to stay viable. Is that a concern? Please don't take this an me
| knocking your company. I really love what I've seen on your
| site.
| dubcanada wrote:
| What exactly is "soooooo low" about $0.50 for a 1000 pages?
| dternyak wrote:
| If your customer is someone who previously had a team doing
| manual data entry, this pricing certainly leaves a lot on
| the table. I would imagine most customers being happy to
| tolerate a 10x increase in price without breaking a sweat,
| assuming there's no one else in the space offering a
| cheaper solution.
| siftrics wrote:
| First of all, thank you!
|
| The point of the pure text recognition service is to draw
| business; not to make a profit. Without the "Advanced
| Features", the service operates at a slight loss. However,
| the profit margins and total volume we do on "Advanced
| Features" covers the loss and turns a profit.
|
| On the Hydra (Documents-to-Database) side of things, I think
| we charge enough. Margins are very high.
| PaulHoule wrote:
| A brilliant article.
|
| Often it seems that SaaS vendors don't have a plan for pricing
| but rather they design a "pricing page" that looks like the
| pricing page for other SaaS plans.
|
| If you start asking questions like: can you afford to offer this
| service at this price? what value does the customer get out of
| this service? they get defensive.
|
| I have refused to use SaaS services and I've refused to work for
| SaaS vendors because "I don't think you can make a profit with
| that pricing" and they tell me "why do you care? "
|
| As a customer: "I am paying you for a service because I want the
| peace of mind that I don't have to do it myself. If you business
| isn't profitable, you're going to go out of business and I'm
| going to have to find a new way to provide this service."
|
| As an employee I reject the marxist idea that I'm necessarily
| getting ripped off if I make more value than I get paid. If you
| are not making a profit for your employer why should they hire
| you?
|
| In a profitable company you are often struggling to get a decent
| computer, good working procedures, etc. In a non-profitable
| company it's almost impossible that they'll treat you with
| respect and give you the resources you need.
|
| My one complaint is that, mindlessly, this article has a pop-up
| at the bottom that says "you are browsing this web site from
| India (not true), click here for our regionalized site..."
|
| Sure big companies like Dell, Logitech, waste your time when you
| are looking for content by trying to segment you via country, are
| you an SMB (the article explains why the word "SMB" is mindless),
| etc. You'd think internet-native firms would know better.
| tchock23 wrote:
| Great points here and a related anecdote:
|
| Last year I came across a productivity app that I absolutely
| loved and signed up for the paid version right away.
| Unfortunately, they're charging less than $5/month.
|
| The service is buggy and infrequently updated now because you
| can tell the founder (solo dev) doesn't make enough money on it
| to continue making upgrades.
|
| If he had only charged more in the beginning the app would be
| both sustainable and growing.
|
| I've learned my lesson and now run some back of napkin math on
| likelihood of success at that pricing before making a
| commitment to a service.
| aripickar wrote:
| I love pretty much everything that Patrick McKenzie writes, but
| for some reason, my default internal monologue for his writing
| makes reading everything that he writes sound like an episode of
| Last Week Tonight with John Oliver. Makes reading his pieces a
| very interesting experience.
| the_reformation wrote:
| It's his profile picture, dude is almost a spitting image.
| Pandabob wrote:
| I have a related question: Is high-touch saas (enterprise sales
| with long sales cycles) inherently harder to bootstrap than a
| low-touch saas business?
|
| I'm guessing the answer is something like "not if you have the
| network"
| heipei wrote:
| I would say that in some ways its easier because you don't have
| to 100% polish your product page and explain everything your
| product does without leaving any open questions. Enterprise
| sales always has this concept of "let's set up a call so you
| can tell me everything that's already on the website", which at
| first seems annoying for us engineers, but actually it's really
| great because your prospective customers ask of lot of
| questions which makes you understand their background, their
| problems, their technical skills, etc. So instead of having to
| guess those things up-front, throw up a product and pricing
| page and just wait for signups, you can iteratively perfect
| your sales pitch, your product bundles, your pricing and really
| hone it in on your target audience.
