How are you competing with FREE tools in your niche?
Hey all,
I'm just doing some research on SaaS pricing as this has become a trending discussion these days for people starting SaaS products.
While I was going through multiple products and their pricing plans, a pattern I can observe is giving away SaaS app for FREE!! In the attached tool, on top of giving away the product for FREE, they are providing an insane offer of 1$ chat agent per hour!!
That too with a bulk of nice features that are same as the ones in a premium priced SaaS app. I also see lots of customers migrating from paid to free apps.
I don't seriously understand what's the point then for new founders who are excited to launch their SaaS app with at least a reasonable pricing? like even 10 or 15 a month with same level of features if not more.. Even the 10 or 15 per month tools are way ahead in terms of features when compared to premium priced products but still trying to price as less as possible.
I feel due to this pricing competition, premium products and features are being given away for cheap prices or for FREE and not sure how future SaaS apps will survive as per the current situation and if they can ever be profitable this way.
How are you handling this and any thoughts?
P.S. I do agree there is a good side for customers by offering products for free but unsure about how SaaS products will survive going forward..
Is it worth trying those free ones for yourself?
If they are truly free it would cost you nothing but time. You can the assess whether they are actually competition or just e-mail address harvesting for other purposes.
There will be a catch somewhere. In-app purchases, they host the site/"own" it, up-selling to another service of theirs...
Often paying up-front assures you that's the price you'll pay and won't be asked for more. You can budget for it and you can have a better level of trust that the vendor is going to keep their word.
Being a paid app can actually offer credibility. If you weren’t savvy enough to divine whether a piece of software was good or not, would you trust an important business task to a free app or a paid app?
Hi. The company you use as example isn't actually running as a SaaS provider but yes they have a brilliant business model. Are you trying to enter that market or was it just an example?
This is a very great insight and a very good question, Prady :)
I think when you're a small team, there are a couple of advantages that you can maximize to win your users over to become paying customers. One of them is that you can deliver quick and personalized support to your users and also build features fast without all the bureaucracy. This, in turn, will build trust and affinity to you and your product. Continue this for a couple of tickets and you'll see them converting to paid customers and tell others about your product.
I experience this all the time with my products, https://oneprofile.info (a personal page builder) and https://oneprofile.page (a landing page builder). I helped one user with a small feature request, 30mins later I got a payment from Stripe from that same person. I chat with one user who told me they like my product for a few days, later that person converted. It takes a lot of effort and time to do this but it's worth it in the long run I guess.
One more way to win over users and customers from competitors is to simply build a product with superior user experience. Better UI and design etc.
Hope it helps!
May be it is your pre-customer support and that you show up as being human.
Every time i have to deal with customer support of large corps, i come more and more to the conclusion that smaller businesses can compete on customer service and being human.
The large corps seem to do everything they can to automate, add bots and put in so many obstacles, so they do not have to deal with their customers. Except charging of course.
Exactly as you said, Jens. Being human goes a long way to building trust with customers and small businesses that capitalize on this genuine human touch usually win.
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