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Take a pinch of salt - you've crossed the first barrier - you're looking at something people want. Ask the magic question - 'Will you pay $X for this per month

by blrgeek 14y ago

Take a pinch of salt - you've crossed the first barrier - you're looking at something people want. Ask the magic question - 'Will you pay $X for this per month?' That differentiates ppl who find it 'nice' vs people who are desperate for it. This will also give you baseline pricing. Pitch it high and come low. If you think it's worth $100/m, start asking at $250/m. What's an interesting revenue number for you from this? Say it's $10000. Say your price is $50/m [Are your customers ready to pay this much?]. Then you need 200 customers. Is the market big enough to support that? Can you reach this many customers? Meanwhile, do the pipeline research. What do people look for when they want this product? What search terms do they use? Use Adwords Explorer to find out how many people in which region are searching for this - https://adwords.google.com/o/Targeting/Explorer https://adwords.google.com/o/Targeting/Explorer . See how many competitors exist in this space, are they easy to find, are they targeting the right keywords [semrush.com] If everything is positive, create a landing page, start doing some basic SEO or even SEM [if the price is low enough], to get signups, and if you're up to it, pre-orders. Then build the product :) P.S. I've done bits and pieces of this before - not done all the way. If you want to chat abt this, I'm prasanna 79 at google's email service. P.P.S. I'm surprised this is not on the front page. I'd have thought this is clearly the most pertinent of HN material.

wpietri 14y ago
Excellent advice. But I don't like the question, "Will you pay X?" People spend imaginary money differently than real money. Instead, ask for them to write a letter saying that when the product is released, they intend to sign up and pay X. Wikipedia has more: http://en.wikipedia.org/wiki/Letter_of_intent http://en.wikipedia.org/wiki/Letter_of_intent This does not legally commit them to paying; if you deliver junk, they can pass. But it's serious enough that people behave much more like a real purchase. Or, given that there are good mockups, the initial website could test prices. If they select a plan and click "sign up" you can capture their email address and plan selection.
- helen842000 14y ago
  This is useful. I think the next step is putting up a page using the mockups and opening it up to a wider audience and adding it to the list I've already got. If I get to 200, 500 or 1000 names then what? Do I presume that 10% genuinely will sign up, 1% or 0.1%? I've actually already got 3 e-mails of intent based on teams of 6, 9 and 10.
  - blrgeek 14y ago
    It depends on the question you are asking! You will need to estimate the conversion rate based on what you see in real life, when you go from alpha to closed beta, how many people who said they'd take, actually take it. Formal LoI's are good if you can get them, but don't really mean much, since they are by definition no commitment. And at this stage, they don't know what they're getting either.
- blrgeek 14y ago
  I very much like the 'Will you pay $X question' since it pushes them into whether they will really buy this. This question may be less useful in a B2C context where it's more of an impulse and less well thought out. But makes a LOT of sense in B2B, where the budgeting and RoI processes are much better thought through. P.S. LoI's make more sense in a very big business context. But I doubt they'd mean much for a small SaaS offering. Also, not many potential customers will be so needy that they'd go to the trouble of a formal LoI. An email should be sufficient at this stage.
  - wpietri 14y ago
    I'm not suggesting a formal paper LOI; if they're email people, email is fine. But I think there's a big psychological difference between somebody saying, "Oh, we'd pay X" in response to an interview question and them saying in writing that they will pay X when the product is available if it meets their needs. I agree that not many potential customers will be so needy that they'll do that. But not many potential customers will be so needed that they'll actually sign up and pay, so I think that's fine.
- tgrass 14y ago
  Wouldn't a "Purchase Now for $X" button work that only tracked clicks and returned a message: "Sorry, our product is in development now. We'll email you as soon as it's live."
  - wpietri 14y ago
    That's basically what I'm suggesting. It works well as long as the web is your primary sales channel. Definitely get the email before the reveal, though. I'd do it as a page with radio buttons for pricing options, a call-to-action button that emphasizes purchase ("buy now" or "sign up now"), and a follow-on page that asks for email and payment method choice (credit card, paypal, purchase order).
    - tgrass 14y ago
      Sorry, your last line, I see that now.
helen842000 14y ago
If I earned an income from building a product that people found useful then that's success to me. Interesting revenue starts at $5k pcm pre-tax from my POV. I could work on it full time on a fraction of that. I wouldn't quit my job until those kind of numbers were coming in repeatedly for a good while. Anything that generated in the region of $10k pcm would be enough to manage the project hands off & spend my time building everything else in my project file and more! P.S It was front page for a little while! Now it's top of 'ask'. It has generated some great feedback so I'm really happy.

