6 ms·

One suggestion is simply increase the price. Price is strongly correlated with quality of customer. Price also acts as signaling that this is a tool for prof

One suggestion is simply increase the price. Price is strongly correlated with quality of customer. Price also acts as signaling that this is a tool for professionals who make actual money and so shouldn't be bothered coughing up something trivial like $100 for a subscription. You end up making more with far less customer support.

7bit 2y ago
I find it hard to believe that this is true. For 100$ a month I expect a far more polished product than for 20$, where I can look over a lot of missing features. If features don't work as advertised, I will absolutely make no distinction between a 500$ or 1$ product, and will demand a fix. But I will more likely have more patient if the service is cheap, before migrating away. And then, if your customers are businesses, do you think the employees really care how much the product costs? No.
- dghlsakjg 2y ago
  Having run my own tourism business (so dealing with consumers directly, rather than b2b), and having spoken to many other business owners, this is counterintuitively true. My worst customers were the ones that ask for discounts, or are otherwise looking for a deal. My theory is that people that happily fork out for an expensive product have already seen the value. There are exceptions, but a lot of business owners see the same pattern.
  - Marsymars 2y ago
    > My worst customers were the ones that ask for discounts, or are otherwise looking for a deal. I get where you're coming from, but it's hardly surprising that a business's favourite customers are those who are happy to get fleeced. And as a customer, if you're not already a subject-matter expert, you have no idea which business is trying to fleece you or not unless you price compare and try for discounts everywhere.
    - dghlsakjg 2y ago
      If you think getting charged asking price is getting fleeced, then you are kind of illustrating my point. I don't want a customer that thinks they are getting fleeced by doing business with me. I don't want a customer who thinks that paying asking price for a product is me taking advantage of them. I don't want a customer that thinks I am starting the relationship as an adversary rather than a partner in a mutually beneficial transaction. I want customers that are happy. I can't make you happy if you already think what I am selling is not worth what I'm charging. We will both be happier if you find a different supplier. The kind of people that look for an angle on every transaction are the ones that will be the biggest pain in your ass while asking for more than everyone else. That's the generally held wisdom for a reason. It isn't always true, but its true often enough that it normally doesn't pay to play the game. > And as a customer, if you're not already a subject-matter expert, you have no idea which business is trying to fleece you or not unless you price compare and try for discounts everywhere. Yes, be a savvy consumer. But also realize that if you go around looking for the lowest price and asking for discounts, you will end up with the cheapest product or service, not necessarily the best value.
      - Marsymars 2y ago
        > If you think getting charged asking price is getting fleeced, then you are kind of illustrating my point. No, that's explicitly not what I'm saying. Of course, you, as an honest business that stands behind their work, prefers customer who are happy to pay your asking price while not being a pain in the ass. But that's going to be exactly the same stance as your competitor who spends half the effort on their product and double the effort on marketing. They really don't want savvy customers to ask many questions, because they don't have a product to back it up.
        dghlsakjg 2y ago
        I never said not to ask questions or to not ask about the product. I said that people that ask for discounts or generally fixate on the price are, in my and many other’s experience, bad customers. I’m happy to sit and talk about the service, the features, etc. I’m even happy to discuss pricing if there is a circumstance that merits it like a bulk deal. But a huge red flag is when people focus on price exclusively.
  - 7bit 2y ago
    I tend to agree (gut feeling) that the claim holds true in tourism. But I wouldn't compare that to a software service, where people typically don't do evaluations and rate services on a completely different level.
- spacephysics 2y ago
  We’ve also seen customer support inquiries, and in general quality of our customers, rise with an increase in price. It doesn’t make sense as an end consumer, but B2B lens it makes sense. If a business can afford the higher price tag, they most likely would rather have a hands off approach for the problem they’re trying to solve (in a service based business) Many of our mid and lower tier customers want everything drawn out and explained, and give feedback at every step. Our higher tier customers pay faster, request minimal input (outside of times we ask for it), and generally much easier to work with
  - Aurornis 2y ago
    > We’ve also seen customer support inquiries, and in general quality of our customers, rise with an increase in price. Yes, but it should be noted that the price is acting as a filter to exclude a subset of customers, reducing overall customer count. Obviously it's easier to have 100 customers paying $100/month than to have 1000 customers paying $10/month, but finding those tradeoff points can be hard. It takes time for market signals to settle out and customers to churn away due to high prices. I've been a customer of several SaaS products that embraced "raise your prices" so much that they slowly became a second-choice option in the market. It takes a long time for people and websites to stop recommending a product as the first-choice option after a price change, so these signals don't appear immediately.
    - spacephysics 2y ago
