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Pricing Low-Touch SaaS

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Re: Pricing Low-Touch SaaS

#21

Post by cercatrova »

PaulHoule wrote: post #19
cercatrova wrote: post #17

Earlier quoted context omitted.

Lifetime of the company, presumably, not lifetime of the user necessarily.

Thus it's meaningless. Put "lifetime" or "unlimited" into a pricing plan and the one thing I know is that neither I nor the vendor can think rationally and honestly about it at all. Thus it is a reason to look for another vendor who shows signs of realistic planning. If I can pay $50 for something that costs them $25 and it is obvious that it is roughly like that, I know I am partnering with a 'sustainable' business.

That's why it's just better to have time-based pricing, like a monthly subscription. As long as you keep paying, you'll be able to access it.

Re: Pricing Low-Touch SaaS

#22

Post by ClikeX »

PaulHoule wrote: post #14
michaelt wrote: post #11

Earlier quoted context omitted.

This is the first time I've seen someone call AWS pricing simple :)

It is compared to the "pick one of three plans none of which make any sense". I know investors like recurring revenue, I sure do. For many things I have no idea how much I am going to use them in six months if at all, but it seems they feel compelled to price something at "$X a month" even if I just could spend $Y on it this week, solve my problem, and maybe buy some more later. I am thinking in terms of $Y. There ar…

As much as I enjoy the thought of a Netflix where I'd pay for how much I actually watched (like how cloud hosting is billed). I think it also opens the possibility that they'll be creating content that abuses that notion. Like, longer content for pay per minute. Or longer seasons for pay per episode.

But the idea sounds great to me.

Re: Pricing Low-Touch SaaS

#23

Post by ClikeX »

PaulHoule wrote: post #12
siftrics wrote: post #7

Earlier quoted context omitted.

> if I had a penny for every time somebody did something stupid or wasteful to stay within the free use tier. You make a good point. I suppose it doesn't apply in quite the same way here, since we offer lifetime free credits --- they don't refresh each month. 1,000 free pages, then you have to pay.

Lifetime? Really? I'll still be able to use this service in 2075? Do you expect anyone to believe that?

I assume the free credits are for trialing and testing.

Re: Pricing Low-Touch SaaS

#24

Post by patio11 »

jmarbach wrote: post #16

Patio11 is practically synonymous with the phrase "charge more" in the startup world, however, his catch phrase cannot be more misleading. For most prospective customers, you should charge less. For a select few customers, you should charge way more. Upping the ante indiscriminately only continues to make the world even more unequal and inaccessible for the people who need your products the most.

Software has two natural prices: free* and expensive. AppAmaGooBookSoft can take care of the free*, and they will invest billions upon billions of dollars more into that than you will. Your market opportunity, and your job, is to write the expensive stuff.

(The asterisk reflects that they give the software away for free because it is a complementary good to the business where they make most of their money.)

Re: Pricing Low-Touch SaaS

#25

Post by graeme »

jmarbach wrote: post #16

Patio11 is practically synonymous with the phrase "charge more" in the startup world, however, his catch phrase cannot be more misleading. For most prospective customers, you should charge less. For a select few customers, you should charge way more. Upping the ante indiscriminately only continues to make the world even more unequal and inaccessible for the people who need your products the most.

I think you’re disagreeing with him. It’s incorrect to describe his advice as misleading in that case.

The idea of charge more is that it brings more revenue into the business and allows it to continue succeeding and producing value for customers. Charging more charges for that value.

The advice is also mostly for b2b or b to professional, so if the product truly brings value to the customer they actually can afford it.

Undercharging kills businesses and does no one any favours in the long run.

Re: Pricing Low-Touch SaaS

#26

Post by aripickar »

I love pretty much everything that Patrick McKenzie writes, but for some reason, my default internal monologue for his writing makes reading everything that he writes sound like an episode of Last Week Tonight with John Oliver. Makes reading his pieces a very interesting experience.

Re: Pricing Low-Touch SaaS

#27

Post by heipei »

Pandabob wrote: post #4

I have a related question: Is high-touch saas (enterprise sales with long sales cycles) inherently harder to bootstrap than a low-touch saas business? I'm guessing the answer is something like "not if you have the network"

I would say that in some ways its easier because you don't have to 100% polish your product page and explain everything your product does without leaving any open questions. Enterprise sales always has this concept of "let's set up a call so you can tell me everything that's already on the website", which at first seems annoying for us engineers, but actually it's really great because your prospective customers ask of lot of questions which makes you understand their background, their problems, their technical skills, etc. So instead of having to guess those things up-front, throw up a product and pricing page and just wait for signups, you can iteratively perfect your sales pitch, your product bundles, your pricing and really hone it in on your target audience.