by blrgeek 14y ago

wpietri 14y ago

Excellent advice. But I don't like the question, "Will you pay X?" People spend imaginary money differently than real money. Instead, ask for them to write a letter saying that when the product is released, they intend to sign up and pay X. Wikipedia has more: http://en.wikipedia.org/wiki/Letter_of_intent http://en.wikipedia.org/wiki/Letter_of_intent This does not legally commit them to paying; if you deliver junk, they can pass. But it's serious enough that people behave much more like a real purchase. Or, given that there are good mockups, the initial website could test prices. If they select a plan and click "sign up" you can capture their email address and plan selection.

helen842000 14y ago
This is useful. I think the next step is putting up a page using the mockups and opening it up to a wider audience and adding it to the list I've already got. If I get to 200, 500 or 1000 names then what? Do I presume that 10% genuinely will sign up, 1% or 0.1%? I've actually already got 3 e-mails of intent based on teams of 6, 9 and 10.
- blrgeek 14y ago
  It depends on the question you are asking! You will need to estimate the conversion rate based on what you see in real life, when you go from alpha to closed beta, how many people who said they'd take, actually take it. Formal LoI's are good if you can get them, but don't really mean much, since they are by definition no commitment. And at this stage, they don't know what they're getting either.
blrgeek 14y ago
I very much like the 'Will you pay $X question' since it pushes them into whether they will really buy this. This question may be less useful in a B2C context where it's more of an impulse and less well thought out. But makes a LOT of sense in B2B, where the budgeting and RoI processes are much better thought through. P.S. LoI's make more sense in a very big business context. But I doubt they'd mean much for a small SaaS offering. Also, not many potential customers will be so needy that they'd go to the trouble of a formal LoI. An email should be sufficient at this stage.
- wpietri 14y ago
  I'm not suggesting a formal paper LOI; if they're email people, email is fine. But I think there's a big psychological difference between somebody saying, "Oh, we'd pay X" in response to an interview question and them saying in writing that they will pay X when the product is available if it meets their needs. I agree that not many potential customers will be so needy that they'll do that. But not many potential customers will be so needed that they'll actually sign up and pay, so I think that's fine.
tgrass 14y ago
Wouldn't a "Purchase Now for $X" button work that only tracked clicks and returned a message: "Sorry, our product is in development now. We'll email you as soon as it's live."
- wpietri 14y ago
  That's basically what I'm suggesting. It works well as long as the web is your primary sales channel. Definitely get the email before the reveal, though. I'd do it as a page with radio buttons for pricing options, a call-to-action button that emphasizes purchase ("buy now" or "sign up now"), and a follow-on page that asks for email and payment method choice (credit card, paypal, purchase order).
  - tgrass 14y ago
    Sorry, your last line, I see that now.

helen842000 14y ago

If I earned an income from building a product that people found useful then that's success to me. Interesting revenue starts at $5k pcm pre-tax from my POV. I could work on it full time on a fraction of that. I wouldn't quit my job until those kind of numbers were coming in repeatedly for a good while. Anything that generated in the region of $10k pcm would be enough to manage the project hands off & spend my time building everything else in my project file and more! P.S It was front page for a little while! Now it's top of 'ask'. It has generated some great feedback so I'm really happy.