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Doubling SaaS Revenue By Changing The Pricing Model

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Re: Doubling SaaS Revenue By Changing The Pricing Model

#51

Post by bravura »

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…

Here's what I find really surprising: Making the word "Free" in the call-to-action much less prominent did not reduce conversion by very much.

The original page prominently says: "Sign up for a free trial" and gets a 6.9% conversion from visitor to trial user.

The new page unprominently says: "Money back guarantee" and "Free Sign Up" in the top right corner. Conversion is 5.2%, which is almost the same considering the scope of the change, even though there was much less use of the word "Free".

This is surprising in itself.

I'm also curious about how the next stage of the funnel is converting users from the trial to entering their credit cards.

Also you say that credit card signup is not mandatory. When does the CC enter the picture? Does the service wait a while (e.g. one month ) and ask you to enter you credit card? How does this compare to taking a credit-card upfront and offering a one-month money-back guarantee?

Re: Doubling SaaS Revenue By Changing The Pricing Model

#52

Post by plasma »

> "The minimum buy-in for the service is now $99 a month, which will segment away customers who are less serious about their server uptime."

I use Server Density (and even blogged about it, http://cherrypopapp.com/blog#Server_Provisioning) and would not pay $99/month to monitor 1-2 servers.

I don't see how paying more or less reflects a level of seriousness.

Re: Doubling SaaS Revenue By Changing The Pricing Model

#53

Post by hythloday »

bravura wrote: post #51
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…

Here's what I find really surprising: Making the word "Free" in the call-to-action much less prominent did not reduce conversion by very much. The original page prominently says: "Sign up for a free trial" and gets a 6.9% conversion from visitor to trial user. The new page unprominently says: "Money back guarantee" and "Free Sign Up" in the top right corner. Conversion is 5.2%, which is almost the same considering th…

I don't want to be pedantic, but 25% fewer conversions is not "almost the same", it's quite the loss. You need to increase your funnel 33% somewhere down the line to make up for it (which I'm sure they did - I'm just making the point that X% -> X-d% is significant if X and d are small).

Re: Doubling SaaS Revenue By Changing The Pricing Model

#54

Post by robryan »

bravura wrote: post #51
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…

Here's what I find really surprising: Making the word "Free" in the call-to-action much less prominent did not reduce conversion by very much. The original page prominently says: "Sign up for a free trial" and gets a 6.9% conversion from visitor to trial user. The new page unprominently says: "Money back guarantee" and "Free Sign Up" in the top right corner. Conversion is 5.2%, which is almost the same considering th…

I think this might be because of the product. Most people probably don't want free server monitoring, as the perceived reliability and performance would be worse.

Re: Doubling SaaS Revenue By Changing The Pricing Model

#55

Post by robryan »

plasma wrote: post #52

> "The minimum buy-in for the service is now $99 a month, which will segment away customers who are less serious about their server uptime." I use Server Density (and even blogged about it, http://cherrypopapp.com/blog#Server_Provisioning ) and would not pay $99/month to monitor 1-2 servers. I don't see how paying more or less reflects a level of seriousness.

With the new pricing though you are no longer a targeted customer.

Re: Doubling SaaS Revenue By Changing The Pricing Model

#56

Post by adrianhoward »

the_bear wrote: post #40
true_religion wrote: post #33

> The minimum buy-in for the service is now $99 a month, which should scare away the idiots. I'm scared, and as a potential customer I hate to be labeled an idiot. I'm very happy with New Relics system even though they're priced higher than you per server, they at least offer a price PER server instead of tiers.

Agreed. I don't doubt that being ruthless about A/B testing pricing increases revenue, but I'm not wild about the implied attitude that customers only exist so that we can extract as much money as possible from them. The user experience should definitely be a factor as well. I don't think it's possible to support this claim with data, but I'm convinced that being ruthless and unfriendly with pricing can have a negati…

I'm convinced that being ruthless and unfriendly with pricing can have a negative impact on the business in the long term

Optimising for price isn't necessarily being ruthless and unfriendly to customers.

In my experience more people like pricing models like these. It's easier to understand. They know what they'll be spending each month. It saves them effort and work.

I worked with one organisation who just killed out of hand any service that had variable pricing since it played merry hell with their accounting processes. They would much rather pay $99 a month every month than deal with the hassle of figuring out what this random number was on the invoice (because you had to check that that number was the right number somehow - which cost them money in admin, tracking, etc.).

Yes - models like this make some customers unhappy. Some of those customers will be good customers. That doesn't mean that other who go for the new model are unhappy - or being screwed.

Changing pricing models like this are in many cases more a way to resegment / target your market. The revenue increase is just evidence that you're doing it well :-)

Also - money for the company should mean more resources for building a better product for the customer, so a long term win for the customer.

Re: Doubling SaaS Revenue By Changing The Pricing Model

#57

Post by ricardobeat »

kkowalczyk wrote: post #38
ricardobeat wrote: post #34

Earlier quoted context omitted.

This is the kind of behaviour we all deeply hate from TelCos, why would you do the same? I'd say offer the new price to all and get happier clients. If you can't afford that then why are you lowering prices in the first place?

We hate TelCos who lower the prices and even apply them retro-actively? That's news to me. But more to the point: the logistics of making refunds on purchases like software are complicated. Most payment processors don't even have the notion of partial refunds. Making a full refund is costly to you (payment processor took their cut of the transaction; they aren't too eager to give it back to you so either they charge…

One day you find out that your parents are still paying $100/month for a 1mbps plan that doesn't even exist anymore, while they could pay $50 for 10mbps after a 2 min phone call. That's what we hate. Not everyone knows to check every couple months to verify that they're paying current prices.

This is on SaaS, so no refunds needed, just a price/plan change for the next billing cycle.

Re: Doubling SaaS Revenue By Changing The Pricing Model

#58

Post by tedunangst »

patio11 wrote: post #30
casca wrote: post #28

Earlier quoted context omitted.

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…

For a minute there I thought you were talking about me. I pay Colin $0.15 per month. :) Literally worth every penny.

Re: Doubling SaaS Revenue By Changing The Pricing Model

#59

Post by statictype »

cperciva wrote: post #21
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…

if the pricing page includes "picodollars", it really shouldn't I knew that was coming as soon as I read the question. :-)

Have you considered running tests on your marketing copy and doing the math on the hard data you get out of it?

I think I understand your point that you're not interested in having the type of customer who would be scared away by 'picodollars' (as opposed to finding it amusing) but you should at least test it out and get the numbers to verify your hypothesis right?

(As a bonus, if you're right, you get to shove it in the faces of everyone else. If you're wrong - well congratulations - you just increased sales)

Unless you're doing this more as a principled stand (which is fine I guess).

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