      100% agree, and in my case its a service-based business so overhead is much higher per additional client vs an additional SaaS signup. And 1 problem client, even if they pay 80% of our higher tier pricing, can lead to major headaches across the board. Something we learned (and are continually learning) is vetting clients as much as they vet us, versus just trying to get the sale. Funny enough, being more stern on pricing, what we offer, and in general our boundaries of what we cover has led to higher satisfaction from clients and our team.
    - wahnfrieden 2y ago
      I tried offering both price points with no difference except the honor system on affordability and a lot of people voluntarily choose the higher price
- bdcravens 2y ago
  Perhaps, but what's your idea of polish? For many developers, it's a shiny interface. Business users have much different metrics. Developers may get excited over "productivity"; business users are more focused on ROI (ie, quantifiable savings or profit)
- MangoCoffee 2y ago
  It's about creating a barrier to exclude unwanted individuals, similar to a gated community with homes priced higher than the average worker's budget, for instance.
- levocardia 2y ago
  >For 100$ a month I expect a far more polished product than for 20$ I hate to put you on blast but this is exactly why people charge $100/mo instead of $20/mo. They do not want the customers who feel (sorry for the term) "entitled" to a heroic level of features, support, polish, etc. They want people who have a hair-on-fire emergency that is so awful that they'd gladly pay $1000/mo for it, and are thankful that your software - klunky as it is - is giving them $900/mo of free value.
  - Ylpertnodi 2y ago
    >the customers who feel (sorry for the term) "entitled" Why would the word/ term "entitled", need an apology?
    - make3 2y ago
      because it's a subjective very negative judgement about another human, and in polite conversation one should assume baseline positive things about other humans. it's basically like calling someone an asshole. as HN as a culture of politeness, you apologize first, even if it's justified.
      - shnock 2y ago
        Serious question, especially if there’s follow up reading. Where does that principle of assuming baseline good things about the other speaker in polite conversation come from?
        bartread 2y ago
        I suppose it's an underlying principle of good faith discourse. And good faith discourse is an absolute requirement to have a meaningful conversation or debate that moves (whatever) things forward. Part of the reason that political discourse is currently so polarised and pushes us towards bad outcomes in our societies (thinking particularly of US and UK here, but I'm sure it applies elsewhere), like the recent riots in the UK, is that so much of it is bad faith, dishonest, assumes the worst of others, casually alienates to score points, etc.
- siva7 2y ago
  Having worked in quite a few startups, parents observation is absolutely true.
Aurornis 2y ago
Raising prices works wonders when a product is both underpriced and hard to replace. It can backfire when the new price point bumps it into a different category of decision making, though. For many, a $20/month product is an easy decision but $100/month price tag bumps it to a point where it becomes a more complicated decision making process. If you're not careful you can easily raise prices so much that people decide to jump to a more full-featured competitor product. Projects like this one that are personal/side projects have an additional risk of raising prices: If the product becomes expensive, many people are going to notice that it appears to be highly profitable while also being within the realm of what a single person or small team can produce. Competition starts appearing quickly and you're back to cutting prices to stay relevant. Finally, higher prices come with higher expectations from your customers. Whereas previously they might shrug off a slow response to a customer support request at $20/month, their $100/month service might lead them to expect more customer support, not less. There are several indie SaaS companies that get posted on HN from time to time that take the opposite approach: They offer a low price but they're up front about what to expect. They don't try to pretend that you're getting world-class reliability, uptime, or support, but they do commit to offering a good service at a fair price. They could raise prices to match competitors, but now they're playing a very different game with very different expectations.
- tonyarkles 2y ago
  I agree with most of what you said, but there's significant nuance to this piece: > Finally, higher prices come with higher expectations from your customers. Whereas previously they might shrug off a slow response to a customer support request at $20/month, their $100/month service might lead them to expect more customer support, not less. This is potentially true, but there's other effects here too: - When I was doing software and hardware consulting work, the people who paid the most were also the happiest customers. It felt paradoxical for a while until I really let it sink in and stew. Most of the high paying customers would just kind of... take my work products, say "yup, this meets the requirements we agreed to", and run with it. The ones who were paying the least were the most likely to pull the classic "well... is what we agreed to but... maybe you could move that button over to the other side and I've got this other feature idea that we didn't talk about, oh and I don't like how this works... it might be what we agreed to but it's not how it worked in my mind..." - It sounds like OPs customers took that to the extreme with "customers" who hadn't paid anything at all yet being demanding. - By going up-market, you can lose customers for sure but it might be worth it anyway. Given the support burden it sounds like 1/5 of the customers at 5x price would be a net win. Especially if it tracks my experience consulting where the remaining high paying customers are happier about your product in general. If you still maintain the same per-customer support burden or even have it climb some it could end up being less work overall.
nsokolsky 2y ago
Or just give yourself permission to not reply to people. Make a big visible unsubscribe button and relax knowing that anyone can just quit if they don't like it.

