Should I double my prices?
TL;DR
As a site owner, indiehacker or corporate buyer would you sign up for my API at twice it's current prices? Link at end of post.
I run a Geolocation API, the pricing of which has been the biggest pain in running my first saas.
I think I might be leaving money on the table but I don't want to be too expensive, because I'm targeting startups and small business.
I'm sure most of you here are site owners, please let me know whether you'd still sign up for my product if it were priced at twice the prices at https://ipdata.co/pricing.html
Thanks.
Hey Jonathan!
I've done a bit of work using geolocation for a few different apps and I wanted to offer you a bit of feedback. Being a developer/hacker, I know that I'm always looking for free resources when building something that needs geolocation. From that quest I've found one that I like located at https://ip.zxq.co
They clearly state how they are different than other free geolocation services on their github page at github.com/thehowl/ip.zxq.co
The reason why I say this is because personally, I wouldn't pay for what I know I can get for free. However, I noticed that some of the fields that you return in your API example are not included with the free resource I mentioned above. If you made it more clear as to how your product differs from some of these other products, and used that as your value prop or call to action at the top of the page, I would be more likely to buy. By using the headline of "Free IP Geolocation API" and then charging for the service, I'm going to compare your offerings with other free services.
For example, your API returns the Organization's name. I've personally done searches for "How to get Organization from IP Address". I didn't figure out how to make that happen with the tools I have found. Take what you have that's different and leverage it! If I found your site when I was looking for this feature, I would be highly likely to pay you 3x for a service that gives me what I want.
Thanks for the amazing feedback!
I do offer a number of extra fields i.e. Currency data, Flag data, Calling Code data,Tor exit node data even an
is_eufield to identify EU users for GDPR compliance. I really have tried to do as much work for the developer as possible.I'm going to test out different titles and copy to see how I can better showcase the extra stuff the API has.
Thanks a lot! Also, if you'd like to try out Ipdata for free on a future project just let me know :)
Crazy feature request: return a list of contacts - first name, last name, email address, job title - for a given IP address. Specifically for businesses. Our sales guys track everyone who visit our sales site. If we call or email an organization, over the next 24 hours we monitor to see if they have visited our site - making them a better lead - but for IPs that visit our site that we don't recognize we can't follow up with them easily.
I suppose to do this, you'd have to get the address and business name, then look that up on a third party service to find high-level individuals working at that specific location.
I think this would be worth a lot of sales orgs.
That might be technically doable, maybe with a yellow pages API or Linkedin, but I'm not sure about the ethics of contacting someone who hasn't voluntarily agreed to be contacted and submitted their contact info? Is there a way you opt them in?
Well, most sales reach outs in my experience aren't requested. As a VP of Engineering with my name and contact info out there, I get contacted on the daily from sales orgs trying to sell me some QA service, or faster deployment times, better monitoring, etc.
BTW, I think this would be a premium service, you'd charge lots more for.
I was also thinking LinkedIn, I'm not sure what other APIs you might be able to leverage.
If I built this, would you pay for it?
Good question. I personally don't have a need for it, but I will check with my company's sales team next week and get back to you.
Hey Mike, I'm releasing an early version of this soon. Please let me know how I can reach you for early access or email me at jonathan@ipdata.co.
I actually found that Clearbit have a similar product (Clearbit Reveal) for which they charge $1000 a month. Which is just insane! I'd be able to provide the same service at a fraction of their pricing.
Jonathan, I spoke to the sales guys here, they already have a product that does this, its functionality packaged into a larger sales platform. Sorry.
Thanks for getting back to me. That's okay at least now I know there's need for a product like this. Thanks! :)
Sounds good, jonathan@ipdata.co
There's also the possibility that some users would be behind a vpn or maybe browsing from home or on phone and their IP would then return their ISP or VPN provider etc
I think your rates are pretty low. The company data seems pretty valuable to me (assuming you have good coverage). For the lowest tier plan which is where I would start I couldn't care less whether it's $10 or $30. Presumably the value in sales (which is the main use case I can think of), would be a lot higher. It would be nice to be able to test it for free (for like 100 hits or something, just to see how good/useful the data is) though.
