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When I raised my B2B SaaS’s prices
- polote 6y agoyeah $50 is still not a lot for the service you provide, if shneider electric, weework, ... are really your customer, you could probably 10x your price. You have to think on the value your bring to them instead of the the complexity of your service. Actually for your product I would expect the price to be around $200 per month for a <300 people company But the price has a big impact on what people expect from you, so if this is a side project, you may prefer keep it low
- TAForObvReasons 6y agoFor a large number of engineers in the target market of this service, a commitment of $50/mo subscription service (which translates to $600/yr) can be put on the credit card without too many hoops, but a commitment of 10x that (translating to $6000/yr) may require actual approvals and a business case. The first price raise might have been successful because it was still in the realm of "put it on the card", but 10x the current price quickly pushes that into a different territory
- axaxs 6y agoI agree that it's a low price, but disagree one should just raise it because they can. Keeping prices low helps prevent competitors from undercutting, or even competing in the first place, in my opinion. If this service were charging say, 500 per month, they'd likely have a lot of knockoffs enter the space.
- opportune 6y agoIf I'm a huge business getting a lot of value out of a $500/mo SaaS product that does everything I need and is reliable, it would be a pretty bad decision to take a chance on a new $200/mo service offering the same thing.
- axaxs 6y agoThat's true for a while, but companies churn a lot as new things come about. I can't even tell you how many travel/HR, ticketing, chat, and video conferencing systems my rather boring company has gone through in my tenure. More importantly, new customer acquisition. At 500 a pop, someone like me could be inclined to give it a go, and I'm just one not-so-motivated guy. That's great passive income with a handful of customers. For 50? Not worth the effort since now I'd need a handful x 10. At 500 a pop, companies with way more resources will outpace and outspend you for that. Less likely for 50. Just my opinion. * To be clear, the above is a hypothetical. I have zero interest in copying anyone's work, or really any side project at the moment.
- amirathi 6y agoRight but a new prospect is going to want to evaluate $200/mo offering and see if that meets their needs. So you are loosing out on new business.
- stevoski 6y agoOP here. It we because we were getting customers like Schneider Electric and WeWork that made me more confident to raise the prices. > Actually for your product I would expect the price to be around $200 per month I love hearing this. Thanks! > so if this is a side project Definitely not a side project!
- polote 6y agoUsually the good price is the price you are comfortable with. But most of the time, this is a cheaper price than customer are willing to pay. In any case you have the good behavior, put a price, give it a few months, if after a few months you feel like you want to increase it, do it, if you want to decrease it, do it and contact people who pay more. And don't forget that if you want to target bigger customers, you can, but you will have to make them pay much more than currently, but you will also have to change a lot of things in the way you operate your company (you can have more info on my blog, link in my bio)
- wykyee 6y agonice
- wykyee 6y agoqqq
- lol768 6y ago>January 2020: start actually charging the new prices. So you just started billing them a different amount without even warning them?
- deleted 6y ago[deleted]
- Axsuul 6y agoExisting customers were grandfathered
- stevoski 6y agoFTA: > What about existing customers? > I’ve never put up prices for existing customers. I’m okay with people getting the price they started with indefinitely. It is the way I’d want to be treated as a customer.
- lol768 6y agoI think this could have been stressed a bit more clearly in the section I referenced - since it's vitally important!
- bumpkinjunkie 6y agoHave you heard of Van Westendorp's Price Sensitivity meter? It could give you numerical insight into how you might raise prices further (vs. guess and test).
- Axsuul 6y agoSuccessful SaaS companies are always testing their pricing
- kolinko 6y agoI ran a successful SaaS and didn’t test. While it’s easy to test basic conversion, it’s way harder to test the prices’ impact on churn and an effect on PR.
- Drdrdrq 6y agohttps://en.m.wikipedia.org/wiki/Van_Westendorp's_Price_Sensitivity_Meter https://en.m.wikipedia.org/wiki/Van_Westendorp's_Price_Sensi...
