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Ask HN: Should I drastically increase my pricing (grandfathering included)?

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Ask HN: Should I drastically increase my pricing (grandfathering included)?

#1

Post by 3a0e8ff4e557 »

My SaaS app tends to attract a lot of customers who upgrade to paid plans but are actually ultimately not really interested in running a business long-term. Our app is actually an ecommerce platform. Our churn is pretty high, but customers are not switching to competitors, just dropping out. I know because their domain names tied to their online stores remain abandoned.

Should I increase my pricing by at least 200-400% to see if this attracts only the most serious customers, and so that I can better focus my effort on serving them instead of spreading myself too thin? Currently, we are definitely underpriced in the market (an indirect consequence of me being the sole employee and living in a country with much lower expenses), and there are also signs that potential customers have problems taking us seriously because of that.

Once we hike our price (to $200/mo), we will be comparable to other competitors. I just felt that undercharging hasn't done us any good for so many months.

What do you think?

Re: Ask HN: Should I drastically increase my pricing (grandfathering included)?

#2

Post by patio11 »

Yes, you probably should increase prices, but just increasing prices isn't going to get you instantaneous credibility to make sales with more qualified clients. It is difficult to point to things you could do to improve perceived credibility without seeing your site, but examples would include a) making sure the English is flawless (only mentioned because of the country with lower expenses -- your writing here is very good), b) displaying social proof such as logos of credible existing customers and/or media mentions and/or vanity stats, and c) generally having a design and experience which screams Credible.

You'll note that your situation is seen over and over and over again by folks who build business tools, by the way. At low prices you get pathological customers. This is exactly what Spreedly and Chargify reported on HN previously, and it comports with the experience of many other companies which have not said so publicly.

Re: Ask HN: Should I drastically increase my pricing (grandfathering included)?

#5

Post by 3a0e8ff4e557 »

nreece wrote: post #4

The first thing you must do is find out why your customers are abandoning your product. I think increasing the price without fixing the core problem will not help much.

Talking to them, I realise that a lot of it is just, "Wow, it's taking up much more time and money than I expected." While we can abstract away some of this time and money investment through better features and better UI/UX, a lot of them are just gunning for building a passive income engine without even investing much money and time in the initial stages. They are the classic get-rich-quick-passive-income-work-from-home crowd, if you will.

Certainly, there are many aspects of our SaaS platform that can be improved, but we have been constantly learning from our customers who are still continuing their subscriptions with us. So hopefully we are indeed improving our platform over time and tackling some core problems (sample bias, of course, but better than nothing).

P.S. Out of 39 people whom we surveyed over a few months (mostly people who continue to upgrade after the trial), 26 said that they will be "very disappointed" if they could not use our platform again, so hopefully this says something about our product/market fit.

Re: Ask HN: Should I drastically increase my pricing (grandfathering included)?

#6

Post by kappaknight »

3a0e8ff4e557 wrote: post #5
nreece wrote: post #4

The first thing you must do is find out why your customers are abandoning your product. I think increasing the price without fixing the core problem will not help much.

Talking to them, I realise that a lot of it is just, "Wow, it's taking up much more time and money than I expected." While we can abstract away some of this time and money investment through better features and better UI/UX, a lot of them are just gunning for building a passive income engine without even investing much money and time in the initial stages. They are the classic get-rich-quick-passive-income-work-from-…

What is taking up most of their time? What can you do to help reduce that, if anything?

Re: Ask HN: Should I drastically increase my pricing (grandfathering included)?

#7

Post by kellros »

I think you need to consider how this will impact your bottom line. Is your cheapness (excuse the pun) your major selling factor i.t.o competitiveness?

Is your 'market share', only the cheap clients? Generally businesses carve out a niche inside their market.

If that above statement is true, you'd probably lose almost all your business.

If you want more money (without losing your client base), add functionality and give them the option to use it (at a price).

I'd say if you already have all or most of the el'cheapos, then cater for them. Make it easier to setup shop and for you to manage them.

Re: Ask HN: Should I drastically increase my pricing (grandfathering included)?

#8

Post by 3a0e8ff4e557 »

patio11 wrote: post #2

Yes, you probably should increase prices, but just increasing prices isn't going to get you instantaneous credibility to make sales with more qualified clients. It is difficult to point to things you could do to improve perceived credibility without seeing your site, but examples would include a) making sure the English is flawless (only mentioned because of the country with lower expenses -- your writing here is ver…

Hello Patrick,

Our landing page is actually converting pretty well, at >5% conversion rate (visit-to-trial signup). The problem is that I'm not sure if the right people are converting. We have no indication on the quality of those signups.

If you are willing to help me out, I'll send you an email with my website, so that you can give quick thoughts. I would say the things you pointed out are generally fulfilled, but I may be wrong and biased too.

Re: Ask HN: Should I drastically increase my pricing (grandfathering included)?

#9

Post by 3a0e8ff4e557 »

kellros wrote: post #7

I think you need to consider how this will impact your bottom line. Is your cheapness (excuse the pun) your major selling factor i.t.o competitiveness? Is your 'market share', only the cheap clients? Generally businesses carve out a niche inside their market. If that above statement is true, you'd probably lose almost all your business. If you want more money (without losing your client base), add functionality and g…

Unfortunately, it is possible that both the questions you posed are answered in the positive. We are grandfathering existing customers, so hopefully if we ever hit a brick wall with new customers, we can just rely on existing income from existing customers for the time being.

But we really want to take a bite at the enterprise/corporate segment, since we believe that what we have is even better than what our premium competitors offer. We have a couple of those now paying a lot of money but are succeeding in making profits, perhaps because their higher fees make them treat their business more seriously.

Re: Ask HN: Should I drastically increase my pricing (grandfathering included)?

#10

Post by patio11 »

3a0e8ff4e557 wrote: post #8
patio11 wrote: post #2

Yes, you probably should increase prices, but just increasing prices isn't going to get you instantaneous credibility to make sales with more qualified clients. It is difficult to point to things you could do to improve perceived credibility without seeing your site, but examples would include a) making sure the English is flawless (only mentioned because of the country with lower expenses -- your writing here is ver…

Hello Patrick, Our landing page is actually converting pretty well, at >5% conversion rate (visit-to-trial signup). The problem is that I'm not sure if the right people are converting. We have no indication on the quality of those signups. If you are willing to help me out, I'll send you an email with my website, so that you can give quick thoughts. I would say the things you pointed out are generally fulfilled, but…

Drop me an email and I'll give it a quick once-over.
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