How did you set 'Pricing' for your SaaS?
Hi IH Community,
We a couple of weeks away from launching EmuCast - https://www.Emucast.com to the public and our team has been discussing pricing? We have done a fair bit of research on the internet but have come to the conclusion that pricing SaaS (especially a new startup) is more of an art than a science? There is loads if literature from VC's but we couldn't work it out in terms of following a prescriptive methodology.
I've attached what we think will be our entry level SaaS pricing for our Pro plan, our enterprise pricing is still TBC.
Can you pls share any experience they you have had with pricing a SaaS at launch?
Thanks in advance
Sean, co-founder at EmuCast
Holding a Vickrey Auction is typically one of the best ways to discover the full demand curve for your product. https://en.wikipedia.org/wiki/Vickrey_auction
Here's a neat blog post on the Vickrey Auction in action: https://kevinlynagh.com/notes/pricing-niche-products/
The curve also reveals that each person is willing to pay a different price, which is something I recommend you accommodate to drive the maximum profit and number of conversions. Full disclosure: I'm working on an API, https://modernpricing.com, that helps you implement dynamic pricing automatically.
I'll keep on your progress and see if in the future we can utilize it.
This is super cool! Thanks for sharing
I love the Profitwell resources for looking at pricing. Their videos on pricing page teardowns are really interesting!
This guide is excellent (and worth giving your email address to ProfitWell for): https://www.priceintelligently.com/developing-your-saas-pricing-strategy
If you have time and an engaged audience to research you can DIY the approach that they charge established businesses for. I've done this myself and have been very pleased with the results.
Awesome resource. Thanks for sharing!
have a look at this guide. "don't roll the dice - guide to software pricing"
https://www.red-gate.com/library/dont-just-roll-the-dice
I'll have a look at this in more detail, based on the date it feels like its more related to old school perpetual software licensing.
Hopefully there is takeaways which apply to SaaS
A bit off topic:
Has anyone ever built a tool to test the elasticity of what people are willing to pay for a product? Meaning, dynamically increase or decrease price based on conversion rates until the optimal price is found?
This was something I mapped out in my ideas list, but I have to imagine is already exists?
Interesting, if you read further up in the comments looks like someone is working on something similiar, not sure if its what your thinking :-)
Remember that there is no such thing as the “best price”. Your price is only good to the extent it reflects the customer's perceived value. Work through your value proposition, what sets you apart from your competition, and the overall marketing message you’re getting across to your consumers. All in all, the more value you bring to the table, the more lucratively you get to price your software products.
☞ https://blog.keyzy.io/software-pricing-7-things-to-know/
mate, thanks for sharing this link, I've read the article twice and there is some fantastic themes we're going to use to help validate our starting price for our SaaS solution.
I really like the parts of the article referring to #2: Perceived vs. Real Value.
The good thing is that we're starting off our startup using the Freemium Pricing. The article kind of validates why we ended up selecting the freemium mode ---> "Freemium packages allow the user to try out a limited version of your software, just for the taste of it. Give away a low-end or lite version of your digital product for free so that the user familiarize with your software piece without having to go through the tedious buying decision process."
Did you look at competing products. Assuming customers would pay a similar price for your product.
Yes, we have 1 direct competitor who is charging an entry price of $10 per month per user. We considered a scenario of bumping up our pricing to be a tad cheaper than theirs.
Some food for thought on competitor pricing. I'm by no means a pricing expert.
I see a lot of startup folks worry about direct competitor's prices when launching a new product. You'd be surprised how little research buyers put in when considering software. Buyers are not nearly as informed as we think they are.
At my previous company (B2B SaaS), we sold a product for 8x the price point of a competitor with very little product differentiation. Our target market was exactly the same, but it was a big enough market that you could find lots of buyers who hadn't even heard of our competitors.
Somethings I'd consider when looking at competitors:
If they have a lot of mindshare with your prospective buyers then you can always position as product X but cheaper. But if they aren't super far along, you can try experimenting with higher pricing. A lot less effort to close a handful of bigger deals vs. a lot of small ones.
Thanks Terrance, the interesting thing about your 3 points about our competitor re: far along, adoption etc, is that our competitor has only recently launched (last 3 months).
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