When I raised my B2B SaaS’s prices
discuss.bootstrapped.fm
discuss.bootstrapped.fm
a) I can just get this on my company credit card without needing approval
b) OK for this price it's going to show up as a line somewhere in a budget and / or I'm going to have to get approval from my boss ( 1-2 meetings work )
c) For THAT price I need to trigger a whole enterprise process, have a ton of meetings, make the case
Mostly you want to stay in a) for volume sales. Once you start getting into b) and c) you start needing support agreements, enterprise sales people etc. plus b) and c) make work for the customers that are your "adopters" in the enterprise - they need to love your product for that to happen.
“Camels and Ducks” (2004)
https://www.joelonsoftware.com/2004/12/15/camels-and-rubber-...
Just curious.
- A: 10-499/mo
- B: 500-4999/mo
- C: 5000+/mo
That said, I’ve also worked at a startup accelerator on rigorous pricing validation for startup business plans. So I have some ideas about the thresholds and know for a fact that they exist. But it’s never as easy as a single number. If anyone’s interested in discussing some data, feel free to hit me up. Only saas targeted at (mainly) small to large business though.
It also depends on the company. Are you talking about Dell, Toyota or Lockheed, or are you talking about a regional business?
Usually I've encountered needing to go through an arduous traditional procurement process when any one lump of money that's being negotiated over or leaving the building is North of $100k
(one time or per year, monthly being 1/12th the amount)
A - <$2,500
B - <$20,000
C - more than $20k
Beyond that, most companies need more documentation or prior approval from your boss (only). The upper limit for that is often $500. That means whether something is $60 or $499, it can take exactly the same effort.
Above that, it often requires boss' boss' approval or a real line item in the team/department budget. The upper limit for this is all over the map, I've seen anything from $1000/month or $10k/year. Once you cross into this zone, assume customization, a more complex sales process, and you've left the realm of expense reports and moved into Purchase Orders (POs).
Above there, this is starting to look like enterprise software sales which is a beast unto itself. This likely turns into competitive bidding, a dedicated sales force, custom contracts & TOS, and a lot of other things. IF you can be successful here though, you can do quite well, especially if you've figured out how to make it repeatable and scalable.
The "pinch" of buying is therefore low enough to encourage uptake. If the base price level is higher than this, then that itself becomes another mental task for the potential customer to work through before pulling the trigger. This doesn't mean you shouldn't have higher priced plans (you must!), but from my experience $50 or even $99 as the upper end of the "base" plan is a good first threshold to get prospects to be ok with putting their credit card in.
As soon as payments are recurring, things will be more complicated: Being bound to a contract beyond the current year is often subject to approval, at least when recurring payments are involved. Not yet paid but binding future obligations have to occur in various reports and need accounting involvement. Better have short contracts with autoextension or at least the possibility to pay up front for a fixed term.
Does that mean monthly recurring payments?
Or is that too short? did you mean yearly?
> the possibility to pay up front for a fixed term
What's a good fixed term, maybe one year? Or a few years?
Usually yearly should be fine, however, monthly would reduce customer anxiety (not sure if thats very relevant for B2B) but increase possible administrative overhead on your side.
> What's a good fixed term, maybe one year? Or a few years?
Longer than your usual recurring term. I'd say 2 to 5 years. The right term depends on the overall cost of that package: you should price them below the next-higher aforementioned cliff of course. If you usually offer yearly $20 contracts, and you have determined a typical cliff to be at $50, you could offer a 3year package for $49.
Also consider other factors: you might not want to support a version for the whole fixed term. And you definitely don't want to sell anything perpetual or semi-perpetual.
Is that per year or month?
Or one time things? Like a lifetime software license
As an example, the product in the linked article is designed to be customer facing, and at the very least, linked to from within an app or site. The person who decides to take that direction is some sort of product owner.
If a person has the authority to decide to incorporate that sort of product (accept & expose feature requests) into their app but doesn't have the authority to sign off on a few hundred dollars a month, then something very unusual is going on.
On the flip side if you're selling something to an individual engineer then the price point is a lot lower. A developer might have autonomy to pick their tools, but they typically won't have the authority to sign off on a large expense.
this was a particularly interesting bit. I've got a feeling that the organizations that care about custom legal and security audits can be charged way more than $50 a month. If people are caring about that you're probably beyond a developer with the corporate card in terms of who is buying.
We have a list price on the website and also a “contact us” enterprise plan over a certain size. Once an enterprise ends up in that funnel, everyone involved knows multiple zeroes are being added to the TCO. It’s never been a problem for us.
Larger orgs really will pay significantly more just to have their hands held.
