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Comment by jacquesm | Hacker News Reader

You'd be surprised how big the world really is. Plenty of people will have never even heard of you or your competitor. Good luck marketing your product to the point where you've gotten 100% saturation in terms of reaching your target audience. Even coca cola and google can't claim that.

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I'm pretty sure Coca Cola can actually claim 100% saturation.

In fact, they probably can, after all, they're the #1 global brand. And those that they haven't reached yet they probably can't sell to. But it can be quite surprising to hear people say 'google? what's that?'.

It still happens to me occasionally (but rarely), and it never ceases to amaze me that there are still people living under rocks thick enough to block out information like that.

Same with wikipedia, you'd think that the news is out by now. But there are still people that have never heard of it.

There are also a _lot_ of people who have heard of Wikipedia, and used it, but have _absolutely no idea_ that it's user generated and that you can edit it. They are generally pretty stunned when I demo it.

Random anecdote: Back in 2002 I spent a week in a village in rural Haiti trying to get an electric generator set up. We had car trouble between villages and our resident mechanic was fixing it on the side of the road, when a woman from a small hut came out and asked us if we wanted Coca Cola. She sold us bottles of Coke kept cool in a hole with a tarp over it. I've never looked at the Coke brand the same way since.

How is that for saturation? Amazing story. I heard that Coca Cola was pretty much the first western brand in to the most unlikely places.

In rural Kenya, Coca Cola is the only thing visitors are advised to drink.

http://www.google.co.uk/search?q=define%3Asaturated

Hm. For truly niche software, I suppose I can see that, but for anything with more than even a few hundred customers, I don't think it'd last. Someone (like me, for example) would smell an opportunity and sell for less.

I suppose it's not a bad thing for you in the short term, but I'd caution against getting comfortable on the profit cushion, and reinvest in revenue sources that can't be taken away by the same opportunistic competitor.

Selling for less doesn't always work, because the more expensive guy can spend more on marketing.

Also, for consumers, $19.99 is pretty much a fixed limit. Above that, you loose people, but below, you don't necessarily gain more signups.

I suppose that's true; below a certain point, the effect of a price is pretty inelastic.

I can almost guarantee you wouldn't build an entire product/website/SaaS just because you 'smell an opportunity' in a market 'with more than even a few hundred customers', would you?

I'm not sure how long 'it would last' would need to be for you to be convinced, but for me it has been going for about 6 years now since that conversation and it still works.

The interesting bit is that I was just as skeptical as you are (and probably even more so) and in the end decided that trying it was the easiest way to see if it was true or not.

The second time I was even more skeptical but then I figured 'in for a penny, in for a pound', just to be able to tell Richard that he was wrong the second time. But he wasn't.

It doesn't hurt to try though, and if it does work for you then it's free money, which is nothing to sneeze at.

Keep in mind that if your product costs you $2 to put out there per paying member and you manage to increase your sales price to $19.95 you've just gone from a 50% gross profit margin to 90%.

Understood, and I think I agree with you. I was thinking in terms of larger prices (i.e. $500 on up; I tend to work with custom and specialized software in my day job.).

How about pulling off what OXO did? They realized their products cut be copied and sold at a cheaper price. So they created their own competition. Just made a worse design, used cheaper materials, slapped on a new brand and put both lines on the same shelf.

That way you can market to two demographics and cover the market. Extra bonus is that you can use essentially the same underlying tech.

Good point. I think Microsoft calls those SKUs. (They just didn't put the same brand name on it, I suppose.)

That is useful, but it is actually just one example of price discrimination - and you might want to create more than one competitor to your product.

>How about pulling off what OXO did?

Made gravy?

OK, what did OXO do, they're a gravy brand in my country ...

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