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Ask HN: Can I offer different prices to different users for the same product?

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Re: Ask HN: Can I offer different prices to different users for the same product?

#21

Post by analog31 »

eastbaydev wrote: post #11

different prices to different users are foundational to the wedding industry and airlines/hotel, just off the top of my head. When I worked in travel a long time ago, there was a saying that if any 2 people paid the same price, somebody did their job wrong (paraphrasing - it was a very long time ago) In both of those cases however it's very easy for the vendor to cover their tracks. I imagine it would behoove you to…

Amusingly, I play in wedding bands (we also work other sorts of functions such as corporate events). The bandleaders certainly have a la carte pricing. Do you want a singer? Extra hours for setup? Emcee service? Travel to a distant location?

The venue for the event is a good indicator of how much money the client has.

The musicians themselves charge different prices. They expect to get paid more for a higher budget event.

If client A recommends the band to client B, then B will usually know what A paid. That's OK, because a referral gig is usually easier to book, and worth keeping the spigot flowing by sticking with the same price.

Re: Ask HN: Can I offer different prices to different users for the same product?

#22

Post by d0m »

Most enterprises need a very different suite of features that take a lot of time and $ to build. I don't think it's as cheesy as other people in this thread try to make it sound. Often, you need to deal with a lot more regulation, have data hosted on prem (potentially in a different country), scale in a very different way (I.e. think of how Slack starts breaking at a certain threshold). Risk mitigation is really different too, often startups are way more understanding if your service goes down or has bugs.

Funny thing is when enterprise customers start asking for so many features, you have to tell them "Sure, we can build it, but it'll cost $50k instead of $50", and surprisingly they write you a check, so you start building those features.

Re: Ask HN: Can I offer different prices to different users for the same product?

#23

Post by jbillington »

x0x0 wrote: post #19
WestCoastJustin wrote: post #7

Yes, totally. This is common practice. A tip though. If you are attempting to connect directly with end users many folks are turned off by a "Contact Sales" only option. You should have something that is totally self serve, like try for $50/month for a single instance, but if you need more seats please "Contact Sales". This gets people in the door. Almost every large company that does any type of enterprise sales wil…

Pick something socially acceptable to gate enterprise. Like pick okta / logging / compliance features that only enterprise will want. An example (I know multiple companies using this to great effect): allow self-service signups. Starting at $60k/year, the enterprise account includes monitoring of what all users @company.com are getting up to.

Charging more for Okta and similar enterprise features works because Enterprises put a high value on them. Understand what your customers value and the pricing model will be a lot easier to develop.

Re: Ask HN: Can I offer different prices to different users for the same product?

#25

Post by solarkraft »

danielvinson wrote: post #4

IANAL, but this is exactly how B2B sales works... you offer an absurdly high MSRP then offer discounts with various incentives based on completely arbitrary things, with the average purchase landing nowhere near MSRP. I'd be careful about pricing this way to consumers since states are now started to see pricing differences as discrimination. See: http://nymag.com/intelligencer/2018/02/tinder-prices-discrim...

> you offer an absurdly high MSRP then offer discounts

Which is amazing. It's probably a lack of experience in B2B, but I tend to see prices as "take it or leave it", so if I see an absurly high price I go "Aight, that's a no", instead of trying to haggle.

It's just so inefficient having to haggle with every vendor to get real prices for a comparison.

Is the sales process anything else than just a huge money sink?

Re: Ask HN: Can I offer different prices to different users for the same product?

#26

Post by droithomme »

Lots of people do this and there's nothing wrong with it, but I think it's best to have up front pricing rather than "contact for quote".

One way to do it is have the Enterprise version have a few more features that are unlikely to be of interest to small companies or individuals.

Another is just to say the company size on your pricing page. If your company has 500+ employees it's $5000, if 1 person it's $50, if 2-10, it's $200, if 11-499 it's $1000 - or whatever.

Can also have per user, say $100 per user, but a single location site wide license for $1000, or a global site license covering all branches for $20000.

Or whatever prices you like. Look around and you'll find tons of companies offering each kinds of licensing.

Re: Ask HN: Can I offer different prices to different users for the same product?

#27

Post by jjjjjjjjjjjjjjj »

What about doing A/B testing with say $5 vs $7.5 for a product? The people who bought it for $7.5 will feel cheated when they find out it cost someone else $5. But at the time of purchase the product was seemingly worth $7.5 to the customer who paid for it. Isn't it fair to pay in relation to how much you value a product?

Re: Ask HN: Can I offer different prices to different users for the same product?

#28

Post by cimmanom »

Note that this is a valid and even necessary strategy if onboarding or hosting or support costs are high and variable (for instance, onboarding requires custom integration with the customer’s systems, performed by the vendor; or if you may have to spin up a variable number of servers to support their usage level; or for enterprise customers who may want to negotiate certain SLAs in terms of how quickly they can reach customer support via what avenues; etc).

Like many here, as a potential customer, I find this practice frustrating, tho.

Re: Ask HN: Can I offer different prices to different users for the same product?

#29

Post by johngalt »

Yes. It's known as 'value based' pricing.

When you see a 'contact sales' form it usually means professional sales people. Their job is trying to determine how much you are willing to pay based on how much you'll benefit from the product. But the pricing will not be $50 or $5000. Generally businesses aren't going to send professional sales people chasing a sub $10k deal.

Many SaaS companies don't want to create/maintain a huge professional sales apparatus, and/or they want to focus on getting a toe into places at $10/month/user and gradually growing through the entire company. So instead they try to slice the up the market based on per user costs, or making the specific features that businesses need really expensive. Building a pricing model that scales up quick.

Re: Ask HN: Can I offer different prices to different users for the same product?

#30

Post by thinkingkong »

I would actually suggest a learning period for pricing. Basically youre going to iterate through several pricing models and youre not going to get it right your first try, so embrace that and figure out the best set of prices “for now”.

- make sure your unit economics work; you dont lose money on a sale unless its part of some intentional strategy (you need a pile of cash)

- find some artificial scarcity features and at least separate your potential customers using one of these.

- instrument your systems (sales and revenue) so you can get good stats on LTV, LTV:CAC, ARPA, etc.

- after 6 months (or whenever you feel is appropriate) revisit pricing and revise your strategy.

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