Our Recurring Payment Pricing Was Rejected
jerviswhitley.com
Our Recurring Payment Pricing Was Rejected
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Re: Our Recurring Payment Pricing Was Rejected
#2Unless you have an excellent track record with a more compelling UX/workflow that works better than existing non-hosted competitors selling a SaaS subscription to a business and expecting them to feel their data is safe will be a hard sell.
One way to get an established track record to sell as a SaaS is to initially start out as a non-SaaS like Adobe did. Once users have confidence in using your product then transitioning to a SaaS model will be easier.
Re: Our Recurring Payment Pricing Was Rejected
#3Same manager is probably leasing their $50k car and will just get another when the lease is up.
People have a hard time putting value on what they cannot touch.
Re: Our Recurring Payment Pricing Was Rejected
#4Same manager is probably leasing their $50k car and will just get another when the lease is up. People have a hard time putting value on what they cannot touch.
Not sure I understand this sentiment. This same manager would likely be buying a 15k used car outright if he's worried about paying for software over time.
The problem that I have with SaaS is that most companies pursuing it's business model fail at the value option. Take Freshbooks for instance - I started using their service 3 years ago for 9$ per month. This got bumped to 14$ per month. I now have to pay 20$ per month for the same service I got 3 years ago (very little has been added of value to me). I could have bought a stand alone invoicing solution for $100 once and been far better off (I'm now trying to find a good one).
SaaS is often a really crummy deal for the customer and we all know it.
Re: Our Recurring Payment Pricing Was Rejected
#5Why not do both? All depends on how large the market is for each of those options. We offer our product (online appointment scheduling) both as Software to be downloaded and as SaaS. Two in three people prefer to download and install the Software but there are enough who have no problems paying a monthly fee that saves them the hassle of installing and maintaining the Software.
Re: Our Recurring Payment Pricing Was Rejected
#6In the example situation the choice wasn't quite so clear, as IP was on the line too.
Regardless:
A customer wants to pay an exorbitant fee up front, and you're fretting? Why? Take their money.
Re: Our Recurring Payment Pricing Was Rejected
#7Same manager is probably leasing their $50k car and will just get another when the lease is up. People have a hard time putting value on what they cannot touch.
There is a serious disconnect here. Listen to the howls if someone suggests you should rent your media but have no problem telling you to rent your software.
Re: Our Recurring Payment Pricing Was Rejected
#8A supplier who wants to switch from pay-once to pay-monthly is either going to be charging me less or charging me more.
If they claim they'll be charging me less, that leaves me confused as to why they think the change is in their interests, unless they actually anticipate charging me more.
Re: Our Recurring Payment Pricing Was Rejected
#9Obviously, not all SaaS is created equally and a recurring fee isn't always the best idea. Especially for SaaS or PaaS offerings that people aren't used to paying for in the first place or are trying to disrupt services that are free.
Recurring monthly charges by no means need to be the default and customers should be wary. What if they don't like it? Is there a cancellation fee? How is the time billed - is it hourly or monthly? How much does it cost to upgrade to a better tier of service (if one exists)? If they work in a company, will they need to get monthly approval to continue the service, or (speaking from experience here) will they be bugged by their forgetful accountant every month for the charge on the company account? Probably most of all, what happens when I don't pay (mentioned in the article) - does my service suspend, is it limited, am I forwarded to a collections agency?
"Buy-to-own" or "Buy-to-access" is a much simpler model - far fewer questions need to occur on the path to payment. There's less value that needs to be determined to justify the expense, even if the initial expense is higher. Some of the same questions above still apply, like, "what if they don't like it?" - but the answers tend to be simpler ("You get a full refund" vs. "You're S.O.L. and still owe us for 72 hours of processing time", etc.).
Re: Our Recurring Payment Pricing Was Rejected
#10This seems especially difficult for a web-based model, and I've personally questioned why anyone would want SaaS when:
1. The company already pays for and supports infrastructure.
2. The company already has a development/IT department that can support an installed product.
3. Viable Open Source alternatives (often using open standards) exist and can be tailored specifically to the company's business needs, either by the in-house team or by eager contractors.
It seems to me that the majority of SaaS providers don't have a way to make their data interoperable with their competitors' products and don't have a way to tailor their product to the specific needs of the business. Worse, there is an impression that SaaS services will offer support better than having someone internal to the company learn an installed or custom tool, when the reality is that many SaaS companies throw up a Get Satisfaction page and call it a day.
To me, a better SaaS sales pitch would include a few key points:
1. Describe the way that the company's data can be taken elsewhere and how well it will work. ("If you decide to cancel, you can push this button and drop the downloaded data directly into X-competitor's product, but we hope to impress you enough with our offering that you never need to do that.")
2. Describe the concrete benefits of a recurring payment over a one-time or per-upgrade fee. ("We are constantly making improvements and refinements to the product based on real client use. Here is a list of the last two iterations of updates, which happened on our regularly scheduled update cycle of X weeks/months.")
3. Describe the specific support and technical infrastructure that the SaaS provides that the company would have trouble or lag time implementing themselves. ("We constantly adjust our infrastructure to your needs, implementing load balancing, reporting, localization, etc. Our techs are on-call via phone/VoIP for your support issues during our regular business hours if there are any issues.")
I'm not suggesting that SaaS isn't a viable business model. I merely posit that the real and valid objections purchasers may have to locking themselves into a perpetual SaaS contract have not been addressed within this post, and are quite common with SaaS products in general. Rephrasing how you present the contract may sell better, but it doesn't change what you're offering.