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I watched a very interesting video about selling to consumers as opposed to businesses [0]. The key takeaway is that consumers' target price to pay is actually

I watched a very interesting video about selling to consumers as opposed to businesses [0]. The key takeaway is that consumers' target price to pay is actually $0. Therefore, any price above that, even a 3 to 4 dollar a month difference, is seen as extremely annoying to them, because again, they actually only want to pay nothing. This is why you should, if not charging business, at least charge prices that are sufficiently high such that only those who see the value in them will pay, which are usually in a different class of consumers from bottom-feeders who look for the lowest price, ideally 0. An example is Superhuman, an email app that costs $30 dollars a month. Only those who see the value in a fast, keyboard-driven email app will pay that much. [0] https://www.youtube.com/watch?v=kEc-qGK5cjY https://www.youtube.com/watch?v=kEc-qGK5cjY

input_sh 6y ago
In an ideal world where people have a decent disposable income, those arguments might be true. In the real world, it's not that "people don't want to pay anything", it's that people have a small amount of money to throw at things for a marginally better experience. I sure like keyboard-driven apps, but I'm never going to pay as much as I pay for my entire Internet package for any online service. Hell, all of them I pay for barely add up to $30/month. Superhuman and similar are tools for rich people, equivalent to a Rolex or the latest iPhone. Those with less income are assumed not to be its target audience. I'd argue that they could double the price without losing more than a single digit percentage of current users.
- cercatrova 6y ago
  Yes, it seems your comment is reinforcing my point. Consumers like you don't want to pay $30 and that's fine, you are not their target audience. You may like keyboard-driven apps but you don't like them enough to pay $30, so in terms of microeconomics, you don't believe you'll get as much value from the tool as you'd spend. Again, that is fine, because the company should only target customers who do realize your product's value. One may say that the takeaway is basically, target prosumers and rich customers who see the value of the product in order to make the most money. That they are price insensitive is also great as a dev, because, yes, you can increase the price multifold and not lose customers, which increases your revenue overall.
  - crooked-v 6y ago
    The comment you're replying to is talking about actual amount of money available for the consumer, not perceived value. Or, in other words: if I look at an app and decide that it's perfect and I'd really like to have it, but it costs $30/month and I need that money for gas to get to work or to put into my kid's college fund, I'm not going to get it. The kind of people who post on HN usually have enough money that just $30/month isn't a problem, but what if there's 10 apps that do the same thing? At $300/mo that's now a substantial budget item, and if I have anything serious to save up money for, individual apps are going to be the first thing to go.
    - cercatrova 6y ago
      Perceived value and realization of that value are the same thing to the vendor. If you don't buy, then it doesn't really matter to those who sell. If it does, then there may be some price stratification they could do to capture that value, but it might be best to not target price-conscious customers at all, due to their tendency to be a larger support concern than those who are price-invariant; they are not worth the money they bring in.
  - dkersten 6y ago
    I’ve backed people on patreon and never accessed the rewards. I’ve bought humble bundles that I never played the games or read the books. I have, on occasion, bought apps just because I liked the idea and wanted to support the developers. I sponsor people on GitHub whose projects I like but don’t actually use. Not everyone is aiming to pay $0 for everything. Some of us like to support things we like our values even if we never actually use them ourselves.
    - cercatrova 6y ago
      Sure. You're not like most consumers however, and a business cannot rely on consumers like you in order to stay alive. Services like Patreon are also different in that the product is not the rewards, those are just the bonus, the product itself is giving support to the creator. Imagine if you'd buy a service like Patreon that just takes your money and gives nothing to the creator, I'd assume not, so you can see how the product is creator support.
- lmeyerov 6y ago
  The anchoring is different -- Consumer: Pay $ZZZ/mo for internet, used to $1/yr apps, etc Business: No idea what the internet bill is, doesn't see corp credit card bill, and for purchases for some level of value, used to do initial procurement flows for $100+/mo, a bit more or $1K/mo, pretty real for $10K+/mo (ex: ROI calc), ... but approval flow for < $100/mo is a "hey-o mgr, this site look alright to you?"
esperent 6y ago
Over the last couple of years, my income has gone up a lot, from "barely scraping by, >50% of my income spent on rent" to "comfortable, can make any small purchases I like without worrying". This has led to a huge change in my attitude to buying things like app, books, games, movies. If it's a small company/author who cares about their product/book etc. and charges a reasonable amount, I want to pay for what I'm using. Before, I pirated, searched for zero cost stuff, because it was either that or reduce the quality of the food I ate. Now, I can support the people that make the amazing things I use, and I want to support them. I don't think I'm especially unusual in this regard. I guess the difference is that now, a $5 app purchase is close to zero in its affects on my bank account, a $20 app purchase needs only a few seconds consideration. However, if I see a $1-$10 a month subscription for simple app with very little cloud functionality, that's still a hard no from me because it seems like blatant greed.
- dvcrn 6y ago
  I am with you on that. I buy apps if they provide value to me. If it has a one-time purchase option next to a subscription, even if it is $30 - $50, I pick the one-time purchase. If it's a journaling app, a calendar app, a habit tracker or a drawing app and it wants me to pay monthly, it's a hard 'no' for me as well unless it has a cloud component that I feel justifies the price. There is mostly nothing in it that justifies paying monthly, it's just an offline app. "But developers need a salary too" - yes, then price your app accordingly and charge for upgrades. Subscriptions make me feel if I stop paying I lose the app and can't access my data any longer. That, and subscriptions pile up. If I subscribe to one app it's not a big deal, but if I subscribe to 10-20 apps and they all cost monthly, it adds financial stress on me and stuff I 'have to keep in my head'.
  - dkersten 6y ago
    Subscriptions also add cognitive load. If I pay upfront and later stop using the app, oh well. If I pay a subscription and stop using the app, I have to remember to unsubscribe.
  - cercatrova 6y ago
deleted 6y ago
[deleted]