I think your comment is the tipping point, everyone else pretty much agrees that if there's value they'd pay a lot lot more. Thanks!
Also there's a 1500 requests a day free tier.
Glad that helped, and I look forward to trying out the service!
Just a note on the pricing page -- it's a bit overwhelming with so many options. Considering the only variable is really the request limit, maybe consider a slider with a few prefined "most popular" options.
In regard to raising prices, how many paying customers do you currently have? Have you tried reaching out to them about pricing or at least asked them about their current experience and how your geolocation API is making their life easier?
A slider would be a great idea, how would you feel about a pay as you go kind of subscription?
I've gotten a lot of positive feedback from users during informal exchanges. I think a good idea might be to send out a small survey with a perk.
I think a pay as you go with breakpoints would attract me.
There is not always a direct correlation between requests and sales so something that works like internet SMS bundles might be good.
A free tier of x requests.
Between x and y charged at $some-cents per request.
Between y and z chaged at $fewer-cents per request.
And so on up to your cheapest per request price.
So, without having thought about the actual bands or prices per band in the slightest, something like :
0 - 500 requests per month = free
501 - 1,000 requests per month = $0.05 per request
1,001 - 5,000 requests per month = $0.04 per request
5,000 - 10,000 requests oer month = $0.03 per request
10,000+ requests per month = fixed monthly price
The idea is that you don't frighten people away with a potentially unbounded monthly cost which might not translate into sales but you also reward your volume users with a fixed, certain price.
As for the pricing page, divide it into two. Ask the question: are you looking for fixed price or variable pricing (or other strategy if you have one)? Depending on the answer, show only the relevant pricing options. I can always choose to look at the other options if I want to.
That way, I understand clearly the various pricing strategies and I can navigate between a less intimidating list of options. So Top Level Strategies first; Lower Level Tactics second.
And you're right not to be greedy. I call it the "McDonalds Principle". McDonalds sell very cheap food. Ignore the fact that the actual market for their type of food is declining and look at the pricing model. McDonalds sell food very cheaply but they sell a lot of it. The restaurant next door sells food at three times the price. It may even be better food but they don't sell the same volume, don't make the same revenue and definitely don't make as much absolute profit.
For the sort of service you are offering, you need to present me with a gourmet restaurant menu (all the flags and fields you mentioned in your earlier replies) but at McDonalds prices. Depending on your infrastructure, your costs are likely to be fairly fixed anyway so take little bits from lots of people to make your money.
Thanks, I think you describe what postmark do with their pricing https://postmarkapp.com/pricing.html which is something I've always wanted to emulate. Thanks a lot!
Just had a look. Yes - that's exactly what I mean.
By the way, from_30_to_greatness has it right about pricing. You sort of want there to be a "right" value. You want to take your costs, add a "fair margin" and charge that.
Value doesn't work like that.
Value is a perception. It's all about perception. Once you get your head around that, pricing becomes less a matter of inner moral turmoil and more a practical matter of finding the "sweet spot" for your product.
haha , "inner moral turmoil", too true!
Coincidentally, I received an email about an hour ago from a company called Hermes. It is a courier company here in the UK and entered the market offering the cheapest rates around.
Then, having acquired market share, they got greedy and raised their prices every couple of months for two straight years. We stopped using them both because we were no longer selling on eBay (also greedy) and because they became too expensive.
Others must have come to the same conclusion because we don't see Hermes any more when we buy online.
This morning's email? An announcement that Hermes is dropping its prices! They are obviously charging more than the market will bear, especially for small packets.
A pretty great example of the free market at work :). I can't help thinking they could've picked up on it sooner.
If you're looking to do this style of usage-based pricing, it might make more sense to track your customer's usage instead of asking for survey responses. You can do this with Cheddar's API for free. (You have to pay to charge customers, but you can track the usage without charging users for free). Full disclosure: I work there.
