4 ms·

Per-user billing works when the value is obvious and the price is low. If you have a B2B SaaS product your goal should be optimizing for getting the maximum us

by gav 6y ago

Per-user billing works when the value is obvious and the price is low. If you have a B2B SaaS product your goal should be optimizing for getting the maximum users in an organization. The more people who use your product: - The harder it is to move off your product - If people like the product, when they leave, they'll evangelize your product to their next employer - It's less likely that different teams/business units/etc will try a competitor's product because there's no seats available for them (and the money is going to come out of their budget anyway--they might as well decide on the product) - You're not causing friction for team leads who have to justify budgets every year How many people have worked somewhere where there's 50 seats paid for and you can't go to 51 because that takes you from "Pro" to "Enterprise" at a huge jump? There's way too much shenanigans that goes on because companies make paying them money painful. I've been working on evaluations of several enterprise developer tools in the last month and without fail all have licensing requirements that are per-seat and painful. The result has been that instead of the whole organization embracing the tool, a much smaller set of users is going to get it. The thing that's crazy is that the cost to the SaaS provider has nothing to do with the number of users.

apatters 6y ago
> The thing that's crazy is that the cost to the SaaS provider has nothing to do with the number of users. Surely their support costs scale with the number of users? This might explain some anti-growth behaviors, support is expensive and a lot of companies struggle to get it right.
- user5994461 6y ago
  Support costs has no relation to number of users. It's constant time O(10) in engineering speech. It doesn't increase going from 100 to 500 to 2000 users, because none of these users can raise support requests to the vendor. It's only the person (or micro team) who did the product evaluation and drafted the contract who has contact to the vendor support and sales team.
  - apatters 6y ago
    I'm not convinced. Even if only one person at the company has access to support, he's going to have more people asking him to submit tickets about their problems when there are 2,000 users vs 100.
    - user5994461 6y ago
      This doesn't happen in practice because the 1900 more employees do not know who is that person and couldn't figure it out even if their life depended on it. If you've worked in any large organization, above one thousand employees, doesn't matter how many above really. For any specific system, there are often only 1-3 people who are familiar with it and have access and would be willing to touch it. There will be a few tens other employees who knows about them and have half a clue what they do (typically same department or neighbors sitting nearby). If one of those hear you looking for help on X, they can direct you "oh I think it's managed by that guy". The other 1900+ can't help you. Having been the unlucky developer at work trying to track down whom to forward a ticket through (100k employees), for both internal services and external vendors. It's not uncommon that it takes weeks to find the one person. There are quite a few I've never found.
      - apatters 6y ago
        Very interesting insights
  - ghiculescu 6y ago
    This might be true in enterprise SaaS (even then it's risky) but not in small/medium business. Particularly if you are using Intercom etc in your product - it's expected that you'll allow any user to contact you. So yes, support can grow as user counts grow. But it shouldn't be a major expense (if it is that's a product failure).
nl 6y ago
In the financial systems/trading world high per-user pricing is considered normal. Most "investment information"-type products are 25K-50K/user/year. It's likely some people here will consider this low pricing, but it's a significantly different pricing model to the sell cheap, stack high $9 to $50/user/month type app.
- user5994461 6y ago
  That's only for products addressed to traders, a very limited audience. For example the bloomberg terminal that sits on their desk. That pricing model is not applied to most information, like pricing data and any sort of API, because these are not about physical users. (They do charge a ton but not per user).
  - nl 6y ago
    > That's only for products addressed to traders, a very limited audience. For example the bloomberg terminal that sits on their desk. It's not, actually. There's a bunch of financial information products that aren't aimed at traders that are around this price point. Pitchbook is a good example. $30k/year. And the whole point is that it's a limited number of people. The price has to be high to make it worthwhile. There's a bunch of markets like this where your pricing advice isn't correct and that needs to be noted.

by gav 6y ago

apatters 6y ago

> The thing that's crazy is that the cost to the SaaS provider has nothing to do with the number of users. Surely their support costs scale with the number of users? This might explain some anti-growth behaviors, support is expensive and a lot of companies struggle to get it right.

user5994461 6y ago
Support costs has no relation to number of users. It's constant time O(10) in engineering speech. It doesn't increase going from 100 to 500 to 2000 users, because none of these users can raise support requests to the vendor. It's only the person (or micro team) who did the product evaluation and drafted the contract who has contact to the vendor support and sales team.
- apatters 6y ago
  I'm not convinced. Even if only one person at the company has access to support, he's going to have more people asking him to submit tickets about their problems when there are 2,000 users vs 100.
  - user5994461 6y ago
    This doesn't happen in practice because the 1900 more employees do not know who is that person and couldn't figure it out even if their life depended on it. If you've worked in any large organization, above one thousand employees, doesn't matter how many above really. For any specific system, there are often only 1-3 people who are familiar with it and have access and would be willing to touch it. There will be a few tens other employees who knows about them and have half a clue what they do (typically same department or neighbors sitting nearby). If one of those hear you looking for help on X, they can direct you "oh I think it's managed by that guy". The other 1900+ can't help you. Having been the unlucky developer at work trying to track down whom to forward a ticket through (100k employees), for both internal services and external vendors. It's not uncommon that it takes weeks to find the one person. There are quite a few I've never found.
    - apatters 6y ago
      Very interesting insights
- ghiculescu 6y ago
  This might be true in enterprise SaaS (even then it's risky) but not in small/medium business. Particularly if you are using Intercom etc in your product - it's expected that you'll allow any user to contact you. So yes, support can grow as user counts grow. But it shouldn't be a major expense (if it is that's a product failure).

nl 6y ago

In the financial systems/trading world high per-user pricing is considered normal. Most "investment information"-type products are 25K-50K/user/year. It's likely some people here will consider this low pricing, but it's a significantly different pricing model to the sell cheap, stack high $9 to $50/user/month type app.

user5994461 6y ago
That's only for products addressed to traders, a very limited audience. For example the bloomberg terminal that sits on their desk. That pricing model is not applied to most information, like pricing data and any sort of API, because these are not about physical users. (They do charge a ton but not per user).
- nl 6y ago
  > That's only for products addressed to traders, a very limited audience. For example the bloomberg terminal that sits on their desk. It's not, actually. There's a bunch of financial information products that aren't aimed at traders that are around this price point. Pitchbook is a good example. $30k/year. And the whole point is that it's a limited number of people. The price has to be high to make it worthwhile. There's a bunch of markets like this where your pricing advice isn't correct and that needs to be noted.