|
| It's harder to bootstrap some customers who have a 6-months
| process with NDA, vendor db onboarding, compliance
| questionnaire, custom T&Cs, but other Enterprise customers are
| just as willing to send you five figures via credit card within
| a day or two of first contact. So these can bootstrap your
| business while you wait for the other deals to go through.
| dman7 wrote:
| In most scenarios, high-touch saas is harder to bootstrap. Your
| network will smooth out the friction of getting in the door,
| but there are other factors that make this hard to bootstrap:
|
| * Expensive headcount - high-touch sales requires sales,
| marketing and other GTM teams. Sales, especially, is very
| expensive. * Customizations - enterprise customers will want
| additional features above and beyond what your MVP offers. This
| will require additional engineering/product/design resources *
| Security audits - IT of the enterprise customer will want to
| see recent security audits which can range from $20K and up *
| Stability guarantees - enterprise customers are wary of
| offloading their workflow to small startups that might go belly
| up. Having guarantees, such as VC funding, will acquiesce them.
|
| A common path in B2B is to start with low-touch SaaS business
| (which is easier to bootstrap) & then move up-market.
| [deleted]
| corentin88 wrote:
| Some key learnings. But you should probably read it.
|
| # Charge more.
|
| - It helps keep low money, high support customers away. See
| "[pathological customers](https://hn.algolia.com/?query=patio11%2
| 0%22pathological%20cu...)" - "If an insurance company builds
| their entire business around [your SaaS product value] then that
| is a six figure deal, minimally." - Just charge more [[1](https:/
| /hn.algolia.com/?query=patio11%20%22charge%20more%22&...)] - SaaS
| entrepreneurs overestimate the benefit of low prices early -
| AppAmaGooBookSoft are doing their best to convince customers
| worldwide that software should be free (or as close at makes no
| difference) and subsidized by extremely lucrative
| advertising/hardware/e-commerce/etc ecosystems attached to it.
| That is a hard market expectation to go against.
|
| # Pricing pages should continue the sales message
|
| - The title of the pricing page should act like a sales
| representative. E.g. avoid "Plans & Pricing" or _Transparent and
| Flat Pricing_ ". Provide your value in the headline. - Reduce
| decision fatigue for customers. Up to 3 plans + contact us.
| Clearly distinct each value proposition - $X.99 pricing is not
| generally used in B2B or prosumer services because it
| communicates cheapness; I'd suggest you drop the 0.99 accordingly
| here, for aesthetic reasons - Lite / Standard / Premium are weak
| names for SaaS plans because they don't help a user make an
| instant decision on which plan is right for them. - Don't use "
| __Dedicated __support ". Use " __Priority __support " instead.
| Plus charge more for priority support. - No free plan on the
| pricing page - Name pricing plans to sell them to the right
| users. Avoid "Premium". Use "Hobbyist", "Small Store",
| "Sophisticated E-Commerce Retailer", "Enterprise" - You should
| only include the most salient details on your pricing page. If
| there is a difference between plans which is not salient to your
| customers or to you, it should not be a difference between plans;
|
| # Others
|
| - __About removing the credit card / free trial : __most B2B SaaS
| companies find that removing the credit card requirement
| increases the number of free trial signups they get but decreases
| the activation rate (the number of users who make material use of
| the software) and conversion rate to paying use. It is generally
| not worth it early in the lifecycle of your company. - All
| decisions about the pricing page are optimizations to approximate
| the value creation curve and charge for it. - Free is not a
| compelling value proposition to well-monied buyers.
| [deleted]
| ultrasounder wrote:
| Here is another interesting take on purchasing power parity
| pricing model used by Wes Bos and Robin Weiruch to sell their
| digital products(books/courses). The idea is to have a single
| pricing for all your products but adjust the pricing based on
| where in the world you live. https://purchasing-power-parity.com/
| jmarbach wrote:
| Patio11 is practically synonymous with the phrase "charge more"
| in the startup world, however, his catch phrase cannot be more
| misleading.