- krm01 6y agoOur [1] UX/UI design service with a monthly retainer had similar results when raising prices for new customers (old ones are locked in at previous rates). same conversation rates, more revenue, zero complaints, bigger customers. Big difference is that we charge $xxxx/mo. So raising our 4-figure prices resulted in a huge revenue increase. We’re probably going to double prices in a few weeks to see what happens. [1] https://fairpixels.pro https://fairpixels.pro
- Drdrdrq 6y agoFyi: faq entry "how will I communicate..." is cut off on ff mobile (limited height and overflow hidden?). Nice concept otherwise - charge subscription instead of per-project and allow endless iterations. Brilliant!
- wtracy 6y agoI'd say that the author missed the chance to add sales copy and/or message the trial users with "Our prices are going up on [date], act now to lock in this rate!" It seems like you could squeeze at least a temporary bump in conversions out of that.
- lubos 6y agoFor most bootstrapped SaaS businesses, the number of active free trial users is so low, it's not worth your mental capacity. Also. You really don't want customers who will buy from you at $29/mo and won't buy at $39/mo. This is because if $10 makes difference in their purchasing decision, the value they are getting out of your subscription is roughly what you charge. This segment of customers will churn the fastest as they will be constantly on the edge revaluating whether your subscription is "worth it". You might as well not care about whether they become customers or not. So why bother with cheesy tricks to make them convert. It's not worth it.
- jwr 6y agoAs a self-funded SaaS owner, I agree 100% with the above answer. Totally correct.
- thayne 6y ago>I’ve never put up prices for existing customers. I think this is key. New customers will evaluate based on the current price not historical prices, but if you increase the price for existing customers, they will feel cheated.
- obenn 6y agoI also think that this can motivate new sales. If I know I’m locking in my price with a company, I’m more motivated to buy now.
- lallysingh 6y agoAnd keep existing customers who may not need the product for a while, but want to keep the low price in case they need it again later.
- seanwilson 6y agoWhat do you do if you want to experiment with lower prices? If you lower the price for existing customers during the experiment, it's going to hurt if you end up putting the price back.
- behindsight 6y agoCall it a flash discount/sale/promotion for new/existing customers. Adjust the terms as needed.
- seanwilson 6y ago> Call it a flash discount/sale/promotion for new/existing customers. Not sure if you mean this, but the problem I find with offering sales (where you mention the end date) is you can't tell if some customers are only buying it because they don't want to miss out on a limited offer so it doesn't help you learn the real value of your product. Like when people buy clothes in a sale they end up never wearing, or people that buy Steam sale games and never play them.
- harryf 6y agoAs an occasional B2B SaaS buyer, the key point in getting your pricing right / wrong is knowing where the limits are for; a) I can just get this on my company credit card without needing approval b) OK for this price it's going to show up as a line somewhere in a budget and / or I'm going to have to get approval from my boss ( 1-2 meetings work ) c) For THAT price I need to trigger a whole enterprise process, have a ton of meetings, make the case Mostly you want to stay in a) for volume sales. Once you start getting into b) and c) you start needing support agreements, enterprise sales people etc. plus b) and c) make work for the customers that are your "adopters" in the enterprise - they need to love your product for that to happen.
- scarface74 6y agoJoel Spolsky “Camels and Ducks” (2004) https://www.joelonsoftware.com/2004/12/15/camels-and-rubber-duckies/ https://www.joelonsoftware.com/2004/12/15/camels-and-rubber-...
- cheez 6y agoThought of the same article.
- tiffanyh 6y agoWould you mind sharing where the price cliffs are for (a), (b), and (c)? Just curious.
- leesalminen 6y agoNot GP, but in my experience: - A: 10-499/mo - B: 500-4999/mo - C: 5000+/mo
- hugey010 6y agoMostly agreed, but your section a goes too high. 400$ per month can't just be quietly expensed in most orgs I've worked for. I'd say max $50-$100 per month.
- jrott 6y agoAs the price goes up we tend to get larger organisations as customers. Unfortunately, they are also more likely to ask for custom legals, T&Cs, and security audits. In all cases, I say no. That may change in the future. this was a particularly interesting bit. I've got a feeling that the organizations that care about custom legal and security audits can be charged way more than $50 a month. If people are caring about that you're probably beyond a developer with the corporate card in terms of who is buying.
