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Don't Blindly Model Your SaaS Pricing on 37signals

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Re: Don't Blindly Model Your SaaS Pricing on 37signals

#41

Post by duck »

jcampbell1 wrote: post #24
GavinB wrote: post #9

If you want to sell services to large companies--even low cost ones--you need to offer invoice payment. At a big company, the corporate credit card is for meals and travel, not for paying vendors.

In my experience, if you send a proforma invoice, a W9, a federal tax id, and a soul sourcing statement, at the end of the signup form, many times a check will just show up in the mail. It is possible to do invoice payment without having a high touch sales process. You just have to preemptively provide all the stuff the AP department needs. I really think 37 signals is leaving quite a bit of money on the table by not…

soul sourcing statement

I think you meant sole, but I had to laugh at this meaning as well in the whole scheme of dealing with finance departments.

Re: Don't Blindly Model Your SaaS Pricing on 37signals

#42

Post by rietta »

rdudekul wrote: post #28

Pricing is complex in general, but for SaaS companies even more so. Enterprise SaaS companies spend a lot of resources to acquire customers. Annual billing to a large extent helps offset these costs. However a question remains: How does a new unfunded SaaS company acquire customers, when annual billing can be a big obstacle for sign ups?

You remove as many barriers to the purchase as possible. Allow monthly credit card billing, but incentivize longer term payments. For example, PivotalTracker.com charges monthly. However, I personally paid them for an entire year to get the 2 month discount! 12 months for the price of 10 months is enough encouragement for me to pay for the entire year.

Re: Don't Blindly Model Your SaaS Pricing on 37signals

#43

Post by jacques_chester »

bravoyankee wrote: post #40

Pricing low has nothing to do with being rude. That statement is a major disconnect from reality. I also think that there are many service out there that are buying into this 'high pricing' doctrine and are giving prospective customers sticker shock. These starving young companies can't afford to do that so early in the game. The other day I saw a site on HN selling business ebooks to startups: "how to drive more tra…

You are substituting what you think are acceptable prices for what the market will bear.

Re: Don't Blindly Model Your SaaS Pricing on 37signals

#44

Post by bravoyankee »

jacques_chester wrote: post #43
bravoyankee wrote: post #40

Pricing low has nothing to do with being rude. That statement is a major disconnect from reality. I also think that there are many service out there that are buying into this 'high pricing' doctrine and are giving prospective customers sticker shock. These starving young companies can't afford to do that so early in the game. The other day I saw a site on HN selling business ebooks to startups: "how to drive more tra…

You are substituting what you think are acceptable prices for what the market will bear.

There's a little more to it than that. If your not priced to keep users long enough to get addicted to your offering, the cost of churn and marketing spend trying to get fresh customers will kill you.

There is a lot of choice out there. Everybody is executing nowadays, and it's the same sort of apps that are flooding the market. The advice in this post is not helpful.

Re: Don't Blindly Model Your SaaS Pricing on 37signals

#45

Post by jacques_chester »

bravoyankee wrote: post #44
jacques_chester wrote: post #43

Earlier quoted context omitted.

You are substituting what you think are acceptable prices for what the market will bear.

There's a little more to it than that. If your not priced to keep users long enough to get addicted to your offering, the cost of churn and marketing spend trying to get fresh customers will kill you. There is a lot of choice out there. Everybody is executing nowadays, and it's the same sort of apps that are flooding the market. The advice in this post is not helpful.

Most of the money in the economy is tied up in the capital structure -- ie, it's not actually in the hands of consumers, it's in the hand of producers.

Producers can and do pay a lot more for goods and services if it helps them to make a profit.

The market for todo apps and other consumer software is, you're right, absolutely a mad scrabble for volume.

The market for intelligently targeted vertical segments is juicy and prime for picking.

I know where I'm aiming my current venture.

Re: Don't Blindly Model Your SaaS Pricing on 37signals

#46

Post by jcampbell1 »

spatten wrote: post #37
jcampbell1 wrote: post #24

Earlier quoted context omitted.

