Ask HN: B2B SaaS Pricing | Hacker News Reader

Ask HN: B2B SaaS Pricing

11 pointsequilibrium7 comments

We offer a document management system tailored for the construction industry.

We've approached a number of Contractors in the Middle East, mainly Dubai and Qatar. We’re getting a lot of positive feedback on the product from these prospective clients. However, we're having difficulty pricing our service. Some contractors are gladly willing to pay anywhere between $10,000 to $15,000 annually for an unlimited number of projects and users. That's usually the big contractors who are turning over $300+ million annually. However, potential deals start to fall through when targeting the smaller contractors.

Ideally, if a client purchases the software, we'd like them to manage all their projects with it. So tiering based on the number of projects a potential client has is not really an option. Our problem would pretty much boil down to tiering the pricing so as to accommodate for contractors of all sizes. And the first thing that would come to mind would be to do that based on storage space.

Can anyone point me in the right direction.

See if you can find some subtle differences between the larger companies and the smaller ones. Those differences can be used as features to implement a tiered payment system.

For example, my company services both small, boutique design firms as well as multi-million dollar ad agencies. Fundamentally, they both use our core services the same, so we've kept that as our standard value proposition across the tiers regardless of price. However, we noticed the agencies in particular wanted the ability for multiple users of the company to be able to log into the system, to be able to internally share notes with one another, and a few other things that, while are nice-to-have for the smaller firms, were not priorities for them. In turn, we threw all those features into an Enterprise plan and could justify charging a larger monthly/yearly fee for our services for the ad agencies.

The major downside of this strategy is if you roll out your tiered pricing from the beginning with these extra features listed, be sure you aren't deceiving your customers and that you have the features built.

For early-stage startups, it's not recommended to build much outside the core value proposition, so an alternative can be advertise your features as "coming soon" and offer discounts to your early enterprise clients.

Pricing is hard. Price is the market reflecting back at you what your product is worth. It's your sales, marketing, branding, feature set, usability, support, relationship with the client, all baked into a single number. As such, no one can tell you what the right price is. For example, lowering your price will not necessarily increase your unit sales, or make an initial sale easier. The answer will always be, "it depends."

I've heard that it's common knowledge that B2B SaaS pricing trends away from five figures. Five figures is believed to be too high to sell itself, and too low to support a high touch sale. But then again, one of the SaaS companies I co-founded sells deployments for $20k setup, plus $20k per year.

I know nothing about your product or your market, but price is synonymous with value and/or cost. Unless you're selling backup services or bandwidth, I doubt that "GBs" is the key metric. Make your pricing reflect increasing value in terms that your customer is most likely to understand. What is the thing about your product which provides increasing (variable) value?

If not number of projects, then perhaps number of users?

Couple of ideas:

* offer levels of support along with the pricing tiers - larger companies sometimes require SLAs that require having someone they can call up if something goes wrong. You can charge for this.

* charge based on number of users - bigger companies have more users

It's difficult to arrive at a price point that works for both small and large companies. You need to choose whether you want more customers who pay less or fewer customers who want to pay more. It will boil down to how high-touch your sales process is. People aren't going to order a 5-digit service online in a low touch sales model.

Some business I know start-off with a low touch model (primarily because hiring full-time sales folk(s) is expensive) and then gradually raise their rates and go high-touch.

Another option you may want to consider is to create 2 different brands. One for large customers and one for smaller ones. It could be 2 different websites but with the same backend system.

Usually large customers don't like to use the same tools as smaller ones, and smaller ones may feel your system is too "high end" if they'll see an option with a 10K pricing tag. You can create a smaller brand with only email support and charge less.

Hi,

a company I'm invested in encountered the same problem for a similar product (generating daily reports for the construction industry). If you like to discuss that, shoot me an email: thorsten (at) sixdoors (dot) com

Take mongohq.com for instance: they range from free all the way up to $6545/m, and "call us for more"...

maybe do what other enterprise-y websites do? Don't show the price, get a phone/face-2-face discussion and evaluate the price depending on the customer?

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