Fixed https://postmarkapp.com/pricing
The rates seem low, I would think you can double them.
Feels like too many options to me. I bet you could get it down to 3.
Consider grand-fathering in all your existing clients, try a price increase for new clients only for a month and see how it works out.
Sure thing, thanks for responding! I'm going to test this over February.
off-topic, but I'm curious: with which tech stack did you build the API? I'm about to build one myself and can't really decide what's the best/fastest way forward.
We're serverless all the way, well with a few running workers on nodes.
I'd really recommend using API Gateway + Lambda + Cognito which I've been meaning to work with.
But that I think pretty much gives you everything you need.
And S3+Cloudfront for hosting your static sites.
Thanks for that! I was looking into Amazon but I read they are using their own NoSQL database SimpleDB where you can only fetch 1MB of data at a time. That doesn't sound so good compared to MongoDB for example.
I'm a newbie on that front so I may be wrong. Correct me if so :-)
Amazon offers a variety of Nosql and sql dbs. You could checkout Dynamodb which you can use as a key value store or even to store JSON documents like you would with mongodb.
You might want to start by looking at the serverless framework or doing something with lambda first. Or maybe just start off with a simple node or flask server for your API.
May end up at the 1/2 the pricing as https://ipinfo.io/pricing (once you normalize the rates)
honestly, i think +5$ is not a big deal financially for a startup (lowest plan) but getting something that others don't do - ex: country flag icon (good one) is what will drive usage and allow you to increase rates with impunity :)
Also what's the deal with annual plan not being less than monthly * 12? Perhaps the annual plan should be less than that to entice users to switch?
Thanks! Right now all the prices are halved as an ongoing test, if I offered a discount on annual it'd come to about 60% off on annual i.e. 50% current offer + 10% standard annual.
I've gotten some encouraging feedback so I'm probably going to steel myself and make the switch.
I like to run Google Consumer Surveys to figure that out. Like for $30 you can ask 100 business owners what they think your product (based on a short description) should be priced at.
I didn't know this existed! Thanks!
Yes
If its a reasonable enough pain being solved. Yeah, I'd pay triple.
It all depends on the amount of pain im feeling and how your software solves it.
If the pain is worth $1,500/mo to me. I'd happily pay it. I think you're overthinking the price thing.
I probably am. I just really hate how arbitrary it is.
From an economics standpoint it's not really arbitrary, it is simply supply and demand. All things being equal a change in price equals a change in quantity demanded. It's essentially an optimization problem of maximising revenue while minimizing customers. The tricky part for you is you don't know where aboutss on the demand curve ur current price sits. It's why you sometimes see 'contact for pricing ' so they can keep ramping up the price til they find that sweet spot.
It really is just firing in the dark. I priced mine based on what I felt was a decent offer and compared to competitors. ($29, $49, $79)
Once I get stable and feel like I'm making great money and dont want the headache of extra customers, i'll likely raise the prices. If they join, they join. If not, eh. Basecamp style.
Try it. Put your price up. If revenue goes up great, if not, put it back down.
I've doubled my app prices twice and have no regrets. Less paying users but they pay more, my $ earned went up. I think I have the sweet spot now. But who knows, I haven't tried more... maybe I should put them up again...
How are you charging users? Just a one-time fee for the app?
I have a dozen apps and products, I monetise in all the ways! In the apps where I doubled the prices (twice) they were pay up front, and also I also sell app bundles where I also doubled the price. I monetise other apps by giving them away for free with advertising and charging with in app purchases for extra features. I find there is a general hatred for subscription services and I haven't succumbed to having any features that are pay per month yet.
Ok, that makes sense--I thought you were changing pricing month-to-month for a subscription business at first. Thanks!
And fewer, higher-paying customers mean your Lambdas cost less and less support. Win win.
Thanks for responding! I'm reviewing my prices today!