Your SaaS Pricing is probably wrong!
Your Pricing is wrong and can be multiple reasons why:
- You charge too little 👼🏽
Problem: Founders (especially technical) perceive their software to be worth almost what it cost them (close to $0) if you ignore time spent!
Solution: Charge by value provided. Get customer feedback and iterate on Pricing.
- Your pricing tiers are wrong ❌
Problem: Most pricing tiers are random and mainly copy competitive products
Solution: Target specific customer personas and their price sensitivity and match the tiers with those personas. As their company grows, you should be able to capitalize on their upgrade.
- You have the wrong pricing model 💸
Problem: Do you have a fundamental reason to charge based on usage? Per seat? Monthly subscription? Or commission? Most products just copy their competitors.
Solution: Testing and analyze customer data is the only reliable way to know which is right for you. Model a few different pricing strategies and don’t be afraid to be flexible.
🙏🏽Wow, still here! Thank you for that🙏🏽
If interested in pricing, I’d love to share some more. I can roast your pricing too!
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I really think you have to do price sensitivity testing on your own audience with your own product. Every product and brand is different and you won't know what is palatable for your customers or right for your business just by looking at others
100% agreed with you!
There is no cookie cutter solution for pricing.
Trial and Error leads you to mastering Pricing!
I am working on https://www.bucketscout.io. It will be a online tool to help DevOps and Sysadmins to track their cloud storage usage using visual tools and compare how usage changes over time.
I was thinking about going the 1x, 2.2x and 5x rule. What do you think?
See my post in the Money group on subscription vs one-time pricing. I'd love to get your input there.
Thanks!
Hmm - so what do you think is the lowest a founder should charge for their SaaS? I’ve seen as low as $1.99 and other $19.99. How do you know what the floor is?
So the main idea is that you want to charge based on value provided, not base on cost.
The price then becomes a bit relative if you think it on that front. If there’s a value metric to monitor the captured value, then even better.
The value metric is relative again to the business offer you provide.
The usage is mostly specific to each company, but definitely what you should keep an eye on.
The more your customers use your product, the more value they see, the more value you have to capture.
It’s a long-process of iteration and trials, but at some point you should be able to find the sweet spot or something close to perfect pricing.
But, just to underprice your competitors for no possible explanation is not a recommended strategy.
This isn't always easy if you don't have the right access to people in your target personas, but there are some clever pricing survey techniques that can help you determine the right range. Check out the Van Westendorp or Gabor-Granger methods.
What's your thoughts on ebook pricing? Low for high volume or high for better margins?
Pricing your ebook is something that takes time to get it right. You may have to experiment to find your sweet spot.
Remember to price according to customer expectations, focus on standards for your category and genre, and create pricing for as many places as possible to maximize your sales potential!
Specifically, if you’re in a congested genre you might need to undersell early and hike prices once you start reaching traction.
If you’re in a specific niche you have the chance to price high and still reach highs volume.