[HN Gopher] Pricing a SaaS product (2019) ___________________________________________________________________ Pricing a SaaS product (2019) Author : helsinkiandrew Score : 128 points Date : 2021-01-28 13:23 UTC (1 days ago) (HTM) web link (www.bannerbear.com) (TXT) w3m dump (www.bannerbear.com) | polote wrote: | One rule to know about pricing which is counter intuitive. (And | that has been repeated countless times on HN) | | _Your pricing is never high enough_ | | If you want your prospects/customers to take you seriously they | have to find you expensive. If you seem cheap they will not take | you seriously. | danenania wrote: | Another way to think about this is that even if you built a | product to scratch your own itch, you may not be your own ideal | customer. In that case, your instincts on pricing could be way | off. | | You might be cost-sensitive and look for a good deal when | buying tools and infra to support your own projects. But buyers | at larger companies aren't spending their own money, so their | thought process is very different. | | As long as the price fits in the budget and isn't an outlier | compared to other products they pay for, then it's not going to | be what they focus on. They'll care much more about quality, | trustworthiness, ease of integration, support, and things like | that. | | That's why putting your price at the high end of the | 'acceptable' range is a win-win. You don't leave money on the | table, and you make an implicit commitment to high quality and | good service, which the customers you really want value more | than a bargain. | TriNetra wrote: | I recently read a story in the book 'Influence - The Psychology | of Persuasion' (by Robert B. Cialdini): | | > I GOT A PHONE CALL ONE DAY FROM A FRIEND WHO HAD RECENTLY | opened an Indian jewelry store in Arizona. She was giddy with a | curious piece of news. Something fascinating had just happened, | and she thought that, as a psychologist, I might be able to | explain it to her. The story involved a certain allotment of | turquoise jewelry she had been having trouble selling. It was | the peak of the tourist season, the store was unusually full of | customers, the turquoise pieces were of good quality for the | prices she was asking; yet they had not sold. My friend had | attempted a couple of standard sales tricks to get them moving. | She tried calling attention to them by shifting their location | to a more central display area; no luck. She even told her | sales staff to "push" the items hard, again without success. | Finally, the night before leaving on an out-of-town buying | trip, she scribbled an exasperated note to her head saleswoman, | "Everything in this display case, price x 1/2," hoping just to | be rid of the offending pieces, even if at a loss. When she | returned a few days later, she was not surprised to find that | every article had been sold. She was shocked, though, to | discover that, because the employee had read the "1/2" in her | scrawled message as a "2," the entire allotment had sold out at | twice the original price! | | > It is easy to fault the tourists for their foolish purchase | decisions. But a close look offers a kinder view. These were | people who had been brought up on the rule "You get what you | pay for" and who had seen that rule borne out over and over in | their lives. Before long, they had translated the rule to mean | "expensive = good." The "expensive = good" stereotype had | worked quite well for them in the past, since normally the | price of an item increases along with its worth; a higher price | typically reflects higher quality. So when they found | themselves in the position of wanting good turquoise jewelry | without much knowledge of turquoise, they understandably relied | on the old standby feature of cost to determine the jewelry's | merits. | loceng wrote: | Pricing psychology is so interesting, where there seems to be a | hierarchy as well; which flows into the idea or rule that you | should never limit how much someone can spend. | intrasight wrote: | "is never high enough" isn't really actionable info. I need to | set a price, and it will be somewhere between $10 and $1000 | month. You could of course try to fill the area under the | demand curve, but that poses it's own challenges. I settled on | $1000/mo because for the customers that will really benefit | from my software, that is how much they benefit. | dubcanada wrote: | Do people not take Walmart seriously? Office 365 is also | extremely cheap compared to what you get. Do people not take | that seriously? | | I don't think blanket statements like, you're SAAS product is | not expensive enough, work. You should take a tailored approach | for what works for you. | graerg wrote: | >Do people not take Walmart seriously? | | Depends on what you mean by "people". For a lot of average | consumers/customers, Walmart _isn't_ taken seriously. They're | not aware (and don't care) about the incredible | supply/logistics magic that Walmart orchestrates behind the | scenes. They'll pay a premium to buy stuff elsewhere to avoid | the inferior goods connotations associated with Walmart. | iujjkfjdkkdkf wrote: | For electronics or clothes maybe, for