Comment by schneidmaster | Hacker News Reader

Comment by schneidmaster | Hacker News Reader

You should charge more :) Especially for your business plan -- any service targeted at enterprises should get you bare-minimum three figures of revenue per month, and you should look for a way to make it four or five, or have it scale up for large enterprises.

There are a few reasons for this:

1) The difference between $35 a month and $250 a month is a rounding error to most enterprises -- but for you, aggregated across all your business customers, it will make it much, much easier to grow and achieve profitability.

2) It's easy to lower your prices if you receive consistent feedback that people really want your product but think it's 30% too expensive or whatever. It's very difficult to raise your prices once people are locked in at a lower monthly rate (especially if the rate is an order of magnitude lower than what you end up really needing to charge).

3) Businesses are used to paying a lot of money for software (sometimes up to seven or eight figures annually). For large enterprises, there is a counterintuitive psychological factor: they don't trust something that costs $XX a month to reliably store their data and scale to their needs, and you'll actually close more customers at $XXX or $XXXX a month.

4) Selling to enterprises is very costly -- they will (try to) run you through procurement, legal reviews, security reviews, terms of service negotiations, and a litany of other things. Your price point needs to take that cost into account -- you simply can't make a profit from large enterprises if you have to spend a few thousand dollars of time/resources getting them closed, and then you have to make it up $35 at a time.

Also, I agree with the other comment saying you shouldn't offer a free plan, especially since your product is open source and they could self-host if they really wanted it. There's an inversion of value -- free users still expect you to support them, and users in free/cheap plans are often actually the noisiest for whatever reason. If I were you, I'd charge about $25/mo for the basic feature set (maybe without the branding and with more than 50 form submissions); $99/mo for the "premium" feature set; and "call me" for enterprises (hundreds to thousands a month depending on scale and commitment).

I agree with everything you say BUT when first starting out I see no harm in starting with lower prices. You need to build up confidence in yourself and your product at the very beginning.

Then, after you're all tested and things are working well, then raise prices (maybe after 2-4 weeks in).

Does it really matter about having high prices for those first few customers? No, they get a reward for taking a risk on you!

I know because I did exactly what you said, and I can tell you your point #2 "It's easy to lower prices" is not quite right.

It really sucks to lower prices. Here's what that looks like:

https://s3.amazonaws.com/nugget.one/academy/nugget-down.png

Conversely, it's easy to raise prices and grandfather the first few customers that took a risk on you.

I agree and disagree. I agree that there's not necessarily a harm to having "beta pricing" or waiting to work out your price structure until you've found some product/market fit. But I was largely responding to the "Coming soon -- business $34.90/mo" plan -- I think by the time they're ready for a business plan, they're ready to start charging "real" prices. I also think you have to be cautious with "beta pricing" because it can distort your view of the market -- the cohort who will pay $10/mo is usually drastically different than the cohort who will pay $100/mo, and it's easy to mistake the former for an indication that you've got a market fit, when you might find that the market is much different when you're charging what you actually need to grow and turn a profit.

I agree! How about this:

Start with a price that is the lowest price in the cohort/market band that you are interested in and then work your way to the top as you get settled in.

I'm a big fan of the inner game, IMHO folks should operate where they feel comfortable so they can rid themselves of impostor syndrome and get more confident over time.

But yeah, do like compete.com did move from a $49 price point over time all the way up to $1,000+! That's fine by me ;)

Yeah, I agree that is a reasonable approach, particularly since it tends to align well with product development (as you add more advanced features, you can easily justify segmenting them into a new premium plan). Though I'm a proponent of having enterprise pricing (or at least "call me" pricing) at any stage -- if a large enterprise comes knocking, you need to make sure you can get enough value for you to support their scale and procurement processes.

1. Not clear why you think this is a solution for enterprises. Business <> Enterprise. Not many large enterprises are going to take a chance on a small company given the large number of CMS systems available. If I were an enterprise looking for a CMS, I'd either being looking for something like Adobe or go the opposite way and go with an open source solution that is well adopted.

2. While you may be right that you can raise prices, you have to remember the competition - I'd compare this to, say, Wix or Wordpress or Squarespace. It may be 200% better than those tools but price matters to the people buying and they will be comparing them.

You have some great feedback. Thanks for taking the time to be so thorough. I’m not the OP, but I still think your comments are valuable in general, not just this one case.

Glad you found it helpful :) I recommend following patio11 on Twitter -- this is one of his regular drums to beat, and it helps having a frequent reminder of how enterprises work and that left to your own devices you will almost always undervalue your own product.

I often see “enterprise” options with “call us” pricing on saas products. However often there are no enterprise features listed. I presume that is because those extra features a customized per large customer.

Do you (or anyone else reading) have examples of some of those type of features enterprise customers might want? I know this is a pretty open ended question. So if helpful, you could limit them to the context of a saas like this one.

Sure, here's the pricing model for the SaaS startup I work for: https://www.aha.io/product/pricing

Our Enterprise+ plan is the one for our largest enterprise customers -- the extra features are:

- Antivirus scanning for attachments

- IP access controls

- Custom tables (an advanced feature where you can create your own record schema and link the records to canonical records in our product -- for example you can create a table of "customers" and link each feature to the customers that want it)

- Account backup (obviously we do our own backups, but this feature lets you easily dump your whole account to JSON so you can do your own backups too)

- Some advanced features around managing licenses within your organization

- Our concierge service (which includes support for security/operational reviews plus some sessions to guide you in rolling out our product within your organization)

Great examples! Thanks.

I presume these services are priced at a level that make it worth your time to develop them. Do you find you have a lot of feature creep as each potential enterprise customer asks for certain extra features?

Not really, but a lot of that is related to how we prioritize features. We set out goals and initiatives each half-year (using Aha! internally) and ensure that the things we prioritize and build are aligned with our initiatives and will broadly benefit our customers.

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