Ask HN: Handling price objections correctly?

"How do I respond to these price objectors who demand a whopping 86% in discount,"

Say no…

" yet interestingly enough they are the MOST demanding when it comes to support and feature requests."

… because of this ;-) If you have happy customers at the higher price point I'd be investing my time trying to find more folk like those — unless you think that a lower price point is going to give you a much, much larger market.

" would I tell them that they might not be a good fit in a polite way?"

I dunno what & how you're selling — so hard to say. Me — I'd lean towards just saying "Sorry, no. We have a standard pricing structure for all clients." If you're offering just monthly pricing maybe offer them an annual plan with 12months for 11months of money. That would at least help cashflow.

> I dunno what & how you're selling

Yeah - link to it!

Are you getting some customers? If so, I'd concentrate on them and finding others like them and simply forget the cheap ones.

> price objectors who demand a whopping 86% in discount, yet interestingly enough they are the MOST demanding when it comes to support and feature requests.

patio11 has written about the same thing: the people who are cheapest are often the biggest PITA in terms of "do it now! I want to talk on the phone right away! It doesn't do this - it sucks!".

> Are you getting some customers?

Yes and they are quite happy based on our calls. They even said our price is good. However, they were still demanding. My biggest shock was when they said they were pitching to people they know.

> patio11 has written about the same thing

I vaguely remember it...would love to read that again.

I'd concentrate on improving the product and listening to those people who are happily paying for it.

> My biggest shock was when they said they were pitching to people they know.

I'm not clear what that means, exactly.

basically they liked it so much they were introducing other people to it (their words).

the people who want the deep discount also seem to like the software.

both were quite demanding although the people who want deep discount seems to be way more.

> basically they liked it so much they were introducing other people to it (their words).

That's awesome! Definitely concentrate on them and what they'd like to see improved.

> the people who want the deep discount also seem to like the software.

Most people like Ferraris, too, even if they don't buy them.

I thought about it hard today. It was tempting to give them a discount and offer a crappier version with crappier support but ultimately decided against it.

First time I said no

You could, for those customers, give the software away for free but charge for each support request?

HN has some advice about "firing customers".

http://blog.aaronklein.com/post/59393862062/firing-a-custome...

https://news.ycombinator.com/item?id=4045251

https://news.ycombinator.com/item?id=3131372

https://www.groovehq.com/support/how-to-fire-a-bad-customer

You could, for those customers, give the software away for free but charge for each support request?

This cannibalizes the primary value you're creating and you're going to get people arguing about every single support request.

If a customer thinks they can get professional work done for $2 an hour you say "Interesting. I wish you the best of luck in your endeavors." and write them out of your life.

As you've discovered, the cheap customers aren't worth the hassle - they cost you time you could better spend on other things.

Find a competitor in your space and suggest them to you problem customers.

There are leads and there are prospects. A lead is anyone who might possibly become a customer. A prospect is someone who has been both qualified and expressed a reasonable interest in becoming a customer.

You want good customers. People who insist on not paying or only paying pennies on the dollar aren't good customers. Your price is a qualifying tool. It weeds out those who are ok if you go bust.

"Give me a good price and I'll tell my friends about you" is a red flag. People don't praise what they don't value to friends...control the message; you don't want more people like your bad customer.

Spend energy closing good prospects. Thank loose meat leads for their time and ask if they'd like to get your company's newsletter. Touch base quarterly or on some other periodically appropriate cadence.

Good luck.

How do I respond to these price objectors who demand a whopping 86% in discount, yet interestingly enough they are the MOST demanding when it comes to support and feature requests.

Don't.

You have a product. You've set the price. Not everyone has to like it, and as long as you're meeting your bottom line, you've no obligation to come down to the lowest bidder if that bid isn't worth it.

Once you start letting those kinds of customers drag down your scale, you'll go broke.

A lot of the advice in this thread is good, so I'll stick to one point.

Let me tell you what a qualified lead is :)

A qualified lead is a potential customer who fits all of these criteria:

1. Is willing to use your service or your product at the non-negotiable price you set for it,

2. Has long term financial resources such that #1 is a stable and basically unchanging reality each month,

3. Understands that your product or service is premium, and while might not ultimately choose you, can be persuaded that you are worth your price,

4. Is willing to negotiate on project scope (if you're a consultant) or enterprise plan terms (if you're a SaaS) instead of price,

5. Will not spend more resources in customer support that they are paying you (or anywhere close to it),

6. Understands your price as a percentage of the value you are either saving them or giving them, and

7. Obviously, has a need for what you're offering.

Now, that's a qualified lead. How to find them is a different story, but you should not actively pursue a customer unless they fit all these criteria.

Understand that your price includes in the built-in cost of pursuing customers and making sales, be that as an individual consultant or SaaS company. You can't waste time with bad leads.

Once you find a single good lead, pursue referrals from that customer, because you've found a potential wellspring of good customers. You also should change the channels through which you're looking for leads.

Someone coming back saying that they can get $2/hr for what you're offering is not a qualified lead. That's...laughably opposite. My grandmother would offer to pay me more for a completely irrelevent service setting up her blog.

Let me give you an example of myself: I primarily cater to startups in the series A funding category - newly funded enough to be able to pay for security, but small enough that they haven't done so yet. Are companies outside this range prospective clients? Sure. Are they qualified leads? No. That's my successful market, the one I've determined my services are tailored to. So I'll talk with a company that approaches me but not burn time with them, and only actively pursue my qualified leads.

Look at what you're offering, determine who your qualified leads are, and reach out to them. Make an offer. Be sincere with a decision maker and make a pitch for your services.

Finally, without knowing what your SaaS is, I can't say if the market is responding that you need to drop your prices, but if it is helpful as you claim, it's most likely an issue of approaching the wrong customers. I'd like to believe you entered this SaaS business understanding the market for it and an appropriate price point - if not, you need to analyze that immediately. That said...a SaaS needs to be sustainable, and about the lowest I could imagine one would be profitable at scale is $19 a month (maybe $10 for the basic price tier).

Read a lot of patio11's work on this. Don't use a gut feeling for price, have a rational motivation for the number you pitch.

Would having a form that filters out the bad ones make sense here?

Like I'm even thinking of getting rid of signing up form for a 30-day trial. It seems that people make up their minds within a day or two once they see it working.

I have a very good idea of what the target market which would be happy and I think from all the answers here this makes the most sense.

It's hard to tell if you should get rid of a free trial without knowing more about your SaaS, but if you can get away with a shorter period you definitely should. Use the shortest period of time that it takes for your customer to get value from you business.

You should A/B test these things.