- leesalminen 6y agoIndeed. I operate a B2B SaaS company as well. We also said “no” a lot in our first 5 years. It wasn’t worth the overhead. But as we grew and our processes matured we started talking to enterprises. Turns out that we’d already figured out most of what they wanted/asked for at that point. We have a list price on the website and also a “contact us” enterprise plan over a certain size. Once an enterprise ends up in that funnel, everyone involved knows multiple zeroes are being added to the TCO. It’s never been a problem for us. Larger orgs really will pay significantly more just to have their hands held.
- goatherders 6y agoYup. I worked for a hosting company once that added a zero to the price of service for an NBA team that wanted a 12 hour SLA instead if a 24 hour SLA. Another NBA team bought the highest priced of solutions i offered and told me as they were signing, "we know the least expensive option was probably overkill for our needs, but it is important that we have your full attention."
- nitrogen 6y agoI have been occasionally "in the room" for conversations where a contract between an enterprise and a vendor is being discussed. I was initially surprised that enterprise buyers specifically wanted per-X billing, to ensure that the vendor was equally incentivized to maximize X as the buyer was. But it makes sense.
- 6y ago
- bithavoc 6y ago> What did I tell existing customers about the price change? > Nothing. I probably should have, but it fell off my to-do list. This pisses me off, I started paying for Notion back when they limited the number of blocks monthly and then at some point they changed the pricing to unlimited blocks in their Free plan, and I didn't notice until last month. I googled, I couldn't find any announcement, no tweet, nothing. I felt betrayed, It's been over a month, and now I find myself using Notion less and less every day.
- bdibs 6y agoIn that situation an email would have been nice, but just raising the price with no feature changes doesn’t warrant notification. Especially since existing customers would be charged their current rate anyways.
- kasey_junk 6y agoFrom the article it seems like their price changes only got worse for new buyers. You’d be angry if you found out someone else’s price went up?
- stevoski 6y agoOP here. I didn't raise prices for existing customers. FTA: > I’ve never put up prices for existing customers. I’m okay with people getting the price they started with indefinitely. It is the way I’d want to be treated as a customer. Anyway, within a couple of years, as existing customers churn, the “problem” of older customers paying less will simply go away.
- fnomnom 6y agoi think the problem is that the poster could have used the free plan now
- bachmeier 6y agoI don't want to rain on anyone's parade, but you don't learn anything from this exercise. Unless you somehow know how many new customers would have signed up without a change in the price, you can't infer anything from this. It's tempting to compare with earlier growth rates (as the author did) but for a small, growing business the growth rate isn't going to be constant over time. What is really problematic, though, is trying to do this type of comparison when we're literally in a different world due to the pandemic.
- LeonB 6y agoI take your point generally but I think it's overstating it to say you learn nothing. Definitely the signal can be hard to isolate form the noise, but if it's a big enough signal you'll hear it. For example: if sales fall off a cliff, it's reasonable to interpret that as "perhaps I over did it." and so on.
- bachmeier 6y ago> For example: if sales fall off a cliff, it's reasonable to interpret that as "perhaps I over did it." and so on. But (a) that's not the outcome, so it doesn't help here, and (b) with the pandemic, even if sales went to zero, you'd still need some way to know the effect of that.
- ssanders82 6y agoThen it would be nice if you could suggest an experiment which would yield useful pricing results for him. I don't know if this was your intention but it's kind of a pet peeve of mine when someone posts "that's useless" to a content creator without elaborating on how they would've approached the issue.
- tarasmatsyk 6y agoAlways enjoy a good read, thank you Steve! Also, this thread has some gems too, glad I found it.
- ramirez60 6y agoHave you explored any non-digital marketing channels for growth yet? I am working on a sales model for companies like yours that sell to small/medium sized businesses. Would love to chat if you had some time to discuss. Is there a good way to contact you?
- deviation 6y agoReminds me of my mother-in-law's wedding photography business. She was struggling with the what-ifs of raising prices and losing her valuable customers. She took a business course and they recommended she double her price. Double. She gained more customers than ever before. I guess when it comes to wanting a premium product, whether it's a wedding or software in general- people are less likely to follow-through if the price is unusually cheap because it gives the smell of "maybe they have terrible support" or "maybe they cut corners in x or y".