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Pricing Low-Touch SaaS

stripe.com

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Re: Pricing Low-Touch SaaS

#71

Post by zackbrown »

senko wrote: post #46

> Monthly: $49 / $99 / $249 So on the topic of ${X}0 vs ${X - 1}9 (ie. "50 vs 49", "100 vs 99", "250 vs 249"), what's the current "best practice"? I feel like we might be like those 5 monkeys with a banana: someone figured out long ago in some context that X9 might convert better, now everyone's doing it and the reason might not still be valid. I'd love to hear about some recent studies or comparative experiences rel…

The best practice is to test.

Measure how a set of prices performs against your driving metric, e.g. customer growth or revenue growth. Iterate on pricing, measure again.

Repeat until you have enough data to model a demand curve[1] between price and your key metric, then choose your pricing as the point of inflection on that curve. Fine-tune with another round of experiments for charm pricing (e.g. 50 vs 49).

Repeat and localize currencies and prices (e.g. via PPP) for each of your top five geographic markets if you really want to optimize.[2]

Second-best practice? Research what your competitors are charging and charge roughly that.

[1] https://en.wikipedia.org/wiki/Demand_curve

[2] I wrote this article: https://crow.app/blog/price-localization-with-stripe

Re: Pricing Low-Touch SaaS

#72

Post by Thorentis »

teraku wrote: post #48
m12k wrote: post #31

Earlier quoted context omitted.

Also, if you can change the framing so the decision becomes 'which option should I go for?' instead of 'do I want to buy this at all?' then that's a valuable bit of sleight of hand. But it comes with the risk of decision fatigue

While this might be true from a sales perspective, I'm actually annoyed when there is a product I want to buy and then I see these tiers.

This is a valid point. I've gone to sign up for a SaaS before, read through the features list and thought it was great, and then realised they've split all the features up among plans and I'll need to pay more than I was expecting to. Obviously this just means that the highest tier plan is what they think all the features together are worth, but I often find that for smaller SaaSes, the desire to have 3 plans shapes how they do their pricing, so the highest "all inclusive" plan is more expensive than it otherwise would be if there was a single plan.

Re: Pricing Low-Touch SaaS

#73

Post by sokoloff »

dubcanada wrote: post #35
tiffanyh wrote: post #34

Earlier quoted context omitted.

Thanks for sharing your company, https://siftrics.com I'd never heard of your company but this service looks GREAT. I wish you financial success. Question: your price points are sooooo low (which is great for the consumer) but I get concerned it's too low for your company to stay viable. Is that a concern? Please don't take this an me knocking your company. I really love what I've seen on your site.

What exactly is "soooooo low" about $0.50 for a 1000 pages?

I can't imagine a use case where I'd be willing to go the hassle of paying $0.50 for 1000 pages but wouldn't pay $2.50 or more for those same 1000 pages.

It would take me probably an hour or more to scan 1000 pages. Given that, I don't see a significant difference between spending "an hour plus two quarters" and "an hour plus ten quarters".

Re: Pricing Low-Touch SaaS

#74

Post by sokoloff »

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.

You might have a point with general lifetime pricing plans, but in this case, I think the usage above of "lifetime free credits" was perfectly clear to most (and is in fact, limited).

Re: Pricing Low-Touch SaaS

#76

Post by calmworm »

senko wrote: post #46

> Monthly: $49 / $99 / $249 So on the topic of ${X}0 vs ${X - 1}9 (ie. "50 vs 49", "100 vs 99", "250 vs 249"), what's the current "best practice"? I feel like we might be like those 5 monkeys with a banana: someone figured out long ago in some context that X9 might convert better, now everyone's doing it and the reason might not still be valid. I'd love to hear about some recent studies or comparative experiences rel…

There is a half-decent book that covers this in part ... I enjoyed it.

“Priceless: The Myth of Fair Value (and How to Take Advantage of It)”

Re: Pricing Low-Touch SaaS

#77

Post by TylerE »

dternyak wrote: post #57
dubcanada wrote: post #35

Earlier quoted context omitted.

What exactly is "soooooo low" about $0.50 for a 1000 pages?

If your customer is someone who previously had a team doing manual data entry, this pricing certainly leaves a lot on the table. I would imagine most customers being happy to tolerate a 10x increase in price without breaking a sweat, assuming there's no one else in the space offering a cheaper solution.

Said 10x increase would put them at ~ the same price as the amzn and goog services the homepage mentions, so...

Re: Pricing Low-Touch SaaS

#78

Post by weaksauce »

tchock23 wrote: post #56
PaulHoule wrote: post #3

A brilliant article. Often it seems that SaaS vendors don't have a plan for pricing but rather they design a "pricing page" that looks like the pricing page for other SaaS plans. If you start asking questions like: can you afford to offer this service at this price? what value does the customer get out of this service? they get defensive. I have refused to use SaaS services and I've refused to work for SaaS vendors b…

Great points here and a related anecdote: Last year I came across a productivity app that I absolutely loved and signed up for the paid version right away. Unfortunately, they’re charging less than $5/month. The service is buggy and infrequently updated now because you can tell the founder (solo dev) doesn’t make enough money on it to continue making upgrades. If he had only charged more in the beginning the app woul…

which app?

Re: Pricing Low-Touch SaaS

#79

Post by userbinator »

cercatrova wrote: post #17
PaulHoule wrote: post #12

Earlier quoted context omitted.

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

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

If you look into the fine print, "lifetime" or "unlimited" really means "until we change our minds".

Re: Pricing Low-Touch SaaS

#80

Post by PragmaticPulp »

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.

"Charge more" can be misleading if you assume it means to raise prices and keep everything else the same. In practice, the idea behind "charge more" is to move more toward the expensive end of the demand curve. You're better off building a $1000/month product for 1000 customers than a $100/month product for 10,000 customers, and you're even better off building a $10,000/month product for just 100 customers. The cheap, highly-scalable products become a race to the bottom where competitors one-up each other with lower and lower prices until they arrive at basically free.

Unfortunately, I've watched most people interpret "charge more" to mean that they should raise their prices and keep everything else the same, which only works if your product was underpriced to begin with. Many startups are underpriced, so it works for a while, but eventually people get SaaS subscription fatigue and start trimming away the high cost / low value services. The "charge more" services that don't also offer more value are the first to go.

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