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I think a better answer is to first build a pricing model that your customers can understand. AWS pricing works well, because it aligns with how sysadmins and
by donw 6y ago
I think a better answer is to first build a pricing model that your customers can understand.
AWS pricing works well, because it aligns with how sysadmins and operations folks used to -- and still do! -- buy hosting space and datacenter resources. It's more granular to be sure, but the model is identical: you're buying so many units of rack or compute space, so much network bandwidth, so much memory, and so on.
As such, value-based pricing only works if either the market already understands it, or if you have the sales resources to educate your potential customer base -- which nominally means you're selling to large orgs and enterprises.
Which also means you're probably not a startup. Enterprise sales cycles are long.
If your product promises to boost sales, revenue-share pricing is a value-based pricing option worth considering. "We don't get paid unless you make more money" is a solid sales tactic, but it also depends on your clients' willingness to share revenue or revenue-proximate data.
But if you don't directly add to the bottom line, that's a hard sell. You are much better off with a simpler model (per-seat, per-month, etc.) that aligns with the market and with your customer expectations, and iterating from there with generous grandfathering.
- yoshyosh 6y agoAgreed with this, would not recommend trying to do metered/per unit pricing (that developers may be used to) if your customers aren't familiar with that. We've found that customers readily accept/understand tier based pricing. We literally just changed higher plans from usage based to blocks/tiers of usage based e.g. up to X units per plan