Doubling SaaS Revenue By Changing The Pricing Model • Hacker News Board

Re: Doubling SaaS Revenue By Changing The Pricing Model

#21

Post by cperciva » Mon, Aug 13, 2012, 5:33 PM UTC

patio11 wrote: post #17

mamcx wrote: post #16

Earlier quoted context omitted.

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…

if the pricing page includes "picodollars", it really shouldn't

I knew that was coming as soon as I read the question. :-)

Re: Doubling SaaS Revenue By Changing The Pricing Model

#22

Post by jessep » Mon, Aug 13, 2012, 5:39 PM UTC

Regarding the question of estimating the error: I don't know a ton about stats, but can't you use bootstrapping to get a valid sense of the variability/margin of error of your dataset for non normal distributions? http://en.wikipedia.org/wiki/Bootstrapping_(statistics)

Re: Doubling SaaS Revenue By Changing The Pricing Model

#23

Post by patio11 » Mon, Aug 13, 2012, 5:42 PM UTC

gav wrote: post #19

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.

Non-technical is not a synonym for uneducated. Many of my non-technical customers have masters degrees, and substantially all passed high school math. The typical non-technical decisionmaker trying to buy server-monitoring software has a title like Purchasing Director or Team Lead and a four-year degree or better. (I'd also tend to avoid that A/B test because the pricing grid looks very clear in context.)

There's a semi-related issue where talking in a particular way can make you seem like The Other to someone, and you don't want to do that, but I doubt the person with purchasing authority is so scared of math that this qualifies. (I might avoid putting a D&D joke on that page, where I would totally do that when talking directly to a geeky audience, if that fits the company culture.)

Re: Doubling SaaS Revenue By Changing The Pricing Model

#24

Post by bdunn » Mon, Aug 13, 2012, 5:42 PM UTC

dchuk wrote: post #18

bdunn wrote: post #5

Earlier quoted context omitted.

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 c…

Absolutely. brennan at planscope.io

Re: Doubling SaaS Revenue By Changing The Pricing Model

#25

Post by rodolphoarruda » Mon, Aug 13, 2012, 5:50 PM UTC

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 et al.

I work in the e-commerce "ecosystem". What's your opinion about offering all software functionality for free, but charge for support and other side services like "product catalog management", "product image treatment", "e-mail marketing campaigns management" etc? Do you think customers may like the idea?

Re: Doubling SaaS Revenue By Changing The Pricing Model

#26

Post by glimcat » Mon, Aug 13, 2012, 5:52 PM UTC

dchuk wrote: post #18

bdunn wrote: post #5

Earlier quoted context omitted.

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 c…

I refer to it as persona-based pricing

I hereby declare this to be the correct technical term for it. The guys in marketing may be calling it something else, but I don't think you'll find a more succinct description of the strategy.

Re: Doubling SaaS Revenue By Changing The Pricing Model

#27

Post by patio11 » Mon, Aug 13, 2012, 5:55 PM UTC

rodolphoarruda wrote: post #25

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 et al. I work in the e-commerce "ecosystem". What's your opinion about offering all software functionality for free, but charge for support and other side services like "product catalog management", "product image treatment", "e-mail marketing campaigns management" etc? Do you think customers may like the idea?

I think that the kind of customers who think "Oh, you know what, I want to run my business on a platform put out by a company with no clear way of keeping the lights on" are absolutely not the customers which you want to get. They're disproportionately going to be people who aspire to make money on the Internet rather than people who actually run businesses. People who actually run businesses are much better prospects: they have money and are willing to spend as much of it as you'd care to take if you can generate positive ROI. They'll be much more positively inclined to upsells like e.g. improved photography for their goods because they know that will directly make them money, whereas someone who a) has no orders and b) has no goods won't understand why on earth they'd pay for a professional photographer.

These very desirable business customers will run screaming from the impending trainwreck of a company which is proposing a) tie your business at the hip to ours and b) we could fold at any stiff breeze.

Re: Doubling SaaS Revenue By Changing The Pricing Model

#28

Post by casca » Mon, Aug 13, 2012, 6:00 PM UTC

patio11 wrote: post #17

mamcx wrote: post #16

Earlier quoted context omitted.

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…

The reason that Colin can get away with the picodollar model is that the type of people who use tarsnap would get annoyed if they were charged for 1gb if they were using 100mb. _For those customers_, there is a clear correlation between the price being charged and the value provided.

Re: Doubling SaaS Revenue By Changing The Pricing Model

#29

Post by zcvosdfdgj » Mon, Aug 13, 2012, 6:08 PM UTC

dmytton wrote: post #4

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?

We had a few people pick up on this test (colleagues browsing on different machines) and they understood when we explained we were running a test. I think so long as you don't try and cover it up and offer those who discover the choice between the new/old pricing, it shouldn't cause any problems.

that's just because you aren't big enough. Amazon has been caught testing prices previously, and there were a lot of upset people.

Noticing the test isn't what caused the outrage.. wait until you have thousands of people who find out they paid more than another person for the same item (ie in their minds: were ripped off).

Then you'll see how consumers feel about your test.

Re: Doubling SaaS Revenue By Changing The Pricing Model

#30

Post by patio11 » Mon, Aug 13, 2012, 6:13 PM UTC

casca wrote: post #28

patio11 wrote: post #17

Earlier quoted context omitted.

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…

The reason that Colin can get away with the picodollar model is that the type of people who use tarsnap would get annoyed if they were charged for 1gb if they were using 100mb. _For those customers_, there is a clear correlation between the price being charged and the value provided.

If Colin is attracting people for whom the difference between $0.03 and $0.30 is meaningful, then Colin is attracting people that do not deserve to do business with Colin. Colin was involved in security with BSD, and made a no-BS almost bulletproof encrypted backup solution on top of untrusted hardware, and has created something of actual value. Anyone whose data is worth less than, oh, call it $100 a month (at the low end) doesn't really need Tarsnap.

I respect that everyone has their own motivations for doing things and that economic optimality is not the be-all-end-all. Colin can run Tarsnap as an underpriced public utility if he wants to. But, Scout's honor, it is underpriced. The pricing model actively discourages large, savvy customers whose lives and businesses would benefit from switching to Tarsnap in favor of pathological bottom-feeders who gain no significant benefit from Tarsnap. My personal opinion is, in addition to costing Colin money, this moots the impact that his (extraordinarily impressive) engineering achievement could otherwise be providing to the world.

This is a very awkward conversion for me, so I'm going to refrain from the unsolicited advice for at least a few months until picodollars just make me snap again.