many household things | Walmart had name brands and people know that. I dont go | there (and I assume pay a premium) because I dont like | places that treat customers as cattle, and would happily | pay a few cents extra for a shopping experience that hasn't | had every ounce or humanity stripped from it. Granted I'm | in the minority and it's hard to even find places that | treat their customers like people anymore. | rootusrootus wrote: | > Do people not take Walmart seriously? | | I tend to think that they mostly sell cheap crap, that even | their brand-name stuff has been renegotiated with the | manufacturer so they can sell you a lower quality version in | order to have the lowest price. They have definitely done | this with some products, and at least attempted it on others. | | So yeah, their pricing definitely affects my perception of | their products. I avoid Walmart. | | Office 365 has the clout of Microsoft behind it. I don't know | that the general rule applies as well as it does to some new | SaaS company I have never heard of before. | dubcanada wrote: | If you have money and you want to pay more for the same | thing you are more then welcome to shop around. But just | because what ever premium brand name store you use is | "better" because it costs more, doesn't mean it isn't the | same thing as Walmart. | | Pricing is not as simple as "charge more" because it | increases the premium factor by applying a this costs to | much for me so it must be good factor. | | There are hundreds of other factors you need to consider | and I don't think applying a double my price equals success | to your pricing schema always makes sense. | rootusrootus wrote: | > pay more for the same thing | | I think you missed the point. Walmart absolutely has | negotiated deals in the past for products that appear to | be the same but are not. Levi's jeans is one example. | They tried to do the same thing with Snapper, as I | recall, but were rebuffed. | | If that's okay with you, great, you are matching the | price of the product with the quality. But as a result of | them doing it and not being completely transparent about | it, I question what other products they've done the same | thing with. | arbuge wrote: | You may avoid it, but hundreds of millions don't, so the | point stands. "Cheap crap" is obviously one possible way to | go, and companies like Walmart have grown very successful | that way. | bryanrasmussen wrote: | are there hundreds of millions of enterprise customers | for your SAAS product? | dubcanada wrote: | Sometimes shooting for enterprise customers doesn't work. | Some products need the little guy to survive, not global | international enterprise companies. | rootusrootus wrote: | Many people are totally fine with buying cheap crap. As | long as they know that going in, that's great. Walmart is | indicating with their prices that they're offering lower | quality merchandise, which many people find acceptable | because the cost is lower. It's honest. | ufmace wrote: | You're kind of both right IMO. | | The great majority of products created by techies interested | in startups are priced much lower than the market will bear, | and so their prices should rise. | | There definitely is a market out there for the cheapest | possible version of something. Usually, turning a profit | while moving a product at the cheapest possible price | involves maximizing volume, cutting quality to be bare | minimum, and ruthlessly eliminating overhead. Like, if there | aren't thousands of people on the internet complaining about | how crappy your quality is, you probably need to cut it | further. I haven't studied it, but I have a hunch that most | of the type of people who surf HN for business advice aren't | interested in being in a commodity industry where you have to | do these things to have a viable business. Or if they find | themselves in one, they aren't going to be ruthless enough in | the right directions to make it. They better find the right | place to get advice for that sort of business, or they won't | last long. | alberth wrote: | Question: is there a buyer who'd be only will to pay $49/mo and | not $99/mo? | | I ask because BannerBear has 3 tiers: $49, $99, $399. | | It seems like if you're willing to pay $49, you'd also pay $99 | ... and as such, why not just eliminate the $49 plan. | | https://www.bannerbear.com/pricing/ | | EDIT: Why the downvotes? It's a genuine question and if you don't | think so, please just comment why you don't think so to advance | the conversation. | rat9988 wrote: | sales tactics to show that you get a lot of value in that tier | per dollar spent. | gnicholas wrote: | It's well-known that people are influenced by the number and | relative value of options. It may be that very few people | purchase the $49 option, but that its mere presence makes | people more likely to purchase a higher tier. | | And by having the $49 tier present, the company can advertise | that their pricing "starts at $49". | | Also, there are probably some people whose purchase authority | is limited to $1,000/yr. | alexellisuk wrote: | Completely agree with the reasons. Most all of my indie company's | software is free and OSS - so no opportunity to capture any | value. | | I created the open source tunnel project called inlets which now | has 8k GitHub stars, the same thing happened - lots of people | used it, got value and didn't pay a sponsorship or for support. | | So seeing the problem, I then went on to create a paid version | which adds value and features for companies. The main issue was | that many developers anchored the pricing to ngrok, but ngrok is | not the same product, for one, it's a SaaS with rate-limits and | is a cloud service. | | inlets PRO doesn't have any rate-limiting, can act as a VPN, | integrates natively with Docekr + Kubernetes and can be self- | hosted too. That's the value of it. So when asked, I advise Ngrok | customers to stay with what they know, they aren't the target | market. | | It still makes anchoring a challenge though, and Neil Davidson of | Redgate talks about this in Don't Roll the Dice - another eBook | the author may enjoy reading - https://www.red- | gate.com/library/dont-just-roll-the-dice | jahewson wrote: | > The main issue was that many developers anchored the pricing | to ngrok, but ngrok is not the same product, for one, it's a | SaaS with rate-limits and is a cloud service. | | You're hooking me in to an interesting pitch here. | | > doesn't have any rate-limiting, can act as a VPN, integrates | natively with Docekr + Kubernetes and can be self-hosted too. | That's the value of it. | | That's just some stuff it does though, not the value. | | As an underwhelmed ngrok free user, you could probably sell me | this product somehow. We have lots of pain around webhooks in | CI, especially with parallel builds. | jFriedensreich wrote: | I was about to write both products went out of business but one | was just rebranded and still has the same higher base pricing and | seems to be doing well, so it seems it worked out very well. | Maybe increasing the pricing also played a role in identifying | the other roduct as too unattractive to continue and focus on | bannerbear sooner than otherwise... | f430 wrote: | Good advice but its a hard sell in overly saturated markets and | most people are just shopping for the lowest price. | js4ever wrote: | After all the good advices in the article my first idea was to | check where they are now after 2 years. The site is down, dead in | the water. So maybe the advices where not that good ... | mlboss wrote: | 2 days back there was an article about how they scales to $10k | MRR. https://www.bannerbear.com/journey-to-10k-mrr/ | jwbaldwin wrote: | Site is still very much up and running. Even postd about a | recent 10k/mmr milestone. | js4ever wrote: | Ah I was referring to the site linked in the article | https://www.votemojo.com/ But it seems they changed the | domain | darrenwestall wrote: | We put our prices up by 50% to new customers this month, we've | see no difference in the amount of customers we've earned - just | a higher revenue per customer. | | Charge more. | yblu wrote: | In my case, I charge $4/month for a developer tool and every | week or so I would receive a survey response (that people do | after uninstalling it) calling me names for charging money. | Apparently there are people who want the tool enough to | complete the survey and curse the creator but not enough to pay | $4/month for it. So for me, pricing is really hard. | jimkleiber wrote: | Just reflecting out loud here, as I struggle with this as | well. | | The way you said it makes me think that at $4/month, you | might actually be competing with free, as the prices seem so | close. If it's $20/month, they may not say "oh but why isn't | it free" or even more so at $50/month. | | At low prices, maybe it just seems too much of a hassle to | sign up and pay, ie, "Ugh, just $4/month? And I have to go | thru the burden of signing up and giving my credit card and | all that?" Whereas at $50/month, the paying process pain may | feel relatively smaller. | Michael_Sieb wrote: | We at Type Studio try to offer our SaaS completely free, as we | believe everyone should find out if the product is helpful. | Especially as students ourselves we don't have the possibility to | pay monthly fees for all the services we like to use. That's why | our approach is to offer a completely free version of our video | and make people who only want to edit 1 video a month happy with | it. But of course we also have to think economically and make | sure that our business is sustainable. | idlewords wrote: | My experience has been that no one can give you as much grief | and hostility as a free user. Even charging a buck a month | leads to an enormous step up in customer courtesy in my world-- | I don't know if it applies equally to yours. | [deleted] | utdiscant wrote: | We use many products with low price - that doesn't make me trust | the products less. For me the reason to charge more is just that | customers are willing to pay more than you think. | | When you double the price, it is likely that the people who | bought would still have bought at the new price. So you are | leaving money at the table by not raising the price. ___________________________________________________________________ (page generated 2021-01-29 23:01 UTC)