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Ask HN: Should I drastically increase my pricing (grandfathering included)?
My SaaS app tends to attract a lot of customers who upgrade to paid plans but are actually ultimately not really interested in running a business long-term. Our app is actually an ecommerce platform. Our churn is pretty high, but customers are not switching to competitors, just dropping out. I know because their domain names tied to their online stores remain abandoned.
Should I increase my pricing by at least 200-400% to see if this attracts only the most serious customers, and so that I can better focus my effort on serving them instead of spreading myself too thin? Currently, we are definitely underpriced in the market (an indirect consequence of me being the sole employee and living in a country with much lower expenses), and there are also signs that potential customers have problems taking us seriously because of that.
Once we hike our price (to $200/mo), we will be comparable to other competitors. I just felt that undercharging hasn't done us any good for so many months.
What do you think?
- patio11 15y agoYes, you probably should increase prices, but just increasing prices isn't going to get you instantaneous credibility to make sales with more qualified clients. It is difficult to point to things you could do to improve perceived credibility without seeing your site, but examples would include a) making sure the English is flawless (only mentioned because of the country with lower expenses -- your writing here is very good), b) displaying social proof such as logos of credible existing customers and/or media mentions and/or vanity stats, and c) generally having a design and experience which screams Credible. You'll note that your situation is seen over and over and over again by folks who build business tools, by the way. At low prices you get pathological customers. This is exactly what Spreedly and Chargify reported on HN previously, and it comports with the experience of many other companies which have not said so publicly.
- 3a0e8ff4e557 15y agoHello Patrick, Our landing page is actually converting pretty well, at >5% conversion rate (visit-to-trial signup). The problem is that I'm not sure if the right people are converting. We have no indication on the quality of those signups. If you are willing to help me out, I'll send you an email with my website, so that you can give quick thoughts. I would say the things you pointed out are generally fulfilled, but I may be wrong and biased too.
- jurre 15y agoCan't you do A/B testing on it?
- nreece 15y agoThe first thing you must do is find out why your customers are abandoning your product. I think increasing the price without fixing the core problem will not help much.
- 3a0e8ff4e557 15y agoTalking to them, I realise that a lot of it is just, "Wow, it's taking up much more time and money than I expected." While we can abstract away some of this time and money investment through better features and better UI/UX, a lot of them are just gunning for building a passive income engine without even investing much money and time in the initial stages. They are the classic get-rich-quick-passive-income-work-from-home crowd, if you will. Certainly, there are many aspects of our SaaS platform that can be improved, but we have been constantly learning from our customers who are still continuing their subscriptions with us. So hopefully we are indeed improving our platform over time and tackling some core problems (sample bias, of course, but better than nothing). P.S. Out of 39 people whom we surveyed over a few months (mostly people who continue to upgrade after the trial), 26 said that they will be "very disappointed" if they could not use our platform again, so hopefully this says something about our product/market fit.
- kappaknight 15y agoWhat is taking up most of their time? What can you do to help reduce that, if anything?
- 3a0e8ff4e557 15y agoThe nature of our industry (our customers' industry, to be precise) is that you need to have fresh products/offerings up every other day or so. So the process of adding content is time-consuming. But the same can be said for our competitors. This is one aspect that is very difficult to abstract away. We have tried: letting them create copies of content, letting them create drafts, and also letting them appoint other users to create content on their behalf.
- kellros 15y agoI think you need to consider how this will impact your bottom line. Is your cheapness (excuse the pun) your major selling factor i.t.o competitiveness? Is your 'market share', only the cheap clients? Generally businesses carve out a niche inside their market. If that above statement is true, you'd probably lose almost all your business. If you want more money (without losing your client base), add functionality and give them the option to use it (at a price). I'd say if you already have all or most of the el'cheapos, then cater for them. Make it easier to setup shop and for you to manage them.
- 3a0e8ff4e557 15y agoUnfortunately, it is possible that both the questions you posed are answered in the positive. We are grandfathering existing customers, so hopefully if we ever hit a brick wall with new customers, we can just rely on existing income from existing customers for the time being. But we really want to take a bite at the enterprise/corporate segment, since we believe that what we have is even better than what our premium competitors offer. We have a couple of those now paying a lot of money but are succeeding in making profits, perhaps because their higher fees make them treat their business more seriously.
- douglee650 15y agowhy not add a 'platinum tier' with an easy to give away service that you know most customers already don't use, and charge extra for it? or add incremental charges to existing plans to push customers towards the new platinum tier? and, btw, if you don;t know the lifetime value of your customers by source and date, you should do more tracking
- brudgers 15y agoA relevant HN'ers blog post and the HN discussion: http://jacquesmattheij.com/Double+your+price+%28and+no%2C+I%27m+not+kidding%29 http://jacquesmattheij.com/Double+your+price+%28and+no%2C+I%... http://news.ycombinator.com/item?id=1639712 http://news.ycombinator.com/item?id=1639712
- debacle 15y agoAnd another one: http://news.ycombinator.com/item?id=1781156 http://news.ycombinator.com/item?id=1781156
- 3a0e8ff4e557 15y agoA quote from JangoSteve that really resonates with me: "There are ways your users tell you your product is too cheap, without actually having to tell you. One good indicator is when you have a lot of people signing up, and then not using it, in which case your product is so underpriced that it attracts indifference." Our product attracts a lot of indifference. This is good in the short-term (free money), but ultimately we don't get to provide the value we want to provide, garner feedback from their regular usage, and they also eventually cancel and not even switch to a competitor.
- debacle 15y agoIf your intial costs are very high, and that is causing the issue, just wrap people into a contract - maybe 6 months up front (with a 30 day trial) and then you can go month-to-month after that. It's becoming bad form to charge 'registration fees,' because everyone thinks that with IT you can do all of the paperwork for free. Especially in business-to-business when you're dealing with tightwads quite often. Figure out what your minimum contract duration to break even (t) would need to be at your current prices. Multiply t * 1.25 and round to the nearest 4 or 6 month interval. That's your new initial minimum contract length.