It can backfire when the new price point bumps it into a different category of decision making, though. For many, a $20/month product is an easy decision but $100/month price tag bumps it to a point where it becomes a more complicated decision making process. If you're not careful you can easily raise prices so much that people decide to jump to a more full-featured competitor product.
Projects like this one that are personal/side projects have an additional risk of raising prices: If the product becomes expensive, many people are going to notice that it appears to be highly profitable while also being within the realm of what a single person or small team can produce. Competition starts appearing quickly and you're back to cutting prices to stay relevant.
Finally, higher prices come with higher expectations from your customers. Whereas previously they might shrug off a slow response to a customer support request at $20/month, their $100/month service might lead them to expect more customer support, not less.
There are several indie SaaS companies that get posted on HN from time to time that take the opposite approach: They offer a low price but they're up front about what to expect. They don't try to pretend that you're getting world-class reliability, uptime, or support, but they do commit to offering a good service at a fair price. They could raise prices to match competitors, but now they're playing a very different game with very different expectations.
> Finally, higher prices come with higher expectations from your customers. Whereas previously they might shrug off a slow response to a customer support request at $20/month, their $100/month service might lead them to expect more customer support, not less.
This is potentially true, but there's other effects here too:
- When I was doing software and hardware consulting work, the people who paid the most were also the happiest customers. It felt paradoxical for a while until I really let it sink in and stew. Most of the high paying customers would just kind of... take my work products, say "yup, this meets the requirements we agreed to", and run with it. The ones who were paying the least were the most likely to pull the classic "well... is what we agreed to but... maybe you could move that button over to the other side and I've got this other feature idea that we didn't talk about, oh and I don't like how this works... it might be what we agreed to but it's not how it worked in my mind..."
- It sounds like OPs customers took that to the extreme with "customers" who hadn't paid anything at all yet being demanding.
- By going up-market, you can lose customers for sure but it might be worth it anyway. Given the support burden it sounds like 1/5 of the customers at 5x price would be a net win. Especially if it tracks my experience consulting where the remaining high paying customers are happier about your product in general. If you still maintain the same per-customer support burden or even have it climb some it could end up being less work overall.
Drawing on my experience: perhaps the high-paying customers are being represented by dedicated buyers/executives who do not actually use the product themselves day-to-day. So they're happy as long as it _can_ perform its tasks, even if it's slow or clunky to use - they're paying the workers for 40 hours/week regardless, after all.
Meanwhile, the more tight spenders are more likely to be small businesses where the person making the purchase is also a regular user, and any UX flaws will drive him mad every day.
If features don't work as advertised, I will absolutely make no distinction between a 500$ or 1$ product, and will demand a fix. But I will more likely have more patient if the service is cheap, before migrating away.
And then, if your customers are businesses, do you think the employees really care how much the product costs? No.
My worst customers were the ones that ask for discounts, or are otherwise looking for a deal. My theory is that people that happily fork out for an expensive product have already seen the value.
There are exceptions, but a lot of business owners see the same pattern.
I get where you're coming from, but it's hardly surprising that a business's favourite customers are those who are happy to get fleeced.
And as a customer, if you're not already a subject-matter expert, you have no idea which business is trying to fleece you or not unless you price compare and try for discounts everywhere.
I don't want a customer who thinks that paying asking price for a product is me taking advantage of them.
I don't want a customer that thinks I am starting the relationship as an adversary rather than a partner in a mutually beneficial transaction.
I want customers that are happy. I can't make you happy if you already think what I am selling is not worth what I'm charging. We will both be happier if you find a different supplier.
The kind of people that look for an angle on every transaction are the ones that will be the biggest pain in your ass while asking for more than everyone else. That's the generally held wisdom for a reason. It isn't always true, but its true often enough that it normally doesn't pay to play the game.
> And as a customer, if you're not already a subject-matter expert, you have no idea which business is trying to fleece you or not unless you price compare and try for discounts everywhere.
Yes, be a savvy consumer. But also realize that if you go around looking for the lowest price and asking for discounts, you will end up with the cheapest product or service, not necessarily the best value.
No, that's explicitly not what I'm saying.
Of course, you, as an honest business that stands behind their work, prefers customer who are happy to pay your asking price while not being a pain in the ass. But that's going to be exactly the same stance as your competitor who spends half the effort on their product and double the effort on marketing. They really don't want savvy customers to ask many questions, because they don't have a product to back it up.
I said that people that ask for discounts or generally fixate on the price are, in my and many other’s experience, bad customers.
I’m happy to sit and talk about the service, the features, etc. I’m even happy to discuss pricing if there is a circumstance that merits it like a bulk deal. But a huge red flag is when people focus on price exclusively.
It doesn’t make sense as an end consumer, but B2B lens it makes sense.
If a business can afford the higher price tag, they most likely would rather have a hands off approach for the problem they’re trying to solve (in a service based business)
Many of our mid and lower tier customers want everything drawn out and explained, and give feedback at every step. Our higher tier customers pay faster, request minimal input (outside of times we ask for it), and generally much easier to work with
Yes, but it should be noted that the price is acting as a filter to exclude a subset of customers, reducing overall customer count.
Obviously it's easier to have 100 customers paying $100/month than to have 1000 customers paying $10/month, but finding those tradeoff points can be hard. It takes time for market signals to settle out and customers to churn away due to high prices.
I've been a customer of several SaaS products that embraced "raise your prices" so much that they slowly became a second-choice option in the market. It takes a long time for people and websites to stop recommending a product as the first-choice option after a price change, so these signals don't appear immediately.
And 1 problem client, even if they pay 80% of our higher tier pricing, can lead to major headaches across the board.
Something we learned (and are continually learning) is vetting clients as much as they vet us, versus just trying to get the sale.
Funny enough, being more stern on pricing, what we offer, and in general our boundaries of what we cover has led to higher satisfaction from clients and our team.
I hate to put you on blast but this is exactly why people charge $100/mo instead of $20/mo. They do not want the customers who feel (sorry for the term) "entitled" to a heroic level of features, support, polish, etc. They want people who have a hair-on-fire emergency that is so awful that they'd gladly pay $1000/mo for it, and are thankful that your software - klunky as it is - is giving them $900/mo of free value.
Why would the word/ term "entitled", need an apology?
Part of the reason that political discourse is currently so polarised and pushes us towards bad outcomes in our societies (thinking particularly of US and UK here, but I'm sure it applies elsewhere), like the recent riots in the UK, is that so much of it is bad faith, dishonest, assumes the worst of others, casually alienates to score points, etc.
Lots of people feel entitled to free, clean, potable tap water. Lots more people don’t because they live somewhere without it.
There is nothing wrong with saying, “our product is not for people entitled to X”. There is no judgement there, let alone anything negative.