7bit 2y ago

I find it hard to believe that this is true. For 100$ a month I expect a far more polished product than for 20$, where I can look over a lot of missing features. If features don't work as advertised, I will absolutely make no distinction between a 500$ or 1$ product, and will demand a fix. But I will more likely have more patient if the service is cheap, before migrating away. And then, if your customers are businesses, do you think the employees really care how much the product costs? No.

dghlsakjg 2y ago
Having run my own tourism business (so dealing with consumers directly, rather than b2b), and having spoken to many other business owners, this is counterintuitively true. My worst customers were the ones that ask for discounts, or are otherwise looking for a deal. My theory is that people that happily fork out for an expensive product have already seen the value. There are exceptions, but a lot of business owners see the same pattern.
- Marsymars 2y ago
  > My worst customers were the ones that ask for discounts, or are otherwise looking for a deal. I get where you're coming from, but it's hardly surprising that a business's favourite customers are those who are happy to get fleeced. And as a customer, if you're not already a subject-matter expert, you have no idea which business is trying to fleece you or not unless you price compare and try for discounts everywhere.
  - dghlsakjg 2y ago
    If you think getting charged asking price is getting fleeced, then you are kind of illustrating my point. I don't want a customer that thinks they are getting fleeced by doing business with me. I don't want a customer who thinks that paying asking price for a product is me taking advantage of them. I don't want a customer that thinks I am starting the relationship as an adversary rather than a partner in a mutually beneficial transaction. I want customers that are happy. I can't make you happy if you already think what I am selling is not worth what I'm charging. We will both be happier if you find a different supplier. The kind of people that look for an angle on every transaction are the ones that will be the biggest pain in your ass while asking for more than everyone else. That's the generally held wisdom for a reason. It isn't always true, but its true often enough that it normally doesn't pay to play the game. > And as a customer, if you're not already a subject-matter expert, you have no idea which business is trying to fleece you or not unless you price compare and try for discounts everywhere. Yes, be a savvy consumer. But also realize that if you go around looking for the lowest price and asking for discounts, you will end up with the cheapest product or service, not necessarily the best value.
    - Marsymars 2y ago
      > If you think getting charged asking price is getting fleeced, then you are kind of illustrating my point. No, that's explicitly not what I'm saying. Of course, you, as an honest business that stands behind their work, prefers customer who are happy to pay your asking price while not being a pain in the ass. But that's going to be exactly the same stance as your competitor who spends half the effort on their product and double the effort on marketing. They really don't want savvy customers to ask many questions, because they don't have a product to back it up.
      - dghlsakjg 2y ago
        I never said not to ask questions or to not ask about the product. I said that people that ask for discounts or generally fixate on the price are, in my and many other’s experience, bad customers. I’m happy to sit and talk about the service, the features, etc. I’m even happy to discuss pricing if there is a circumstance that merits it like a bulk deal. But a huge red flag is when people focus on price exclusively.
- 7bit 2y ago
  I tend to agree (gut feeling) that the claim holds true in tourism. But I wouldn't compare that to a software service, where people typically don't do evaluations and rate services on a completely different level.
spacephysics 2y ago
We’ve also seen customer support inquiries, and in general quality of our customers, rise with an increase in price. It doesn’t make sense as an end consumer, but B2B lens it makes sense. If a business can afford the higher price tag, they most likely would rather have a hands off approach for the problem they’re trying to solve (in a service based business) Many of our mid and lower tier customers want everything drawn out and explained, and give feedback at every step. Our higher tier customers pay faster, request minimal input (outside of times we ask for it), and generally much easier to work with
- Aurornis 2y ago
  > We’ve also seen customer support inquiries, and in general quality of our customers, rise with an increase in price. Yes, but it should be noted that the price is acting as a filter to exclude a subset of customers, reducing overall customer count. Obviously it's easier to have 100 customers paying $100/month than to have 1000 customers paying $10/month, but finding those tradeoff points can be hard. It takes time for market signals to settle out and customers to churn away due to high prices. I've been a customer of several SaaS products that embraced "raise your prices" so much that they slowly became a second-choice option in the market. It takes a long time for people and websites to stop recommending a product as the first-choice option after a price change, so these signals don't appear immediately.
  - spacephysics 2y ago
    100% agree, and in my case its a service-based business so overhead is much higher per additional client vs an additional SaaS signup. And 1 problem client, even if they pay 80% of our higher tier pricing, can lead to major headaches across the board. Something we learned (and are continually learning) is vetting clients as much as they vet us, versus just trying to get the sale. Funny enough, being more stern on pricing, what we offer, and in general our boundaries of what we cover has led to higher satisfaction from clients and our team.
  - wahnfrieden 2y ago
    I tried offering both price points with no difference except the honor system on affordability and a lot of people voluntarily choose the higher price
bdcravens 2y ago
Perhaps, but what's your idea of polish? For many developers, it's a shiny interface. Business users have much different metrics. Developers may get excited over "productivity"; business users are more focused on ROI (ie, quantifiable savings or profit)
MangoCoffee 2y ago
It's about creating a barrier to exclude unwanted individuals, similar to a gated community with homes priced higher than the average worker's budget, for instance.
levocardia 2y ago
>For 100$ a month I expect a far more polished product than for 20$ I hate to put you on blast but this is exactly why people charge $100/mo instead of $20/mo. They do not want the customers who feel (sorry for the term) "entitled" to a heroic level of features, support, polish, etc. They want people who have a hair-on-fire emergency that is so awful that they'd gladly pay $1000/mo for it, and are thankful that your software - klunky as it is - is giving them $900/mo of free value.
- Ylpertnodi 2y ago
  >the customers who feel (sorry for the term) "entitled" Why would the word/ term "entitled", need an apology?
  - make3 2y ago
    because it's a subjective very negative judgement about another human, and in polite conversation one should assume baseline positive things about other humans. it's basically like calling someone an asshole. as HN as a culture of politeness, you apologize first, even if it's justified.
    - shnock 2y ago
      Serious question, especially if there’s follow up reading. Where does that principle of assuming baseline good things about the other speaker in polite conversation come from?
      - bartread 2y ago
        I suppose it's an underlying principle of good faith discourse. And good faith discourse is an absolute requirement to have a meaningful conversation or debate that moves (whatever) things forward. Part of the reason that political discourse is currently so polarised and pushes us towards bad outcomes in our societies (thinking particularly of US and UK here, but I'm sure it applies elsewhere), like the recent riots in the UK, is that so much of it is bad faith, dishonest, assumes the worst of others, casually alienates to score points, etc.
siva7 2y ago
Having worked in quite a few startups, parents observation is absolutely true.

