Ask HN: SaaS/Recurring Businesses - How did you figure out your prices?

https://news.ycombinator.com/item?id=5977302

by johnnyleitrim • 13 years ago

8 5 13 years ago

news.ycombinator.com

How did you figure out how much you could/should charge your customers?

How did you determine how much you should spend on Marketing acquiring those customers?

Are there any useful tools to help!?

Rakathos• 13 years ago

I sell Inventory Management software, and I priced the three plan levels by guessing. I went for $29/$59/$129 across three different plan levels.

Many trial users have told me that my pricing is way too high. I imagine these people actually want the product for free[1] and will probably never "buy" it until it is.

On the opposite side of this spectrum, I've been told by potential customers that my pricing is so low that they wouldn't consider buying it because it isn't a serious price.

I've just started rebuilding[2] this product because it failed for a variety of reasons, and once I get to pricing it won't be hard to figure out which side of the argument I'm going to favor.

[1] https://twitter.com/Rakathos/status/350615055223644160/photo...

[2] http://www.ironconversions.com/blog/post/Breathing-Life-Into...

johnnyleitrim2• 13 years ago

That's interesting Joshua. Sounds very similar to a situation I was in previously that I am also trying to avoid again! We guessed our pricing on competitors and some (poor) customer research, and we heard both of those "you're too expensive/cheap" arguments as well!

jerryasmith• 13 years ago

I can respond to the pricing piece – if you have some funds available and want to research this, I would look into a research technique called Choice-Based Conjoint Analysis [1]. This is a research technique that has you list out the main attributes (processor, for example) and levels within those attributes (1 GHz, 2 GHz, etc) of the product that you’re selling. You then send respondents through a mini simulator, asking them to choose between “choice sets” – different combinations of your attribute levels.

What you get is a preference score for each level. You can then build things like a pricing demand curve, or a full blown market simulator if you know what features your competitors include in their products.

It’s also great for assessing what features you want to include in a product.

[1] http://www.sawtoothsoftware.com/conjoint-analysis-software

johnnyleitrim2• 13 years ago

Thanks for reply Jerry. That's sound interesting for setting an initial price. It is possible to keep that type of process going so that you can monitor if the price point is right?

rshlo• 13 years ago

Great post here by patio11 : http://www.kalzumeus.com/2012/08/13/doubling-saas-revenue/

Ask HN: SaaS/Recurring Businesses - How did you figure out your prices?

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