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> reflect for a moment on how much time is spent on standups at a company with 20 or 200 engineers, what one hour of their time is worth > Your minimum commitm
by Reedx 7y ago
> reflect for a moment on how much time is spent on standups at a company with 20 or 200 engineers, what one hour of their time is worth
> Your minimum commitment should be north of $1,000 per month; practically nobody can integrate with your API for cheaper than a thousand dollars of engineering time, right.
That's my thinking as well, but haven't had much luck getting companies to accept this kind of pricing. Even though it's all inbound interest (no advertising or outreach) and they're sometimes large companies.
Here are the problems I'm aware of:
1. People generally don't think about the cost of standups or meetings or per hour employee cost. That's just not something typically being considered.
2. They've compared with other APIs or use other APIs/SaaS and are used to <$100/mo. So $1k/mo or even $500/mo is a shock and they decline or disappear. Apparently deciding they don't actually need it that bad or going with their 2nd choice.
How do you overcome these? Do you actually point out that the API is cheap compared to employee cost? Help them justify it to themselves and/or their manager?
- milesvp 7y agoTo be fair, anything more than ~$250/mo probably requires some kind budget approval which will quickly scare away many underlings, and means now you're in the realm of enterprise sales. Now you should probably be charging closer to $10k/mo just to deal with that headache. It's another reason why having 3 tiered pricing can really help, with a 4th tier being "contact us for enterprise solutions". It can allow you to sneak past some of these organizational hurdles, by allowing people to select the price that will cause them the least headache. Joel Spolsky talks about this a lot, how there are holes in the market for pricing due to these frictions.
- Bubbadoo 7y agoYes, very good point. Generally, the higher the pricing, the longer the sales cycle. That can mean months of evals, potential customer hand-holding, pre-sales support, etc. In the end, someone in the decision chain at the prospect decides to go a different way and you've blown months and many dollars on trying to land the client. A small or one-man operation is not going to survive that kind of abuse and make no mistake, some larger customers will take advantage.