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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

#51

Post by patio11 »

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…

How many copywriting ebooks have you purchased in the last quarter? What is your budget for enterprise software?

If the answers are "zero" and "none" then is any price I could possibly quote to you giving a potential customer sticker shock?

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

#52

Post by bravoyankee »

patio11 wrote: post #51
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…

How many copywriting ebooks have you purchased in the last quarter? What is your budget for enterprise software? If the answers are "zero" and "none" then is any price I could possibly quote to you giving a potential customer sticker shock?

It's probably over $100 this year that I spent on copywriting books, and almost that the year before.

I will pay for information if it will help me, but the examples I've given is very basic information that's been written about for free so many hundreds of times, I'm surprised anyone would buy those ebooks.

They are ripping off the very startup community they say they are helping.

I think there's a pricing bubble going on with startups. Many monthly subscription rates are too high, especially when there are so many choices available to the consumer, and at a time when the budgets and attention span of buyers is so limited.

There seems to be no imagination in pricing, only to charge more and more. It's bad advice and I'll bet its mortally wounding a lot of young startups and impressionable kids that are trying to make a go of it.

Again, it's a con game and it's trying to gouge and profit off the start up community they say they are helping. It's shameful, but its only time before the herd snaps out of it and realizes what is happening.

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

#53

Post by noahc »

bravoyankee wrote: post #52
patio11 wrote: post #51

Earlier quoted context omitted.

How many copywriting ebooks have you purchased in the last quarter? What is your budget for enterprise software? If the answers are "zero" and "none" then is any price I could possibly quote to you giving a potential customer sticker shock?

It's probably over $100 this year that I spent on copywriting books, and almost that the year before. I will pay for information if it will help me, but the examples I've given is very basic information that's been written about for free so many hundreds of times, I'm surprised anyone would buy those ebooks. They are ripping off the very startup community they say they are helping. I think there's a pricing bubble go…

RE: "I will pay for information if it will help me, but the examples I've given is basic information that's been written about for free so many hundreds of times"

I suspect your google-fu is stronger than most. Many people don't have the skills or time to do this. Should I spend 2 or 3 days searching and building a marketing strategy that works in 2012 by filtering through all the stuff written over the last 4 years and half of it is out of date or should I pay $99 dollars to get it in my inbox in PDF form. For many the $99 makes sense.

They are certainly not ripping off the startup community! If you even value your time as a startup founder at $100, it's cheaper just to by the dumb book.

Most startups doing subscriptions are doing b2b or b2h (business 2 hacker examples: github, seomoz, etc) business. Businesses and to a much lesser extent hacker don't care about the cost, but look at the value provided.

RE: "There seems to be no imagination in pricing, only to charge more and more. It's bad advice and I'll bet its mortally wounding a lot of young startups and impressionable kids..."

This is absolutely absurd! This is like saying "There seems to be no imagination in cars today, only to get better gas milage more and more". Of course, that's the point of a business is to charge so much your customers complain, but still pay you none the less. You're capturing the most value possible, while they still enjoy a net gain.

I'd argue even if this is bad advice for a majority of people, it's still good to get it out there that it is possible. Once we know it's possible, much like the 4 minute mile, we can achieve it. When it's locked away and only a choosen few know it is possible that is the real danger to impressionable kids.

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

#54

Post by caw »

bravoyankee wrote: post #52
patio11 wrote: post #51

Earlier quoted context omitted.

How many copywriting ebooks have you purchased in the last quarter? What is your budget for enterprise software? If the answers are "zero" and "none" then is any price I could possibly quote to you giving a potential customer sticker shock?

It's probably over $100 this year that I spent on copywriting books, and almost that the year before. I will pay for information if it will help me, but the examples I've given is very basic information that's been written about for free so many hundreds of times, I'm surprised anyone would buy those ebooks. They are ripping off the very startup community they say they are helping. I think there's a pricing bubble go…

There's a difference between free information and compiled free information with a bit of extra. You pay for the premium of having it all put together and not having to spend the time to go find it all. Why buy a programming book? There's lots of tutorials on the internet. Still, many people buy books.

