Comment by glenngillen | Hacker News Reader

Comment by glenngillen | Hacker News Reader

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Would be worth updating the topic to be prefixed with "Ask HN: " so people know it's a discussion.

As to your question, I'm facing the same problem. I've got a couple of hundred free users who signed up to help beta testing, I think I'll allow them to keep their free accounts as a thank you. Beyond that, I'm going start high and see how it goes. The system is designed to allow certain features to be enabled/disabled easily so I'll offer 3 different price options.

I think it is about finding that sweet spot on perceived value. I'd prefer to have the product priced slightly on the higher side with fewer customers (but roughly the same net revenue), that way I'm just as well off but with a lower support requirement. Plus it gives me room to price-cut in the future.

And then there is always to option to try and split test pricing to see how sensitive your prospective customers are to price adjustments.

Above all, I'd look at other successful companies like Apple and see how they try and structure their products and prices in such a way to convince you that you're actually getting a good deal.

Oh and of course, try and calculate what it costs you to provide the product and support per signed up customer... and don't charge less than that ;)

How about offering them free accounts for a fixed period, like 3/6/12 months? That way you could reward their support without having to carry a bunch of free users in perpetuity. If they like your product they probably wouldn't mind paying for it, and this explicitly communicates the value you're offering.

Also, for any given product I'd expect a small group of very active testers, and a larger group of semi-active to inactive ones.

I have updated the title. Rewarding the beta testers seems like a fair thing to do. The banding we are thinking about is between $4 and $8 per month and we would probably like to start at the $6 per month mark, or $5.95. We are not particularly interested in out-pricing our competitor; we would like a steady increase in market share. Thanks for the comments.

My only comment on that is partially based on personal experience, and anecdotal evidence from end-users of some products I've developed for my own clients.

Many, many, many years ago now I wrote one of the very early GUI HTML editors while still a junior in high school. This predates Frontpage, Homesite, and most commercial offerings from the major players so it was relatively successful in terms of market share. It was shareware though, and fully functional apart from the occasional annoying popup. A payment of $5 would remove the popups. Over the course of a year I increased the price from $5 to $10, and then to $15 dollars.

I can't remember the exact numbers, the the downloads per month were still in the thousands but the number of people that had paid for the product since I released it I could still count on one hand. That didn't bother me too much as I built it for myself primarily, anything else I deemed a bonus.

Then one day I decided to up the price to $99, I figured zero people at $99 was just as profitable as zero people at $15. The next day I woke to find I'd had at least 10 orders overnight, and the trend continued for quite a few months until the product started to noticeably lag the new offerings from Microsoft and Co.

It was a very early and valuable lesson, the price you put on a product signals to your potential customer how valuable you think it is.

One of my most recent client sells a SaaS product that allows people to do market research. It's not the cheapest in the market, but by no means expensive. A large part of their customer base are consultant types who use the tool for when doing work for their own clients. Many of them lament the fact that there wasn't an "Enterprise" edition of the tool. No requirements for additional features, it already meets their requirements, they just don't want their clients thinking they can have access to the same tools for $100/month.

For slightly different reasons, it was price guiding the perceived value of the offering.

Just something worth considering. Obviously without knowing the product it's hard to say what value I'd prescribe to it on a monthly basis.

A Good story and some good advice there. Thanks once again. I perceive certain products in certain ways, in terms of the price guiding my judgement, e.g. higher priced items being of better quality which doesn't always hold true of course. Personally, I need to actually make use of a product which is higher priced before actually making the decision to buy. This is why we will go with the freemium model I think.

This is just my opinion, but I don't see a price difference between $4 and $8. The biggest challenge is getting me to pay. If it is worth paying for then whether I am going to pay $4, $8 or $10 a month is pretty irrelevant to me. Making me put my hand in my pocket is the hard part. I always think $9.95 sounds like a good price for something on a monthly basis ($100 if you pay upfront for a year also sounds OK).

I'd start high and lower the price (A/B price testing?) as needed.

Reasonable comments. This - and the above - is the type of commentary I was hoping I would get. If I consider myself as a customer aswell, then am I likely to be swayed by a few dollars difference in a monthly subscription. Probably not. And anything less than $10 won't require too much consideration from me.

Is this B2B or B2C? The pricing just seems too low.

I think a problem many of us face is knowing when to take off the techie hat and put on the CEO hat. Don't price like a techie. ;)

B2C. "Don't price like a techie". Food for thought indeed.

And I know B2C is harder, but to have to beat yourself up over an extra dollar or two just seems like a bad place to be as a businessperson (while enterprises dole out wheelbarrows of cash for unused products).

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