Aurornis 2y ago

Raising prices works wonders when a product is both underpriced and hard to replace. It can backfire when the new price point bumps it into a different category of decision making, though. For many, a $20/month product is an easy decision but $100/month price tag bumps it to a point where it becomes a more complicated decision making process. If you're not careful you can easily raise prices so much that people decide to jump to a more full-featured competitor product. Projects like this one that are personal/side projects have an additional risk of raising prices: If the product becomes expensive, many people are going to notice that it appears to be highly profitable while also being within the realm of what a single person or small team can produce. Competition starts appearing quickly and you're back to cutting prices to stay relevant. Finally, higher prices come with higher expectations from your customers. Whereas previously they might shrug off a slow response to a customer support request at $20/month, their $100/month service might lead them to expect more customer support, not less. There are several indie SaaS companies that get posted on HN from time to time that take the opposite approach: They offer a low price but they're up front about what to expect. They don't try to pretend that you're getting world-class reliability, uptime, or support, but they do commit to offering a good service at a fair price. They could raise prices to match competitors, but now they're playing a very different game with very different expectations.

tonyarkles 2y ago
I agree with most of what you said, but there's significant nuance to this piece: > Finally, higher prices come with higher expectations from your customers. Whereas previously they might shrug off a slow response to a customer support request at $20/month, their $100/month service might lead them to expect more customer support, not less. This is potentially true, but there's other effects here too: - When I was doing software and hardware consulting work, the people who paid the most were also the happiest customers. It felt paradoxical for a while until I really let it sink in and stew. Most of the high paying customers would just kind of... take my work products, say "yup, this meets the requirements we agreed to", and run with it. The ones who were paying the least were the most likely to pull the classic "well... is what we agreed to but... maybe you could move that button over to the other side and I've got this other feature idea that we didn't talk about, oh and I don't like how this works... it might be what we agreed to but it's not how it worked in my mind..." - It sounds like OPs customers took that to the extreme with "customers" who hadn't paid anything at all yet being demanding. - By going up-market, you can lose customers for sure but it might be worth it anyway. Given the support burden it sounds like 1/5 of the customers at 5x price would be a net win. Especially if it tracks my experience consulting where the remaining high paying customers are happier about your product in general. If you still maintain the same per-customer support burden or even have it climb some it could end up being less work overall.

nsokolsky 2y ago

Or just give yourself permission to not reply to people. Make a big visible unsubscribe button and relax knowing that anyone can just quit if they don't like it.