Pricing a SaaS product (2019)

You’re hooking me in to an interesting pitch here.

> doesn't have any rate-limiting, can act as a VPN, integrates natively with Docekr + Kubernetes and can be self-hosted too. That's the value of it.

That’s just some stuff it does though, not the value.

As an underwhelmed ngrok free user, you could probably sell me this product somehow. We have lots of pain around webhooks in CI, especially with parallel builds.

I don't think blanket statements like, you're SAAS product is not expensive enough, work. You should take a tailored approach for what works for you.

You might be cost-sensitive and look for a good deal when buying tools and infra to support your own projects. But buyers at larger companies aren’t spending their own money, so their thought process is very different.

As long as the price fits in the budget and isn’t an outlier compared to other products they pay for, then it’s not going to be what they focus on. They’ll care much more about quality, trustworthiness, ease of integration, support, and things like that.

That’s why putting your price at the high end of the 'acceptable' range is a win-win. You don’t leave money on the table, and you make an implicit commitment to high quality and good service, which the customers you really want value more than a bargain.

> I GOT A PHONE CALL ONE DAY FROM A FRIEND WHO HAD RECENTLY opened an Indian jewelry store in Arizona. She was giddy with a curious piece of news. Something fascinating had just happened, and she thought that, as a psychologist, I might be able to explain it to her. The story involved a certain allotment of turquoise jewelry she had been having trouble selling. It was the peak of the tourist season, the store was unusually full of customers, the turquoise pieces were of good quality for the prices she was asking; yet they had not sold. My friend had attempted a couple of standard sales tricks to get them moving. She tried calling attention to them by shifting their location to a more central display area; no luck. She even told her sales staff to “push” the items hard, again without success. Finally, the night before leaving on an out-of-town buying trip, she scribbled an exasperated note to her head saleswoman, “Everything in this display case, price × ½,” hoping just to be rid of the offending pieces, even if at a loss. When she returned a few days later, she was not surprised to find that every article had been sold. She was shocked, though, to discover that, because the employee had read the “½” in her scrawled message as a “2,” the entire allotment had sold out at twice the original price!

> It is easy to fault the tourists for their foolish purchase decisions. But a close look offers a kinder view. These were people who had been brought up on the rule “You get what you pay for” and who had seen that rule borne out over and over in their lives. Before long, they had translated the rule to mean “expensive = good.” The “expensive = good” stereotype had worked quite well for them in the past, since normally the price of an item increases along with its worth; a higher price typically reflects higher quality. So when they found themselves in the position of wanting good turquoise jewelry without much knowledge of turquoise, they understandably relied on the old standby feature of cost to determine the jewelry’s merits.

This is BS.

If you want your customers to take you seriously, seriously solve their pain. One example is charging $1 USD for a song, which at least one company has done and made billions.

Making an offering "expensive" in and of itself neither conveys legitimacy nor value. It only begs potential customers to contemplate the cost/value proposition more critically.

And by having the $49 tier present, the company can advertise that their pricing "starts at $49".

Also, there are probably some people whose purchase authority is limited to $1,000/yr.

The ultimate goal with a SaaS is to "land and expand" where you can hook somebody at a cheap point, withhold some valuable features or add hard limits somewhere, and just wait for customers to self-select: the people that use your thing more hit upgrade walls faster and upgrade further and pay you more over time.

Whether or not the ideal inital price is $49 or not, that takes time to determine, but one thing about not offering anything to the lower-end is that you only invite better competition. At $49, you don't give much room for somebody to compete with you on price and still run a profitable business. At $99, attack of the clones. Frankly, after being on HN twice in a week, I am expecting the clone Banner<Noun>s any day now.