OP here. I'm grateful to hear that you also said "no" a lot. I do sometimes feel like I'm declining a lot of additional revenue, so it makes me feel more confident about what I'm doing to hear that you did the same for a few years.
Companies use these requests as signals that they want me to charge them 10-1000X the off-the-shelf price for the service. Usually they realize that this is what they're doing, but occasionally I'll get to have a fun email exchange with a rank and file developer who accidentally flipped his $5/month personal plan into $300/month Enterprise mode by routing his purchase through Purchasing.
No, you can't go back. Once you start acting like an Enterprise, you're an Enterprise. There's no way I'm risking ever needing to involve my lawyer for a customer with an expected lifetime value of a few hundred dollars, so once you cross that line you're across it.
cc'd to 3 levels of purchasing at a company you've heard of:
"I'm afraid we've reached the point where it is now officially silly to continue discussing ways to save $BRAND_NAME (a billion dollar company, if I'm not mistaken) three hundred dollars."
They're still customers to this day.
I think this is key. New customers will evaluate based on the current price not historical prices, but if you increase the price for existing customers, they will feel cheated.
Adjust the terms as needed.
Not sure if you mean this, but the problem I find with offering sales (where you mention the end date) is you can't tell if some customers are only buying it because they don't want to miss out on a limited offer so it doesn't help you learn the real value of your product.
Like when people buy clothes in a sale they end up never wearing, or people that buy Steam sale games and never play them.
We raised prices slowly, in cohorts. It was after years without a price raise and a lot of new value adds.
There was no churn.
Perhaps I'm not making the best decisions to maximise revenue, but part of the pleasure of running my own company is running the way I feel is right to me.
Nice concept otherwise - charge subscription instead of per-project and allow endless iterations. Brilliant!
Actually for your product I would expect the price to be around $200 per month for a <300 people company
But the price has a big impact on what people expect from you, so if this is a side project, you may prefer keep it low
More importantly, new customer acquisition. At 500 a pop, someone like me could be inclined to give it a go, and I'm just one not-so-motivated guy. That's great passive income with a handful of customers. For 50? Not worth the effort since now I'd need a handful x 10. At 500 a pop, companies with way more resources will outpace and outspend you for that. Less likely for 50. Just my opinion.
* To be clear, the above is a hypothetical. I have zero interest in copying anyone's work, or really any side project at the moment.
> Actually for your product I would expect the price to be around $200 per month
I love hearing this. Thanks!
> so if this is a side project
Definitely not a side project!
In any case you have the good behavior, put a price, give it a few months, if after a few months you feel like you want to increase it, do it, if you want to decrease it, do it and contact people who pay more.
And don't forget that if you want to target bigger customers, you can, but you will have to make them pay much more than currently, but you will also have to change a lot of things in the way you operate your company (you can have more info on my blog, link in my bio)
For example: if sales fall off a cliff, it's reasonable to interpret that as "perhaps I over did it." and so on.
But (a) that's not the outcome, so it doesn't help here, and (b) with the pandemic, even if sales went to zero, you'd still need some way to know the effect of that.
I don't know if this was your intention but it's kind of a pet peeve of mine when someone posts "that's useless" to a content creator without elaborating on how they would've approached the issue.
It seems like you could squeeze at least a temporary bump in conversions out of that.
Also. You really don't want customers who will buy from you at $29/mo and won't buy at $39/mo. This is because if $10 makes difference in their purchasing decision, the value they are getting out of your subscription is roughly what you charge. This segment of customers will churn the fastest as they will be constantly on the edge revaluating whether your subscription is "worth it". You might as well not care about whether they become customers or not. So why bother with cheesy tricks to make them convert. It's not worth it.
> Nothing. I probably should have, but it fell off my to-do list.
This pisses me off, I started paying for Notion back when they limited the number of blocks monthly and then at some point they changed the pricing to unlimited blocks in their Free plan, and I didn't notice until last month. I googled, I couldn't find any announcement, no tweet, nothing. I felt betrayed, It's been over a month, and now I find myself using Notion less and less every day.
> I’ve never put up prices for existing customers. I’m okay with people getting the price they started with indefinitely. It is the way I’d want to be treated as a customer. Anyway, within a couple of years, as existing customers churn, the “problem” of older customers paying less will simply go away.
She gained more customers than ever before.
I guess when it comes to wanting a premium product, whether it's a wedding or software in general- people are less likely to follow-through if the price is unusually cheap because it gives the smell of "maybe they have terrible support" or "maybe they cut corners in x or y".
Also, this thread has some gems too, glad I found it.
So you just started billing them a different amount without even warning them?
> What about existing customers?
> I’ve never put up prices for existing customers. I’m okay with people getting the price they started with indefinitely. It is the way I’d want to be treated as a customer.