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Ask HN: pricing question

3 points by kinj28 12y ago

whats better for SaaS pricing - pay per user or per usage? eg. we have a link sharing tool for teams. should the pricing be based on #of links shared or #of users?

adventured 12y ago
All of this said without knowing what your actual business does. Ideally whichever is easiest to calculate use for by the customer (assuming you can keep your pricing structure similar in terms of what you earn as well). If users might be sharing anywhere from 5 to 500 or 5,000 links, that's a pricing nightmare in which the customer doesn't know their costs and it might be very hard to estimate ahead of time. That's a non-starter for most businesses. When something has such low per unit costs and value as an individual link, I'd tend to argue in favor of a layer above that which simplifies the pricing: in this case, the per user pricing model. If you can provide unlimited links per user in that model, all the better.
- kinj28 12y ago
  good point. but dont you think if their link shares are increasing then they will be happy to pay more? Agreed that estimating the links will be difficult for customers. looks like identifying the optimum team size (for viral adoption) for a freemium model is quite challenging.
adrianhoward 12y ago
Depends on your customers and your product. Could be neither. Could be both depending on how you segment your customers.
hcatlin 12y ago
If it's "for teams", then users seems like a better option. You wouldn't want to punish usage. Remember, you are creating value and you want to make sure that the user gets as much value as possible... and that's by sharing more often, typically. And, as the user base within a company grows (hopefully), the price should go up. This stuff is always hard to figure out and I don't think most companies are always 100% happy with how they are charging, but if you are a team-based app where you can easily measure by employees using it, then user is probably the clear winner, even with the little information you've given.
- kinj28 12y ago
  Some more information: we are called http://www.teamgum.com http://www.teamgum.com. our competition: mostly they have all user based pricing my view: i think value of the product will be more visible if no. of users in the network are increased & no. of links shared are also increased. my concern: if we price per user & end up restricting free flow of users then do you think we may end up turning off many of the acquired teams?
ASquare 12y ago
Some good posts on this topic: https://www.linkedin.com/today/post/article/20140512065424-7018284-both-pay-as-you-go-and-subscription-pricing-for-saas https://www.linkedin.com/today/post/article/20140512065424-7... http://www.tomtunguz.com/pricing-experimentation http://www.tomtunguz.com/pricing-experimentation
- kinj28 12y ago
  thanks for sharing :)
fasteo 12y ago
"per user". The problem "per usage" is that most of the time the potential customer does not have a clue about what his usage will be, shifting his mind from "should I sign up ?" to "I need first to calculate how much this thing will cost me"
cardeo 12y ago
In this case I think number of users makes the most sense

3 points by kinj28 12y ago

whats better for SaaS pricing - pay per user or per usage? eg. we have a link sharing tool for teams. should the pricing be based on #of links shared or #of users?

adventured 12y ago

All of this said without knowing what your actual business does. Ideally whichever is easiest to calculate use for by the customer (assuming you can keep your pricing structure similar in terms of what you earn as well). If users might be sharing anywhere from 5 to 500 or 5,000 links, that's a pricing nightmare in which the customer doesn't know their costs and it might be very hard to estimate ahead of time. That's a non-starter for most businesses. When something has such low per unit costs and value as an individual link, I'd tend to argue in favor of a layer above that which simplifies the pricing: in this case, the per user pricing model. If you can provide unlimited links per user in that model, all the better.

kinj28 12y ago
good point. but dont you think if their link shares are increasing then they will be happy to pay more? Agreed that estimating the links will be difficult for customers. looks like identifying the optimum team size (for viral adoption) for a freemium model is quite challenging.

adrianhoward 12y ago

Depends on your customers and your product. Could be neither. Could be both depending on how you segment your customers.

hcatlin 12y ago

If it's "for teams", then users seems like a better option. You wouldn't want to punish usage. Remember, you are creating value and you want to make sure that the user gets as much value as possible... and that's by sharing more often, typically. And, as the user base within a company grows (hopefully), the price should go up. This stuff is always hard to figure out and I don't think most companies are always 100% happy with how they are charging, but if you are a team-based app where you can easily measure by employees using it, then user is probably the clear winner, even with the little information you've given.

kinj28 12y ago
Some more information: we are called http://www.teamgum.com http://www.teamgum.com. our competition: mostly they have all user based pricing my view: i think value of the product will be more visible if no. of users in the network are increased & no. of links shared are also increased. my concern: if we price per user & end up restricting free flow of users then do you think we may end up turning off many of the acquired teams?

ASquare 12y ago

Some good posts on this topic: https://www.linkedin.com/today/post/article/20140512065424-7018284-both-pay-as-you-go-and-subscription-pricing-for-saas https://www.linkedin.com/today/post/article/20140512065424-7... http://www.tomtunguz.com/pricing-experimentation http://www.tomtunguz.com/pricing-experimentation

kinj28 12y ago
thanks for sharing :)

fasteo 12y ago

"per user". The problem "per usage" is that most of the time the potential customer does not have a clue about what his usage will be, shifting his mind from "should I sign up ?" to "I need first to calculate how much this thing will cost me"

cardeo 12y ago

In this case I think number of users makes the most sense