In my experience, if you send a proforma invoice, a W9, a federal tax id, and a soul sourcing statement, at the end of the signup form, many times a check will just show up in the mail. It is possible to do invoice payment without having a high touch sales process. You just have to preemptively provide all the stuff the AP department needs. I really think 37 signals is leaving quite a bit of money on the table by not…

Would you not have to customize this for every country that you do business with, though? Hmm. Sounds like a complete and utter horribly painful schlep. A schlep that puts you right in the path of the money. Interesting.

You don't have to customize anything. If you don't want them to call, you can add a sentence that you accept (or don't accept) foreign currency checks at a market exchange rate. That is about the only question foreign businesses ask.

Re: Don't Blindly Model Your SaaS Pricing on 37signals

#47

Post by derefr »

jcampbell1 wrote: post #24
GavinB wrote: post #9

If you want to sell services to large companies--even low cost ones--you need to offer invoice payment. At a big company, the corporate credit card is for meals and travel, not for paying vendors.

In my experience, if you send a proforma invoice, a W9, a federal tax id, and a soul sourcing statement, at the end of the signup form, many times a check will just show up in the mail. It is possible to do invoice payment without having a high touch sales process. You just have to preemptively provide all the stuff the AP department needs. I really think 37 signals is leaving quite a bit of money on the table by not…

Just dreaming here, but is it possible that this could be outsourced, the way you can outsource credit-card payments with Stripe? Have another organization invoice them, collect the check, and then deposit the money into your account, without you ever having to make more than an API call?

Re: Don't Blindly Model Your SaaS Pricing on 37signals

#48

Post by dkokelley »

kanzure wrote: post #33
jcampbell1 wrote: post #24

Earlier quoted context omitted.

In my experience, if you send a proforma invoice, a W9, a federal tax id, and a soul sourcing statement, at the end of the signup form, many times a check will just show up in the mail. It is possible to do invoice payment without having a high touch sales process. You just have to preemptively provide all the stuff the AP department needs. I really think 37 signals is leaving quite a bit of money on the table by not…

> You just have to preemptively provide all the stuff the AP department needs. Do you have an example of a SaaS operation doing this well?

I don't know for sure, but I imagine Salesforce has this down.

Re: Don't Blindly Model Your SaaS Pricing on 37signals

#49

Post by wilfra »

derefr wrote: post #47
jcampbell1 wrote: post #24

Earlier quoted context omitted.

In my experience, if you send a proforma invoice, a W9, a federal tax id, and a soul sourcing statement, at the end of the signup form, many times a check will just show up in the mail. It is possible to do invoice payment without having a high touch sales process. You just have to preemptively provide all the stuff the AP department needs. I really think 37 signals is leaving quite a bit of money on the table by not…

Just dreaming here, but is it possible that this could be outsourced, the way you can outsource credit-card payments with Stripe? Have another organization invoice them, collect the check, and then deposit the money into your account, without you ever having to make more than an API call?

Interesting idea. How much would that service be worth to SaaS companies?

Re: Don't Blindly Model Your SaaS Pricing on 37signals

#50

Post by Joeri »

jwblackwell wrote: post #13

I think the OP makes some very important points here. There's definitely a somewhat fixed mentality when it comes to SaaS pricing and it's easy to fall into the trap that you should be charging something akin to 37signals. Pricing isn't actually something that's as easy to change as you'd believe either. It has huge implications on your actual product, your target market and sales strategy - as the OP points out. Ima…

"If you're anything like me, it's easy to assume everyone lives in a world where $10 for Spotify is a pretty big deal. My friends moan about that price for unlimited music. $200 a month seems huge to me for anything I'd buy. It's only recently I've fully started to appreciate just how much money enterprise clients willing drop on "simple" products that meet their needs."

For businesses those SaaS services are a core need. Leisure services like spotify are the wrong thing to compare prices to. Think about how much of your budget you spend on housing, food, transportation. $200 / month is peanuts for those kinds of things. That gives a better idea about what businesses are willing to spend on software they need for their core activities.

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