Best pricing strategy for SaaS?
I'm building an editable 3D & flat illustration library. The idea is, users can change the color of a 3D or flat illustration and download it directly from the browser (PNG/SVG).
Users can use these in their site, blog thumbnail, or app.
I'm very close to the launch but not sure about the pricing yet.
Option A: I can put a monthly price, but churn would be higher as people would just download as many as they possibly can and unsubscribe. (e.g. $12 per month)
Option B: Just yearly subscription. (e.g. $69/year)
Option C: The credit system. Get 100 credit for $50. 1 credit = 1 asset.
You can check snippets of my product here: https://makesumo.com
Please let me know your thoughts. This is my first SaaS product.
P.S. There would be freebies on the site as well.
Hey @ishfillet, congrats on launching your first SaaS 🥳
Here's what we know:
My suggestion:
The pricing structure does 2 things:
Hope this helps!
I've also written extensively about pricing models & strategies for SaaS businesses. Hope it proves useful to you and others.
@hipreetam93 Thanks a lot! Your article is also brilliant! I just realized and I read your Shopify biz articles before - love your transparency and writing style xD
Glad you enjoyed the articles :)
For others who want to learn more, the tactic illustrated by Hipreetam93 is based on a psychological effect called price anchoring.
But the point AlexHillman made in-thread about clearly identifying who your target customer is, is also very important.
If you don’t do your home work by identifying a clear set of target customers, you’ll end up with a high customer churn.
Looks sharp!
Who's your main audience for this? Is it business owners to use for their own site, or agencies/consultants who build marketing sites for clients? Do you have advantages for reaching one or the other?
Anyone can use these really. You can use these in your side project, startup, or on blog posts in your enterprise site.
I made those with categories in mind ( e.g. you can search for “data” or “marketing” and relevant assets would appear)
Sure anyone can but different positioning and pricing attracts different audiences.
For example: a biz owner or startup designer employee has a specific set of goals and like you suggest is likely to churn when they are done getting the assets they need for their own site.
But someone who works at an agency will have new sites to design every month, with new clients and new projects.
Diff customers, diff positioning, diff pricing strategy!
True! What would be your pricing for this product?
It depends on who you're pricing it for, that's why I asked 😄
The other thing I would consider: one time purchases are MUCH easier to make than subscriptions. I totally understand the desire for subscription revenue, but the same customer (of nearly any kind) is more likely to pull out a card and pay if it's a one time purchases than a subscription. Counterintuitively that's even if the one time purchase price is much higher than the subscription!
So if you don't have an audience identified for this yet and are just aiming to get it out the door, I would choose the simplest model to make sales which is (again with no other data) most likely to be the option that allows for one time purchases.
I don’t have customer data yet. But yeah, I was mostly leaning towards yearly subscription.
My point in that last message is that the goal is to start making sales and have some real customer data, the psychological barrier to being willing to save a card to be charged again in the future is MUCH higher, even at a lower price point.
Eg the same person who impulse buys almost anything with biz value under $99 one time purchase will hesitate on a $99/year or even a $10/mo plan just because of the nature of subscriptions.
Psychology is weird. 😂 So I would reconsider that subscription model for launch.
If you really want to try launching with subscriptions, I would strongly consider angling your marketing specially for agencies or another kind of client who is going to benefit from regular access to the library.
If the only reason you're doing annual is because monthly is gonna churn, remember that churn is a symptom not a cause.
Hey I’m not OP but just wanted to let you know this thread of comments you made was super helpful and I’m sure there are lots of lurkers benefiting from it. Thanks
😁🙏
There would be lotta other tools later on, in this project. That’s why I can’t go for one time payment. You’re spot on with the psychological aspect of pricing haha
congrats and good luck @ishfillet ✌️
check out this great thread https://twitter.com/lennysan/status/1321114051737313280
i tried looking first... but, i didn't see anyone post this:
https://stripe.com/atlas/guides/business-of-saas
... it's like the best resources i've found in the last year that has a very, very good high-level.
good design too, with chapters on the left. also, the author, Patrick, is super-available via Twitter: https://twitter.com/patio11
Great stuff! Just bookmarked.
sure!
