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?
19 comments
[ 3.0 ms ] story [ 54.1 ms ] threadYou'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.
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.
Thanks for being awesome Patrick. :)
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.
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.
"Should I increase my prices?" is a "vanity question" ( just like "vanity metrics" (E Ries Lean startup philosophy) >> They do not help you build a better business, they take you away from what is REALLY important) Finding why your customer do not want to spend more time adding content and/or why they consider spending more time adding content is not worth it definitely help.
Good luck.
How about letting them schedule and set future publish times for the items? As a small biz owner, if I'm in the groove of adding products, I would love to just spend 4 hours straight on a Sunday night adding all the products for the week and have the system publish them on a schedule I set. It's much harder (and more annoying) to do this fresh every day for 15 minutes than doing so in a large block of time.
If freshness of the content is a real concern, I'd pay for something like that to make my site appear more fresh.
You need to ask 5 Whys here (http://en.wikipedia.org/wiki/5_Whys):
1. Why are your customers abandoning your product?
.. because it's taking up much more time and money than they expected.
2. Why is it taking up much more time and money than they expected?
and so on.
You can certainly increase the price, but it's a dangerous proposition, that can be counter-productive without knowing what's causing your customers to abandon the product and how can you improve the overall user experience first & foremost.
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.
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.
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
http://jacquesmattheij.com/Double+your+price+%28and+no%2C+I%...
http://news.ycombinator.com/item?id=1639712
http://news.ycombinator.com/item?id=1781156
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.
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.