input_sh 6y ago

In an ideal world where people have a decent disposable income, those arguments might be true. In the real world, it's not that "people don't want to pay anything", it's that people have a small amount of money to throw at things for a marginally better experience. I sure like keyboard-driven apps, but I'm never going to pay as much as I pay for my entire Internet package for any online service. Hell, all of them I pay for barely add up to $30/month. Superhuman and similar are tools for rich people, equivalent to a Rolex or the latest iPhone. Those with less income are assumed not to be its target audience. I'd argue that they could double the price without losing more than a single digit percentage of current users.

cercatrova 6y ago
Yes, it seems your comment is reinforcing my point. Consumers like you don't want to pay $30 and that's fine, you are not their target audience. You may like keyboard-driven apps but you don't like them enough to pay $30, so in terms of microeconomics, you don't believe you'll get as much value from the tool as you'd spend. Again, that is fine, because the company should only target customers who do realize your product's value. One may say that the takeaway is basically, target prosumers and rich customers who see the value of the product in order to make the most money. That they are price insensitive is also great as a dev, because, yes, you can increase the price multifold and not lose customers, which increases your revenue overall.
- crooked-v 6y ago
  The comment you're replying to is talking about actual amount of money available for the consumer, not perceived value. Or, in other words: if I look at an app and decide that it's perfect and I'd really like to have it, but it costs $30/month and I need that money for gas to get to work or to put into my kid's college fund, I'm not going to get it. The kind of people who post on HN usually have enough money that just $30/month isn't a problem, but what if there's 10 apps that do the same thing? At $300/mo that's now a substantial budget item, and if I have anything serious to save up money for, individual apps are going to be the first thing to go.
  - cercatrova 6y ago
    Perceived value and realization of that value are the same thing to the vendor. If you don't buy, then it doesn't really matter to those who sell. If it does, then there may be some price stratification they could do to capture that value, but it might be best to not target price-conscious customers at all, due to their tendency to be a larger support concern than those who are price-invariant; they are not worth the money they bring in.
- dkersten 6y ago
  I’ve backed people on patreon and never accessed the rewards. I’ve bought humble bundles that I never played the games or read the books. I have, on occasion, bought apps just because I liked the idea and wanted to support the developers. I sponsor people on GitHub whose projects I like but don’t actually use. Not everyone is aiming to pay $0 for everything. Some of us like to support things we like our values even if we never actually use them ourselves.
  - cercatrova 6y ago
    Sure. You're not like most consumers however, and a business cannot rely on consumers like you in order to stay alive. Services like Patreon are also different in that the product is not the rewards, those are just the bonus, the product itself is giving support to the creator. Imagine if you'd buy a service like Patreon that just takes your money and gives nothing to the creator, I'd assume not, so you can see how the product is creator support.
lmeyerov 6y ago
The anchoring is different -- Consumer: Pay $ZZZ/mo for internet, used to $1/yr apps, etc Business: No idea what the internet bill is, doesn't see corp credit card bill, and for purchases for some level of value, used to do initial procurement flows for $100+/mo, a bit more or $1K/mo, pretty real for $10K+/mo (ex: ROI calc), ... but approval flow for < $100/mo is a "hey-o mgr, this site look alright to you?"

esperent 6y ago

Over the last couple of years, my income has gone up a lot, from "barely scraping by, >50% of my income spent on rent" to "comfortable, can make any small purchases I like without worrying". This has led to a huge change in my attitude to buying things like app, books, games, movies. If it's a small company/author who cares about their product/book etc. and charges a reasonable amount, I want to pay for what I'm using. Before, I pirated, searched for zero cost stuff, because it was either that or reduce the quality of the food I ate. Now, I can support the people that make the amazing things I use, and I want to support them. I don't think I'm especially unusual in this regard. I guess the difference is that now, a $5 app purchase is close to zero in its affects on my bank account, a $20 app purchase needs only a few seconds consideration. However, if I see a $1-$10 a month subscription for simple app with very little cloud functionality, that's still a hard no from me because it seems like blatant greed.

dvcrn 6y ago
I am with you on that. I buy apps if they provide value to me. If it has a one-time purchase option next to a subscription, even if it is $30 - $50, I pick the one-time purchase. If it's a journaling app, a calendar app, a habit tracker or a drawing app and it wants me to pay monthly, it's a hard 'no' for me as well unless it has a cloud component that I feel justifies the price. There is mostly nothing in it that justifies paying monthly, it's just an offline app. "But developers need a salary too" - yes, then price your app accordingly and charge for upgrades. Subscriptions make me feel if I stop paying I lose the app and can't access my data any longer. That, and subscriptions pile up. If I subscribe to one app it's not a big deal, but if I subscribe to 10-20 apps and they all cost monthly, it adds financial stress on me and stuff I 'have to keep in my head'.
- dkersten 6y ago
  Subscriptions also add cognitive load. If I pay upfront and later stop using the app, oh well. If I pay a subscription and stop using the app, I have to remember to unsubscribe.
- cercatrova 6y ago

deleted 6y ago

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