You raised the concern about people scraping assets and then cancelling.
Have you considered a tiered structure that starts off with rate limited download capabilities at the lowest subscription levels and gradually increases privileges to match the nature and volume of what a B2B relationship might require for a production dev house?
I'm interested in hearing what you think.
I hope that's helps :)
⛵
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Yeah that's the best option for now. Even if people scrap, they'd miss out on the editing part as MakeSumo would provide options to customize colors. We will add new resources every month. Would be shipping other tools as well. But for now, thinking about correct pricing.
Hey @ishfillet
You can go by Option C.
Pay as you use is the only good option where you will able to get a good amount of users and quality feedback that will be helpful for you to improvise.
SaaS subscription shift over a last few years are facing some challenges. If your product is really good and you want expert guidence to take your saas product to the next level.
Check our website for more information.
www.saasmantra.com
we will take care of your growth
and Congo on launching your first SaaS product.
Is this similar to AppSumo?
Nope We are not similar to AppSUMO
Our approach is completely different. We will help you to run a LTD in our marketplace and will guide you even after the LTD ends. You can see some of the testimonials by other saas founders who parntered with us
Checkout this video
https://www.youtube.com/watch?v=elY-6DW7Tko&%3Bfeature=youtu.be
Interesting, I will check these out
Maybe along with the monthly and yearly pricing you can also have a special pricing tier 1. for students ( whose ID you can collect and also focus on these users for your referral programs, email blast to these users - share with friends and earn credits or something along those lines )
2. for small businesses and startups - have a pricing tier which you can use to focus on design agencies or startups, maybe throw in a custom commission for these users ( this could be one way for you to constantly upsell to your users and if some of them are businesses with bigger budgets they might soon sign you up for contracts )
Custom Work for your top paying users, Focused pricing for different user profiles help you align more with your potential customers.
Share with friends and get credit is something I have in mind
Hey! Awesome idea and something that resonates with me. I'm a UX/UI designer and I'm always on the lookout for things like this.
My advice would be to offer a free plan with a smaller res download (but still high enough to be OK - maybe even without requiring registration), a premium plan which allows you to download X monthly illustrations as PNG/SVG and high res, and an 'unlimited' plan to give the user unlimited downloads.
I'm not a fan of credits - it feels quite old school and it can get confusing. As a user, I would use the free plan and if I liked your product, I'd have no problem upgrading. I don't think I'd keep buying credits though, unless the monthly price is high versus price for credits.
Great idea!
Thanks a lot. I wouldn’t necessarily put credits. It was just one of the options. There would be plenty of freebies on the site. Pngs would be free for flat illustrations. SVGs would be all paid or under subscription. As for 3D, might give away one or two set for free, rest paid. Just confused about pricing part mostly!
Yep I understand - in my opinion I'd have 3 tiers:
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I pay for https://thenounproject.com/ monthly, even though I'm not always downloading. I have lots of difference projects so I never need to download at once. The only people who would need to download at once are those who just work on 1 design (e.g. founder), but even then, if they needed a bulk load of images, they would need to pay for the unlimited plan and then churn. It's still $9.99 and it gives you exposure (e.g. if someone asks where they created their assets).
Either way, this is very marketable!
Thanks for the feedback. Making product is fun - the business side of it makes the indiehacking challenging
For sure!
@pips Just checked your product. Landing is EPIC. Our designing taste kinda matches. See this theme I designed with Circular font:
https://themeforest.net/item/webify-allinone-responsive-wordpress-theme/23850621
My other themes here:
https://themeforest.net/user/theme_bubble/portfolio
Focusing more on SaaS these days haha
Thanks! That is awesome, you have some very lovely themes and super impressive sales. You should do a writeup about succeeding on themeforest!
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What product are you building btw?
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Is there enough market demand for it?
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🙏
Thanks for your the great feedback! So you think credit system is better than yearly flat price?
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There’s no free competitor in 3D, even if there were, they wouldn’t provide edit option in browser. My site will have freebies as well. Flat illustrations would probably be Free pngs and paid SVGs.
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