Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Doubling SaaS Revenue By Changing The Pricing Model

kalzumeus.com

Post reply on HN
Print view View original

11–20 of 74 posts

Re: Doubling SaaS Revenue By Changing The Pricing Model

#11

Post by patio11 »

mootothemax wrote: post #10
patio11 wrote: post #2

Happy to answer questions to the extent that I can. Speaking of which: if it isn't transparently obvious by now, I really, really like getting feedback about how my advice worked out. If you ever implement a suggestion from me (particularly with an A/B test), please, drop me an email. Even if the result was "Well, that was sure an epic failure", because negative confirmation is useful, too. (If you want to share resu…

What are your thoughts on trimming down the price options even further, e.g. one plan around $200/month, plus a "need more? we do custom plans, call us!" option? Oh, and thanks for writing this, there's some really useful information here.

The notion of keeping customers from having to make multiple decisions at once appeals to me, but you hugely gain by ability to price discriminate against customers who are less sensitive. There's a reason almost everyone you can think of has more than one price for their offering.

Can I give you a suggestion that's halfway there? There's no reason that your /pricing page has to be the only channel anywhere for getting signups. You might have a particular recommendation specific to a particular audience and give that particular audience just a single option. For example, when I write drip marketing campaigns, I often pitch the #3 out of 4 plan semi-exclusively, and send folks to pages which plug it and only it. (If you want to hear more about drip marketing get on my email list. August will be a fun month for you. If you don't want to hear about email marketing optimization my email list is a very bad place to be for the next couple of weeks.)

Re: Doubling SaaS Revenue By Changing The Pricing Model

#12

Post by mootothemax »

patio11 wrote: post #11
mootothemax wrote: post #10

Earlier quoted context omitted.

What are your thoughts on trimming down the price options even further, e.g. one plan around $200/month, plus a "need more? we do custom plans, call us!" option? Oh, and thanks for writing this, there's some really useful information here.

The notion of keeping customers from having to make multiple decisions at once appeals to me, but you hugely gain by ability to price discriminate against customers who are less sensitive. There's a reason almost everyone you can think of has more than one price for their offering. Can I give you a suggestion that's halfway there? There's no reason that your /pricing page has to be the only channel anywhere for getti…

Thanks, that's really good advice. I'm planning on launching a new product at some point next month, and am preparing the initial pricing plans now. I hadn't thought of offering custom pages for specific audiences like that - I'm already on your list, and looking forward to seeing what turns up :)

Re: Doubling SaaS Revenue By Changing The Pricing Model

#13

Post by salman89 »

patio11 wrote: post #7
salman89 wrote: post #3

I always wondered how volatile your pricing scheme can be. Suppose you wanted to A/B test a pricing scheme - is there any potential impact/backlash from customers? And when a company changes their pricing scheme, what happens to customers who were paying a former price/scheme?

And when a company changes their pricing scheme, what happens to customers who were paying a former price/scheme? Best practice -- and I'm shamelessly stealing this lesson from Joel Spolsky -- is to grandfather SaaS accounts in indefinitely if you raise prices. This a) lets you get a nice bump in sales if you announce the incoming price increase (no reason you can't do the A/B test quietly but announce the conclusion…

Fair, but what if simple economics/margins do not allow you to offer the old price/package. Ex, say you license Twitter data at $0.10/1k, and Twitter decides one day that they want $0.15?

What do you do when your old pricing scheme is no longer profitable?

Re: Doubling SaaS Revenue By Changing The Pricing Model

#14

Post by cfn »

patio11 wrote: post #9
cfn wrote: post #6

When I change pricing I always worry that current customers will be unhappy because they might have saved some money had they bought it later (I sell a desktop product). Is this a problem you have seen youself when you sold desktop software?

Give anyone who complains a refund. Problem solved. (P.S. Not many people will complain, and you don't want the business of the ones that will .) Though I'd wonder why one would be lowering prices when raising prices is just as easy and generally does better things for revenue.

I meant lowering in context of a test but fair point.

Re: Doubling SaaS Revenue By Changing The Pricing Model

#15

Post by patio11 »

salman89 wrote: post #13
patio11 wrote: post #7

Earlier quoted context omitted.

And when a company changes their pricing scheme, what happens to customers who were paying a former price/scheme? Best practice -- and I'm shamelessly stealing this lesson from Joel Spolsky -- is to grandfather SaaS accounts in indefinitely if you raise prices. This a) lets you get a nice bump in sales if you announce the incoming price increase (no reason you can't do the A/B test quietly but announce the conclusion…

Fair, but what if simple economics/margins do not allow you to offer the old price/package. Ex, say you license Twitter data at $0.10/1k, and Twitter decides one day that they want $0.15? What do you do when your old pricing scheme is no longer profitable?

You can head this issue off by charging more, because your margins for a SaaS should probably be in the 80~95% region, and if you're finding yourself thinking "I'll just add a 20% markup on top of Twitter's API rates then compete on price" or "I'll make a payment processing solution which charges 0.25% on top of credit card costs" then you can reasonably anticipate that this will eventually happen to you. So, for anyone thinking they might ever be worried about this, charge more. Cost-plus pricing has no place in software.

