3 ms·

Do you (or any fellow HN'er) have any suggestions about, or personal experience with, trying price elasticity testing for longer revenue models like subscriptio

by tdupree 16y ago

Do you (or any fellow HN'er) have any suggestions about, or personal experience with, trying price elasticity testing for longer revenue models like subscriptions? I will be launching a SAAS soon with a subscription model and am curious about experiences with price testing like this.

aresant 16y ago
Attrition is the name of the game w/any subscription model, and there are lots of variables at play. Typically for start-up SAAS pricing look at your competitors to get a sense of what the perceived value is going to be of your offering - what category of SAAS are you getting in to?
- tdupree 16y ago
  You could group us in an SEO/Web Analytics category. For our particular niche service, our competitors pricing schemes are all over the place. Our service is born out of our frustration using the other services out there on a daily basis, so we are rolling our own and putting it out there for others to use.
  - aresant 16y ago
    When you've got the site live drop me an email zl @ myusername dot com and I'd be happy to share some experience once I have a better feel for the service. Have optimized and participated in several SAAS projects of varying scale. But a few tips: a) Attrition, again, is the name of the game. Use that as your metric, look at trailing trends. Typically we've observed the highest drops in between the first 3 billing cycles, after that attrition rate seems to stabilize. If you're lucky attrition stabilizes after the second rebill cyle and you can better manage front end testing and customer aquisition strategy. b) You're at something of a disadvantage w/price elasticity testing w/SAAS because you're going to get press, people are going to hear about you / hear about your pricing and write reviews early. If you change pricing UP, the internets will scream loudly :). Plus you have to worry about current customers getting upset, always implement price changes DOWN accross the board, always grandfather price changes UP to current users (and tell them about it so they feel warm and fuzzy). A strategy we've used before is to put together a meaningful ad budget for PPC, and test the heck out of the front end pricing. Treat it like traditional elasticity testing, expecting that rebill #s will hold relatively steady on the back even though you can't predict that. The point is to get the highest front-end you can and then work it down, it's obviously much, much easier to lower pricing than raise.
    - tdupree 16y ago
      Thanks for the tips, I'll let you know when we go live!
- tdupree 16y ago
  What will set us apart from the pack will be a much better user experience and an easier to use/smarter toolset for gaining insights on the data a customer is working with. We are also planning on competing on price as we think we can provide more value for a lower price (and a more clear pricing plan) than the other outfits currently out there. I feel like if we are trying to compete on price than we shouldn't be changing them up with something like price elasticity testing, but on the other hand, I wanted to know if anyone had done this with a subscription based model and how it worked out. Perhaps after establishing oneself and getting a decent customer set it would be alright to try out price elasticity testing, rather than trying something like that when we are a newcomer.
mixmax 16y ago
I wrote a post about something very similar around a year ago that might be interesting to you. http://www.maximise.dk/blog/2009/01/getting-product-pricing-right.html http://www.maximise.dk/blog/2009/01/getting-product-pricing-...

by tdupree 16y ago

aresant 16y ago

Attrition is the name of the game w/any subscription model, and there are lots of variables at play. Typically for start-up SAAS pricing look at your competitors to get a sense of what the perceived value is going to be of your offering - what category of SAAS are you getting in to?

tdupree 16y ago
You could group us in an SEO/Web Analytics category. For our particular niche service, our competitors pricing schemes are all over the place. Our service is born out of our frustration using the other services out there on a daily basis, so we are rolling our own and putting it out there for others to use.
- aresant 16y ago
  When you've got the site live drop me an email zl @ myusername dot com and I'd be happy to share some experience once I have a better feel for the service. Have optimized and participated in several SAAS projects of varying scale. But a few tips: a) Attrition, again, is the name of the game. Use that as your metric, look at trailing trends. Typically we've observed the highest drops in between the first 3 billing cycles, after that attrition rate seems to stabilize. If you're lucky attrition stabilizes after the second rebill cyle and you can better manage front end testing and customer aquisition strategy. b) You're at something of a disadvantage w/price elasticity testing w/SAAS because you're going to get press, people are going to hear about you / hear about your pricing and write reviews early. If you change pricing UP, the internets will scream loudly :). Plus you have to worry about current customers getting upset, always implement price changes DOWN accross the board, always grandfather price changes UP to current users (and tell them about it so they feel warm and fuzzy). A strategy we've used before is to put together a meaningful ad budget for PPC, and test the heck out of the front end pricing. Treat it like traditional elasticity testing, expecting that rebill #s will hold relatively steady on the back even though you can't predict that. The point is to get the highest front-end you can and then work it down, it's obviously much, much easier to lower pricing than raise.
  - tdupree 16y ago
    Thanks for the tips, I'll let you know when we go live!
tdupree 16y ago
What will set us apart from the pack will be a much better user experience and an easier to use/smarter toolset for gaining insights on the data a customer is working with. We are also planning on competing on price as we think we can provide more value for a lower price (and a more clear pricing plan) than the other outfits currently out there. I feel like if we are trying to compete on price than we shouldn't be changing them up with something like price elasticity testing, but on the other hand, I wanted to know if anyone had done this with a subscription based model and how it worked out. Perhaps after establishing oneself and getting a decent customer set it would be alright to try out price elasticity testing, rather than trying something like that when we are a newcomer.

mixmax 16y ago

I wrote a post about something very similar around a year ago that might be interesting to you. http://www.maximise.dk/blog/2009/01/getting-product-pricing-right.html http://www.maximise.dk/blog/2009/01/getting-product-pricing-...