If I were completely new to a topic, like copywriting, I would probably look for a book on the topic, rather than blogs. That's because I'd spend more time trying to find free material that's good (there's a lot of free crap out there), than to buy a pre-compiled book from a reputable source.

I agree with you that the materials have to justify their price. I've purchased a $99 information product before that was total crap, and the exact same content on the same person's website, just reformatted. In that case there's no justification, no added value. I don't know what books you're talking about to determine if they're actually any good or not, but to charge for what's normally "free" information there has to be added value.

Maybe there is a rash of startups with inflated pricing without any added value. However, as soon as the first competitor comes in that truly adds value for the same price (or less), then everyone will jump to it.

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

#56

Post by bravoyankee »

noahc wrote: post #53
bravoyankee wrote: post #52

Earlier quoted context omitted.

It's probably over $100 this year that I spent on copywriting books, and almost that the year before. I will pay for information if it will help me, but the examples I've given is very basic information that's been written about for free so many hundreds of times, I'm surprised anyone would buy those ebooks. They are ripping off the very startup community they say they are helping. I think there's a pricing bubble go…

RE: "I will pay for information if it will help me, but the examples I've given is basic information that's been written about for free so many hundreds of times" I suspect your google-fu is stronger than most. Many people don't have the skills or time to do this. Should I spend 2 or 3 days searching and building a marketing strategy that works in 2012 by filtering through all the stuff written over the last 4 years…

I don't have special google-fu abilities. I just notice there's a glut of ebooks and courses out there that are rehashes of older content - and they are priced way too high. They are priced so high that those who need the information most cant afford it.

Stop drinking the Jonestown kool-aid that's been going around my friend. Your time isn't so valuable that you can't spend 15-20 minutes doing a diligent search online.

The ebooks I mentioned in the previous post were college textbook stuff. As basic as the stuff gets. You would need to be already under the influence of the kool-aid getting passed around here to think that's an honest price. It's not.

My point is this: the people trying to sell you stuff here are not your friend.

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

#57

Post by bravoyankee »

caw wrote: post #54
bravoyankee wrote: post #52

Earlier quoted context omitted.

It's probably over $100 this year that I spent on copywriting books, and almost that the year before. I will pay for information if it will help me, but the examples I've given is very basic information that's been written about for free so many hundreds of times, I'm surprised anyone would buy those ebooks. They are ripping off the very startup community they say they are helping. I think there's a pricing bubble go…

There's a difference between free information and compiled free information with a bit of extra. You pay for the premium of having it all put together and not having to spend the time to go find it all. Why buy a programming book? There's lots of tutorials on the internet. Still, many people buy books. If I were completely new to a topic, like copywriting, I would probably look for a book on the topic, rather than bl…

I'm not going to link to these ebooks because it doesn't deserve more attention, but it was front page HN only a day or so ago.

I will say this though: certain opinion leaders on HN are taking advantage of the readers and the prevalent herd mentality that prevails here.

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

#59

Post by nimblegorilla »

rgrieselhuber wrote: post #12
facorreia wrote: post #11

Earlier quoted context omitted.

His math is completely skewed. 22 sales a month of a service that charges $200/month will generate $343,200 a year (unless he's assuming 100% churn rate).

Good point! I was talking about startup costs for the first few months of hire as the rep ramps but didn't make that clear at all. I'll update soon. Edit: Updated now.

Your math is still way off unless you assume 100% churn rate. Assuming a reasonable churn rate in the 2nd month you will have some fraction 22 existing customers paying $4400/mo (not really sure how $4400 breaks even with $4800).

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

#60

Post by joshbrody »

wilfra wrote: post #49
derefr wrote: post #47

Earlier quoted context omitted.

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?

Enough to give me a business plan ;)
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