|
| For most prospective customers, you should charge less. For a
| select few customers, you should charge way more. Upping the ante
| indiscriminately only continues to make the world even more
| unequal and inaccessible for the people who need your products
| the most.
| graeme wrote:
| I think you're disagreeing with him. It's incorrect to describe
| his advice as misleading in that case.
|
| The idea of charge more is that it brings more revenue into the
| business and allows it to continue succeeding and producing
| value for customers. Charging more charges for that value.
|
| The advice is also mostly for b2b or b to professional, so if
| the product truly brings value to the customer they actually
| can afford it.
|
| Undercharging kills businesses and does no one any favours in
| the long run.
| threeseed wrote:
| Charging less has the disadvantage of bringing in customers who
| statistically are more likely to need customer support.
|
| Also no business should be run on a foundation of altruism.
| Axsuul wrote:
| A business is always evolving. A business charges more
| initially so they can become default-alive. A business can then
| charge less and move downmarket with more resources. The
| greatest loss is a business going poof because they didn't
| charge enough in the beginning.
| patio11 wrote:
| Software has two natural prices: free* and expensive.
| AppAmaGooBookSoft can take care of the free*, and they will
| invest billions upon billions of dollars more into that than
| you will. Your market opportunity, and your job, is to write
| the expensive stuff.
|
| (The asterisk reflects that they give the software away for
| free because it is a complementary good to the business where
| they make most of their money.)
| [deleted]
| [deleted]
| jrochkind1 wrote:
| "materially sized business"?
| [deleted]
| senko wrote:
| > Monthly: $49 / $99 / $249
|
| So on the topic of ${X}0 vs ${X - 1}9 (ie. "50 vs 49", "100 vs
| 99", "250 vs 249"), what's the current "best practice"?
|
| I feel like we might be like those 5 monkeys with a banana:
| someone figured out long ago in some context that X9 might
| convert better, now everyone's doing it and the reason might not
| still be valid.
|
| I'd love to hear about some recent studies or comparative
| experiences related to this.
|
| For me, subjectively, "49" has the "sleazy car salesman" vibe,
| compared to "50" being more "we're not ashamed to tell it like it
| is". On the other hand, I've always felt like this so I was an
| outlier before.
| dangrossman wrote:
| I split tested $49/$149/$299 per month vs $50/$150/$300 and the
| 9's converted better.
| wcarss wrote:
| I would love to hear more about the results of that test --
| e.g. was it higher conversion for all categories, how much,
| did one category do particularly better with the 9's, was the
| distribution of category conversions similar on both sides,
| etc.
| slim wrote:
| it's actually a mind trick. 49 feels small compared to 50
| because the 9 behind the 4 makes it look tiny. perception is
| full of bugs
| wim wrote:
| Great article. Related to _charge more_ : don't dismiss a higher
| price point outright as "probably being high-touch only"; it's
| worth testing. We have a $999/month plan for example which we
| still sell on a low-touch model.
| [deleted]
| seanwilson wrote:
| Great article with good real world examples. It's easy to
| underestimate how many decisions you have to juggle when coming
| up with pricing plans.
|
| I wouldn't mind a similar analysis for my own pricing page for an
| website SEO auditing tool if anyone feels like giving feedback:
| https://www.checkbot.io/#pricing
|
| Related to the advice from the article, I resisted offering
| lifetime deals and going really cheap, I have a free tier to help
| with organic marketing, I don't offer a free trial of the full
| version but I offer refunds if you're not happy, and I avoiding
| using "Pricing" as the pricing section heading. I might try
| replacing the monthly plan with a quarterly plan so subscribers
| aren't having to decide so often if they're going to keep paying
| (I rarely see a SaaS doing quarterly plans without monthly plans
| though). I suspect I'm giving too much away for free as the free
| version will probably cover a lot of small business websites.
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(page generated 2020-09-21 23:01 UTC)