There's some costs which are difficult to anticipate prior to launch. One is ongoing customer support, and it is entirely possible to price below profitability if you get a lot of pathological customers in on the ground floor. If you've just got a few and the business is fundamentally sound, consider it a marketing expense and let them get weeded out by attrition. If you're like Spreedly or Chargify and discover that a lot of the early adopters in your space are toxic, then it's time to have the "Look, we're not in the business of subsidizing you" discussion. I'd have the messaging for that discussion stress that you'd like to continue offer the old terms but circumstances are tying your hands, and try to be generous on e.g. giving 6 months or so of lock-in to the old prices or assistance in moving them to a provider which is more suited to their needs. But honestly, at the end of the day, if the choices are a) not making payroll for my employees and b) ticking off a bunch of pathological freeloaders, I know what I'd pick every single time.

Re: Doubling SaaS Revenue By Changing The Pricing Model

#16

Post by mamcx »

patio11 wrote: post #2

Happy to answer questions to the extent that I can. Speaking of which: if it isn't transparently obvious by now, I really, really like getting feedback about how my advice worked out. If you ever implement a suggestion from me (particularly with an A/B test), please, drop me an email. Even if the result was "Well, that was sure an epic failure", because negative confirmation is useful, too. (If you want to share resu…

Any info in the best price strategy for online backup software, for companies? Price per server, GB or what?

Re: Doubling SaaS Revenue By Changing The Pricing Model

#17

Post by patio11 »

mamcx wrote: post #16
patio11 wrote: post #2

Happy to answer questions to the extent that I can. Speaking of which: if it isn't transparently obvious by now, I really, really like getting feedback about how my advice worked out. If you ever implement a suggestion from me (particularly with an A/B test), please, drop me an email. Even if the result was "Well, that was sure an epic failure", because negative confirmation is useful, too. (If you want to share resu…

Any info in the best price strategy for online backup software, for companies? Price per server, GB or what?

I haven't worked directly with any online backup software companies (and wouldn't give you their secrets if I had). In general, I'd try to align pricing with customer success, such that e.g. a big enterprise doing online backup of a mission critical application would end up paying a heck of a lot more per anything than a bride backing up her wedding photos.

This would tend to suggest not pricing backups by weight at all because, crucially, businesses do not value data by weight. 8 GB of bingo cards: doesn't matter if they get rm -rf'ed, I can regenerate them trivially. 200kb gzipped of Appointment Reminder database backups: that literally represents more than half my net worth. The production database for a large enterprise customer? That might trivially be worth $20k+ per month, totally no-brainer, regardless of size.

My most specific recommendation: if the pricing page includes "picodollars", it really shouldn't. (Much love for Tarsnap but darn it I'm right.)

Re: Doubling SaaS Revenue By Changing The Pricing Model

#18

Post by dchuk »

bdunn wrote: post #5
patio11 wrote: post #2

Happy to answer questions to the extent that I can. Speaking of which: if it isn't transparently obvious by now, I really, really like getting feedback about how my advice worked out. If you ever implement a suggestion from me (particularly with an A/B test), please, drop me an email. Even if the result was "Well, that was sure an epic failure", because negative confirmation is useful, too. (If you want to share resu…

Patrick, I've recently doubled my pricing across the board. To confirm Ruben's results, no change in trial/paid conversions. Next step is disconnecting from "usage" (right now, plans are based on # of employees using the software, all plans have the same features) and moving towards plans based on the goals of the business: Do they need reporting? Are they comfortable being a solo freelancer working from Starbucks, o…

This is the exact path I'm taking with my company very soon (I refer to it as persona based pricing, not sure if that's the correct technical term or not).

We've found that increased usage is not what differentiates our users (no one hits the imposed limits on their plans). So we're switching to plans that users should be able to read and immediately identify themselves with (Solo, Consultant, Agency)

Would love to chat with you about your thoughts and results if you're interested.

Re: Doubling SaaS Revenue By Changing The Pricing Model

#19

Post by gav »

patio11 wrote: post #2

Happy to answer questions to the extent that I can. Speaking of which: if it isn't transparently obvious by now, I really, really like getting feedback about how my advice worked out. If you ever implement a suggestion from me (particularly with an A/B test), please, drop me an email. Even if the result was "Well, that was sure an epic failure", because negative confirmation is useful, too. (If you want to share resu…

If you are targeting non-technical people, I wonder what improvement the change from "∞ users" to "unlimited users" would be.

Re: Doubling SaaS Revenue By Changing The Pricing Model

#20

Post by 13rules »

cfn wrote: post #6

When I change pricing I always worry that current customers will be unhappy because they might have saved some money had they bought it later (I sell a desktop product). Is this a problem you have seen youself when you sold desktop software?

I think you should give them the option to buy at the new price or stay on their current plan. Think about receiving an email from a service you have been paying $99 a month to that says, "Hey, we are lauching this new pricing at $79 - if it suits your needs you could save $20 a month"

Definitely is not the norm from the majority of SaaS sites.

Post reply on HN