It's harder to bootstrap some customers who have a 6-months process with NDA, vendor db onboarding, compliance questionnaire, custom T&Cs, but other Enterprise customers are just as willing to send you five figures via credit card within a day or two of first contact. So these can bootstrap your business while you wait for the other deals to go through.

Re: Pricing Low-Touch SaaS

#28

Post by PaulHoule »

ClikeX wrote: post #22
PaulHoule wrote: post #14

Earlier quoted context omitted.

It is compared to the "pick one of three plans none of which make any sense". I know investors like recurring revenue, I sure do. For many things I have no idea how much I am going to use them in six months if at all, but it seems they feel compelled to price something at "$X a month" even if I just could spend $Y on it this week, solve my problem, and maybe buy some more later. I am thinking in terms of $Y. There ar…

As much as I enjoy the thought of a Netflix where I'd pay for how much I actually watched (like how cloud hosting is billed). I think it also opens the possibility that they'll be creating content that abuses that notion. Like, longer content for pay per minute. Or longer seasons for pay per episode. But the idea sounds great to me.

Frankly Netflix scares me and I am scared more by the proliferation of the Netflix model to video games.

What I saw happen with television is that it went from a ratings based model (they had to make stuff people wanted to watch) to a model where the "cable bundle" was determined by cigar-chompers in a dark room somewhere. I can say I want this group of 20 channels, but I can't say I want CNBC but not CNN, Fox and MSNBC.

They get paid anyway so now there is no connection between "what I want as a consumer" and "what I get". So of course you get slow decline like we've seen with the cable industry -- the only meaningful conversation you can have through the market is "exit".

Netflix has only "exit" and "not-exit", it doesn't have market signals that say you can do 1% better and make 1% profits. So ultimately it gets a dull edge.

So many firms are falling over each other to offer you all the Madden NFL and Assassin's Creed you could possibly play and I am frustrated that people don't perceive that this has happened to MTV and most of the other cable channels since the 1980s: when I was a teen we watched music videos, but a 70-year old man bought the network and decided that he didn't want us to watch music videos. Once Youtube let people chose what to watch we found that people still love watching music videos: does anyone watch MTV? I'm sure there is somebody long past youth in Hollywood who thinks they can stay in touch with "youth culture" by watching MTV. I suspect there is a TV set in a Nielsen home that blasts away 24 hours a day with nobody watching. Other than that I don't know.

Re: Pricing Low-Touch SaaS

#29

Post by siftrics »

turkeywelder wrote: post #6
siftrics wrote: post #2

>Reduce decision fatigue for customers. I am a huge evangelist of this piece of advice. I'm the founder of a startup that offers ONE price --- and free trial credits, of course --- for each product. I think it has helped us tremendously. The amount of startups I see that use the 3-column pricing plans (or worse!) is mind-boggling. Perhaps there is empirical evidence supporting complicated pricing. But I've never seen…

We did the same, it's I think one of our best moves because everyone just gets the same price, nobody feels like they're missing out and it's super easy to administrate so we can concentrate on the product, not the pricing.

I have to say — nice product. It’s very clean. I can see how people are convinced to try it. I want to sign up just to experience more of the buttery-smooth UI.

Re: Pricing Low-Touch SaaS

#30

Post by anonAndOn »

PaulHoule wrote: post #28
ClikeX wrote: post #22

Earlier quoted context omitted.

As much as I enjoy the thought of a Netflix where I'd pay for how much I actually watched (like how cloud hosting is billed). I think it also opens the possibility that they'll be creating content that abuses that notion. Like, longer content for pay per minute. Or longer seasons for pay per episode. But the idea sounds great to me.

Frankly Netflix scares me and I am scared more by the proliferation of the Netflix model to video games. What I saw happen with television is that it went from a ratings based model (they had to make stuff people wanted to watch) to a model where the "cable bundle" was determined by cigar-chompers in a dark room somewhere. I can say I want this group of 20 channels, but I can't say I want CNBC but not CNN, Fox and MS…

Music royalties and professional VJ's (read, unionized) eat into those profit margins. That 70 year old man figured out he could cut costs by hiring unprofessional "reality" actors and running his network on the sweat of young perma-lancers.[0]

[0]https://www.dailykos.com/stories/2020/8/12/1968730/-Sumner-R...

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