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Ask HN: Is $2.95/month too cheap for a B2C SaaS?

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Ask HN: Is $2.95/month too cheap for a B2C SaaS?

#1

Post by egmike »

I'm looking at pricing for a new B2C-based SaaS, and I'm wondering if going with $2.95 or $3 per month would be considered "too cheap." Does anyone have any experience with this pricing that they'd care to share?

The reason why I'm asking is because the first time I saw a $2.95/month price plan a few years ago, I thought to myself "that's too cheap, they must be skimping on something." It was for JungleDisk (an online backup service).

I now know companies like JungleDisk (who use the Cloud) can afford to do this, so I don't think it bothers me that much anymore. But in your opinion/experience, when it comes to potentially subscribing to a new service, do you feel that some prices are "too cheap" and shy away from signing up? Along the same lines, do you think customers who don't know about the Cloud would avoid signing up if the pricing looks "too cheap?"

Re: Ask HN: Is $2.95/month too cheap for a B2C SaaS?

#2

Post by ig1 »

Make it an annual sub if you think $3/month sounds too cheap. But in general pricing is one of those things you only learn by trial-and-error, so stick up an A/B test and see what converts better.

edit: Also offer multiple levels of pricing, offer a "premium" product with a few extra bells and whistles for people who want to pay more.

Re: Ask HN: Is $2.95/month too cheap for a B2C SaaS?

#3

Post by byoung2 »

ig1 wrote: post #2

Make it an annual sub if you think $3/month sounds too cheap. But in general pricing is one of those things you only learn by trial-and-error, so stick up an A/B test and see what converts better. edit: Also offer multiple levels of pricing, offer a "premium" product with a few extra bells and whistles for people who want to pay more.

Definitely follow the above advice and A/B test to see which one converts. I personally don't think $3/mo is too cheap for B2C (e.g. Skype has a $2.95/mo plan). Even B2B can be pretty cheap (when I was just using Amazon S3 I had bills of just a few pennies).

Re: Ask HN: Is $2.95/month too cheap for a B2C SaaS?

#6

Post by sebg »

I would think it depends not so much on whether your users can afford it, but whether you can sustain development on $2.95/month. The price difference between 0 and 0.01 is huge, but between $2.95 to $8.95 is minimal. If you are going to charge for it, charge for it so you can keep supporting it.

Re: Ask HN: Is $2.95/month too cheap for a B2C SaaS?

#7

Post by dpapathanasiou »

It's hard to start low and then raise the price, w/o a substantial increase in the number of features.

Psychologically, a better approach is to start high (i.e., at the highest per month you think people will pay), and only drop the price over time if you're not getting enough subscribers.

If you do stay in the $2, $3 per month range, though, then definitely make it one charge of $24 to $36 per year.

Re: Ask HN: Is $2.95/month too cheap for a B2C SaaS?

#8

Post by egmike »

dpapathanasiou wrote: post #7

It's hard to start low and then raise the price, w/o a substantial increase in the number of features. Psychologically, a better approach is to start high (i.e., at the highest per month you think people will pay), and only drop the price over time if you're not getting enough subscribers. If you do stay in the $2, $3 per month range, though, then definitely make it one charge of $24 to $36 per year.

Thanks for your response. Hmm... see, I used to think starting with the higher price was better, but now I think it definitely depends on the feature set at the beginning.

Right now I'm planning on launching it mainly as a Minimum Viable Product, so I'm thinking of starting at the lower price and raising it as features are added. I think that waiting to see if people buy at the higher price may take too long, since I'll be trying to validate whether people are willing to pay for the product at all.

For the yearly price, do you mean remove the monthly option entirely and replace it with the yearly option? Are people more likely to spend $24 or $36 upfront than $3/month? I was planning on offering a yearly option at a discount...

Re: Ask HN: Is $2.95/month too cheap for a B2C SaaS?

#9

Post by egmike »

byoung2 wrote: post #3
ig1 wrote: post #2

Make it an annual sub if you think $3/month sounds too cheap. But in general pricing is one of those things you only learn by trial-and-error, so stick up an A/B test and see what converts better. edit: Also offer multiple levels of pricing, offer a "premium" product with a few extra bells and whistles for people who want to pay more.

Definitely follow the above advice and A/B test to see which one converts. I personally don't think $3/mo is too cheap for B2C (e.g. Skype has a $2.95/mo plan). Even B2B can be pretty cheap (when I was just using Amazon S3 I had bills of just a few pennies).

Thanks you two, that's good advice... and I'll definitely be offering multiple packages for premium usage. :)

Re: Ask HN: Is $2.95/month too cheap for a B2C SaaS?

#10

Post by egmike »

bradly wrote: post #5

I'm not sure whether $3 is too cheap, but I've noticed a few sites use ~$25 annual subscriptions. http://flickr.com/ http://backpackinglight.com/ I sure there are many others.

Annual subscriptions are a good idea, thank you, and thanks for the references.
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