Would Multi Level Marketing (MLM) work for pricing your SaaS?
Would Multi Level Marketing (MLM) work for pricing your SaaS?
So, I had a random idea the other evening... MLM pricing for your SaaS, like a real time referral bonus, on steroids.
Such that, and as an example, one would pay £30 per month for a service. When they refer somebody to the service they get for example 5% off their monthly price as long as the referred person is a paying customer.
There could be a cap on the discount so that a user still ends up paying some money... or maybe they shouldn't. If they are causing mega referrals then perhaps they should be getting the product for free?
Could be an interesting concept on modern and social pricing? What do you think?
Then, on the back of that one could build a MLM pricing engine for SaaS.
Has this been done? Obviously Ponzi schemes are illegal and MLM is sometimes referred to a Ponzi scheme. I am not advocating any illegal activity and if this model would constitute an illegal scheme, then please say so.
I would advise you to go the route of "$5 off for you, $5 for a friend you share a referral code", like Uber/Lyft/etc do, rather than looking at MLMs as a positive model.
MLMs are widely regarded as spammy and are known to ruin people's relationships. You want people to feel excited about using your product and to promote it, not to bully their friends into using it and continuing to use it. It would create an unhealthy dynamic between your customer and the person they recruited, making the person recruited likely resentful and not eager to share the product. I would strongly advise you to avoid looking at MLMs except as an example of what NOT to do.
Mutual referrals ($5 for me, $5 for you), however, have the positive effect you're trying to create. People happily share their referral codes and people know to look for them. Just increase your prices by whatever the amount of the referral is.
I would be interested to know whether anyone has built a Stripe integration for referrals. We might consider using such a product.
What you describe sounds like a simple referral affiliate program.
What distinguishes MLM is that you typically have to pay a lot up front, and you get a percentage of everyone referred below you. So you you refer Alice and she refers Bob and then Bob refers Carol, you get a percentage from Alice, Bob, and Carol.
The emphasis is placed on referring new members to get the large up front fee over customers getting value out of the product.
Wealthfront does exactly this. Every time you refer someone who deposits money, you get more of your funds managed for free. Here's my referral link if you want to try out Wealthfront lol :) https://wlth.fr/28IoiZD
This comment was deleted 7 years ago