I increased my prices 800% and made $100k in revenue AMA
Hey folks,
I'm doing this AMA because I believe pricing is a critical topic that can make or break your business if you get it wrong.
I started building Gravity (https://usegravity.app) in late 2018 initially as a small side project selling Node.js boilerplates. I was charging $99 and made $396 that year.
In 2019 I increased the price to $297 and then $397 and I started to bring in some beer tokens and cover my rent during this period.
It wasn't until 2020 when I started to seriously consider this as a business (not a side project). So I started to experiment with higher price points. Current price is $895 (800%+ from my initial price).
Like most people, I experienced fear during each price increase and was worried that I'd price myself out of the market.
Bizarrely –
The more I increased my prices, the more sales I made! Once I started charging $500+ my business began to explode. Within a few months I was generating $10k in a single month.
I've done a lot of research into why this happened and talked extensively with customers who purchased at different price points and my conclusion is that my higher price * branding created an elevated level of trust. My customers don't want to entrust their entire business on a boilerplate that costs the same price as a sandwich.
There are two kinds of buyers:
-
Bargain buyers – these people want the cheapest product they can find and don't necessarily care about the quality.
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Sophisticated buyers – they care about quality and accept that they will have to pay a higher price in order to attain it.
You want to attract customers in the #2 camp. If you have a solid product, selling to #2 is easy and in my experience they extremely easy to work with.
How has this impacted my business?
If I was still selling a $99 boilerplate I would have a side project, not a company.
It's the difference between making $12k vs $100k.
With a $99 product & $12k in revenue I would not have been able to invest the same amount of time into developing the product, producing content, building the Slack community and giving my customers a high quality experience.
Don't focus on simply being the cheapest and believing that you'll attract more customers, you risk putting yourself in a difficult position of having a lot of bargain customers who may be very demanding, and not enough capital and resources to support them.
It's much better to have a smaller base of less-demanding customers that you can deliver an awesome experience to and who are happy to enter at a higher price point for that experience.
If you have any questions, please post them below and I'll get back to you today :)
After 19,314 lines of code, i'm shutting down my project
Need feedback for my product.
We are live on Product Hunt
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Awesome news and progress Kyle!
With your jump from 12k - 100k/ year, did you change up your marketing/ advertising channels at all or has it been organic? How do you get in front of more sophisticated buyers?
Thanks!
It's all organic. I've experimented with some ads but get better results (customers) from organic. My buyers are all inbound.
Congrats! This is great stuff and I'm happy that boilerplates worked for you. I was trying to do something similar with Next.js but it wasn't as successful (you can see it here if interested: https://nextails.com).
But this gives me hope. Will try to apply some of your lessons. :)
Why do you think it hasn't been as successful?
I think mainly due to marketing. I suck at getting the word out.
Excellent! I've been following your story since near the launch of Gravity, and it's great to see how far you've come.
I had a very similar idea on my list of potential products, so I'm definitely a little jealous at how well you rocked the execution. But maybe one day I will follow in your footsteps (though I won't crowd your market, I promise!)
Thanks for the kind words Tyler :)
Nice work, Kyle! Have you done any podcast interviews lately? Would be interested to learn more about your story and journey.
You might be able to even charge more than that. I know people seeling really high quality starter apps for $10k and more.
Do you have a link?
It's a friend who sells it to private clients, they don't do any advertising. They also offer customization of the app.
First of all congrats, this is pretty impressive! Do you think you'll keep increasing the price, and why? (or why not?) When do you know this final price is the right price?
I'll keep increasing to test it, of course I want to keep the price fair too (which will naturally be determined by what people are prepared to pay).
I’m building a tool called PriceUnlock specifically for this (https://bychgroup.com/price-unlock) situation where... maybe you could charge more, but you have to bet the whole company
So I’m in need of this tool because I’d need to test different prices - see if I can get away with $895 better than $99, to use your numbers
Could you tell me a bit about
(Would love to offer you PriceUnlock for free once it’s done! Maybe $599 or $999 is the perfect pricing for u!)
This looks really cool, does it only work with subscriptions?
For now we're making it to work with subscriptions, BUT eventually we'll expand into products
I'm curious about #2 you mentioned - despite the fear, what made you make the jump? What was the 'let's do it' moment?
And at 1 - what metrics specifically were you tracking?
Thx so much Kyle! Love to see you engaging with the community
My motivation was getting to sustainable revenue. Charging $99 wasn't sustainable. I track sales volume/revenue compared to previous quarter and YTD.
helps a lot, thx Kyle! Question is: why not see if you can 'get away' with $999 now? Or more? Or whether charging less would bring more revenue
I've recently increased to $895, so $999 is the next step :)
It's possible that I could increase sales volume with a lower price, but I'd rather have less customers paying more money so I can give my customers a premium experience and keep the roadmap focused on what they want.
That's impressive! Just wondering, how did you get your first four customers and the ones that started paying more? I'm personally at the launching step and finding customers seems a bit hard (I have an idea of who they are but I need to find where they are now)
My first customers came from here :)
Congratulations, Kyle, and thank you for sharing your experience. You are an inspiration.
You mentioned that when you reached the $500 price point your business began to explode. At that point, would you say that finding your price bracket was more important than marketing and finding product niche?
Both are equally important, I'd say you need to discover a very painful problem first in order to increase prices and charge high.
Kyle, do you test your price? or you just increase it to an amount that you think fair?
I increase incrementally, usually +$100 and then test over a few months. By testing I'm measuring if I can maintain sales volume compared to previous quarter or period last year.
I also talk to existing customers directly and ask them about their buying experience. Usually I'm underpricing to their expectations.
For example, I charge $97/yr for updates but customers voted between $199- $399/yr as a more fair price for updates, with one saying they'd pay $1000/yr.
Thanks for sharing!
What are your long term goals for Gravity and beyond? Where do you see yourself in 5 years time?
The next few years will be about adding more products to compliment the core offering for the Indie hackers niche.
I'm working on https://firelab.io now which is a complimentary product for testing SaaS applications and I'm also working on building up a YouTube channel: https://www.youtube.com/c/GravityJS/
Longer long term, I'd love to set up a micro indie fund.
Where do you want to do dinner this week and why is it Wasabi?
Are you asking me on a date? Fran won't be pleased 😅
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What's your product and what did you increase the price from/to?
This comment was deleted 3 years ago.