Ask HN: Handling price objections correctly?
Prospect loves my SaaS and the tool, sees a ton of value but says they won't pay more than low double digits per month for it.
Common reasons include their supervisor is stingy, they are able to use teams in India etc.
My software has already saved thousands of man hours for customers who are paying the full price, and for these folks they don't seem to object to the price, rather they understand that the software saves them time.
How do I respond to these price objectors who demand a whopping 86% in discount, yet interestingly enough they are the MOST demanding when it comes to support and feature requests.
"Oh but I can get someone in India doing it for $2/hr to do it for me"
Are these people simply not a right fit? Should I drop them? IF so, how would I tell them that they might not be a good fit in a polite way?
OR is does this signal a poor market-fit of the product and the price needs to drop?
I just don't understand why the current customers paying the full price are so happy while the new prospects seem very stingy and selective, even after claiming they see the value and the time it will save them.
If saving 100s of hours is worth very little to someone, doesn't it mean that their time is probably worth very little? Where as someone who's time is worth a lot (executives, managers) saving 100 of hours would pay off greatly?
16 comments
[ 3.3 ms ] story [ 51.9 ms ] thread> price objectors who demand a whopping 86% in discount, yet interestingly enough they are the MOST demanding when it comes to support and feature requests.
patio11 has written about the same thing: the people who are cheapest are often the biggest PITA in terms of "do it now! I want to talk on the phone right away! It doesn't do this - it sucks!".
Yes and they are quite happy based on our calls. They even said our price is good. However, they were still demanding. My biggest shock was when they said they were pitching to people they know.
> patio11 has written about the same thing
I vaguely remember it...would love to read that again.
> My biggest shock was when they said they were pitching to people they know.
I'm not clear what that means, exactly.
the people who want the deep discount also seem to like the software.
both were quite demanding although the people who want deep discount seems to be way more.
That's awesome! Definitely concentrate on them and what they'd like to see improved.
> the people who want the deep discount also seem to like the software.
Most people like Ferraris, too, even if they don't buy them.
First time I said no
Say no…
" yet interestingly enough they are the MOST demanding when it comes to support and feature requests."
… because of this ;-) If you have happy customers at the higher price point I'd be investing my time trying to find more folk like those — unless you think that a lower price point is going to give you a much, much larger market.
" would I tell them that they might not be a good fit in a polite way?"
I dunno what & how you're selling — so hard to say. Me — I'd lean towards just saying "Sorry, no. We have a standard pricing structure for all clients." If you're offering just monthly pricing maybe offer them an annual plan with 12months for 11months of money. That would at least help cashflow.
Yeah - link to it!
HN has some advice about "firing customers".
http://blog.aaronklein.com/post/59393862062/firing-a-custome...
https://news.ycombinator.com/item?id=4045251
https://news.ycombinator.com/item?id=3131372
https://www.groovehq.com/support/how-to-fire-a-bad-customer
This cannibalizes the primary value you're creating and you're going to get people arguing about every single support request.
If a customer thinks they can get professional work done for $2 an hour you say "Interesting. I wish you the best of luck in your endeavors." and write them out of your life.
Find a competitor in your space and suggest them to you problem customers.
You want good customers. People who insist on not paying or only paying pennies on the dollar aren't good customers. Your price is a qualifying tool. It weeds out those who are ok if you go bust.
"Give me a good price and I'll tell my friends about you" is a red flag. People don't praise what they don't value to friends...control the message; you don't want more people like your bad customer.
Spend energy closing good prospects. Thank loose meat leads for their time and ask if they'd like to get your company's newsletter. Touch base quarterly or on some other periodically appropriate cadence.
Good luck.
Let me tell you what a qualified lead is :)
A qualified lead is a potential customer who fits all of these criteria:
1. Is willing to use your service or your product at the non-negotiable price you set for it,
2. Has long term financial resources such that #1 is a stable and basically unchanging reality each month,
3. Understands that your product or service is premium, and while might not ultimately choose you, can be persuaded that you are worth your price,
4. Is willing to negotiate on project scope (if you're a consultant) or enterprise plan terms (if you're a SaaS) instead of price,
5. Will not spend more resources in customer support that they are paying you (or anywhere close to it),
6. Understands your price as a percentage of the value you are either saving them or giving them, and
7. Obviously, has a need for what you're offering.
Now, that's a qualified lead. How to find them is a different story, but you should not actively pursue a customer unless they fit all these criteria.
Understand that your price includes in the built-in cost of pursuing customers and making sales, be that as an individual consultant or SaaS company. You can't waste time with bad leads.
Once you find a single good lead, pursue referrals from that customer, because you've found a potential wellspring of good customers. You also should change the channels through which you're looking for leads.
Someone coming back saying that they can get $2/hr for what you're offering is not a qualified lead. That's...laughably opposite. My grandmother would offer to pay me more for a completely irrelevent service setting up her blog.
Let me give you an example of myself: I primarily cater to startups in the series A funding category - newly funded enough to be able to pay for security, but small enough that they haven't done so yet. Are companies outside this range prospective clients? Sure. Are they qualified leads? No. That's my successful market, the one I've determined my services are tailored to. So I'll talk with a company that approaches me but not burn time with them, and only actively pursue my qualified leads.
Look at what you're offering, determine who your qualified leads are, and reach out to them. Make an offer. Be sincere with a decision maker and make a pitch for your services.
Finally, without knowing what your SaaS is, I can't say if the market is responding that you need to drop your prices, but if it is helpful as you claim, it's most likely an issue of approaching the wrong customers. I'd like to believe you entered this SaaS business understanding the market for it and an appropriate price point - if not, you need to analyze that immediately. That said...a SaaS needs to be sustainable, and about the lowest I could imagine one would be profitable at scale is $19 a month (maybe $10 for the basic price tier).
Read a lot of patio11's work on this. Don't use a gut feeling for price, have a rational motivation for the number you pitch.
Like I'm even thinking of getting rid of signing up form for a 30-day trial. It seems that people make up their minds within a day or two once they see it working.
I have a very good idea of what the target market which would be happy and I think from all the answers here this makes the most sense.
You should A/B test these things.
Don't.
You have a product. You've set the price. Not everyone has to like it, and as long as you're meeting your bottom line, you've no obligation to come down to the lowest bidder if that bid isn't worth it.
Once you start letting those kinds of customers drag down your scale, you'll go broke.