Money September 22, 2020

How do you respond to non-customers saying "hey did your pricing go up?"

Jon Yongfook @yongfook

Note: I'm not talking about current, paying customers. How you handle pricing changes for existing customers is a different topic. (personally I keep existing customers at the price they signed up at)

Here I'm talking about prospects. People who saw your old pricing, didn't sign up, then revisit the site months later and find that pricing has gone up.

I've had a few emails like this and I'm always a bit unsure how to handle them. Do you offer them the old price? Or is it new price only; take it or leave it?

I think there's good arguments for / against both approaches - I'm curious what you all think.

What do you do?
  1. Let them sign up on the old price
  2. They should sign up on the current price
  3. Other
Vote
  1. 15

    Potential Customer: "hey did your pricing go up?"
    Me: "Yup"

    Conversation over

    1. 1

      Most of the time this is how I handle it, couched with a nice smiley face.

      There’s SO many parameters that need to be evaluated to construct a more nuanced response, such that I think my brain just has a stack overflow and I resort to “yup!”.

      Some of those parameters include:

      • when did they see the pricing, was it ages ago or very recently?
      • how easy will it be for me to offer them a now-custom plan? (Not as easy as some people think)
      • how long do I think they will stay before churning? Is this going to be worth it?
      • what’s the price difference, if it’s just $5 or $10 difference old vs new then do I want to deal with such a price sensitive customer?

      Etc.

      In the end, all things considered IMO the best response is just “yes the price went up” and leave it at that 😅

  2. 9

    I take it as an opportunity to understand why they didn't buy before. What's changed in their situation? Why are they now interested? What are they hoping your product will solve for them? I'd likely give them the old price if it's workable, but only if they were willing to answer some of the questions to help make it better.

    1. 1

      This is a fantastic approach.

      I agree it’s best to view all these interactions as an opportunity to learn.

  3. 4

    I alwasy think they should pay the current price, but I'm also a sucker for just giving people a discount, if it is easy enough to do.

    I also feel I'm often too kind! However I also find that it makes the relationship more human and I like human relationships rather than being so focused on being transactional.

    There's a good chance (but no guarantees) they'll end up remembering your kindness and recommending you to others.

    1. 2

      "They'll end up remembering your kindness". In real life, there is zero chance they will remember my kindness :(

    2. 1

      Hmm actually this gives me another idea - I don’t like the idea of offering these folks the old price as that incurs some technical overhead on my side. But I could offer them a coupon that achieves the same effect, and this is supported in Stripe checkout.

      Discounting is a slippery slope though and I’m yet to offer any kind of coupon / deal. Intending to stay that way too...

    3. 1

      you attract people who are a reflection of yourself, @rosiesherry :)

  4. 3

    If it's just one person, I'd manually create a subscription to the desired plan, apply the discount to match the old price and email the invoice.

    If it's systematic, I'd say the the pricing is iterated upon, and if they don't see the value in the current number I'll let them know if it's ever decreased. I've never experienced this to be honest.

  5. 2

    If you're still small and it's just a few dollars, I would give them the old price. Extra kindness goes a long way in establishing your brand in the early days. Caveat: don't do it if the old price was so low that you wouldn't make money out of it.

  6. 2

    There is a reason they messaged you. They feel like they missed out on the opportunity, it's a lesson for them for watching the whole time and not acting.

    Consumer psychology is real. The scary thing is that more and more consumers are aware of this type of psychology more so than ever, and yet we humans still are controlled by our nature.

  7. 2

    I usually offer the previous pricing as a discount but only if they agree to signing up by a certain date (put a deadline on it). Would rather just book the MRR and (hopefully) a happy customer but don't want to give discounts out with nothing in return.

    1. 1

      This is a fair approach. How do you manage these “expiring” prices in your back end though? This is what I want to avoid - any technical overhead incurred by offering someone a cheaper price just seems like double the effort wasted.

      1. 2

        I don't. Just consider it a verbal agreement in exchange for the discount code.

  8. 2

    Someone reaching out to ask questions like that sounds like a tire-kicker and an overall painful customer.

    1. 1

      I tend to agree. After almost a year in the SaaS game you can spot these kinds of issues a mile off.

      That said, there will be edge cases where it’s more understandable. Someone inquiring about a small price change on a low tier is likely to be a future problem customer. But for example if it’s someone inquiring about a large price change on a high end tier, it may be because they secured budget from their boss and now the price exceeds the budget. I’m reaching though, the latter doesn’t happen often.

  9. 2

    your price went up because you are more valuable.

    if they wont sign up, either they cannot see your value ...

    ...or they are not the type of customer you want.

    i advise you do not let your standards down.

    1. 1

      This is what I have to hold back from saying. My prices will only ever go up. They aren’t going to go down!

      1. 1

        @yongfook why must you hide your true authentic self from your customers?

        1. 1

          Because the statement “my prices will only ever go up” is easy for me to understand as I know what I have planned for the future and I know that in general, SaaS businesses charge more as they age.

          Someone who just wants to use my service right now, doesn’t care about that stuff though. And I don’t want to get into a back and forth about pricing strategy with someone who isn’t a customer, just seems like a bad use of time.

          It’s not about censoring myself, it’s about efficient use of my limited time.

          1. 1

            i see. in this situation, i believe i might have accidentally projected myself onto you, causing me to misunderstand you. you took the time to help me truly understand your situation, which i really appreciate. thanks @yongfook! best of luck

  10. 1

    I would say "Yep we have enhanced our product and service quite a bit since last pricing and it was time for us to reflect that in pricing. "

    But never just say that and always always close your email with a question "Are you interested in a chat ? I would be happy to discuss the pricing questions and also tell you how far we have come since last time". Remember, always try to a get a prospect to talk to you or give you more details unless you are absolutely sure they are not a good fit.

  11. 1

    "Yup, went up with the latest feature."

    I think this is a good way to justify the increased value perceived by the costumer.

  12. 1

    On a purely monetary note they are getting a discount even if they sign up at the new price.

    Let's go to an example:

    If they wanted to buy 6 months ago at $29 per month, And they had started paying, They would have already paid you $174.

    And they would continue paying $29 per month, for the foreseeable future.

    Now it's $39, a $10 per month difference.

    Up until now they've paid you $0. They saved $174.

    Now, they pay you $39 per month.

    It would take 17.4 months to recoup the "savings" they got by waiting 6 months.

    1. 1

      I see where you’re coming from but I have a tendency to disagree. I don’t think you can count not purchasing something as getting a discount.

      By that same logic, I’ve saved millions from not buying every car I’ve ever dreamt of having.

      Imo, going without is not equivalent to saving. Rather, going with an alternative that offers similar features and benefits at a lower price is actually saving.

      Thoughts?

      1. 1

        You're absolutely right. It's not savings and not a discount. Poor choice of words on my part. What else would you suggest?

        The result at the end is the same: He shouldn't discount them now. The price is what it is. If someone is asking for a discount they probably will ask for more.

        And yes by that logic, I too have saved $10k by not buying that tesla at $35k. There's gonna be a tesla at $25k soon.

        On the customer side: it doesn't hurt to ask
        On the developer side: it doesn't hurt to reply nicely, yet firmly.

        Responding to price sensitivity is a good way to grow faster later. And lots of options available for pricing in price sensitive customers later when the development is stable and user friendly and matured it's FAQ or support lines. Yearly pricing, LTDs, Freemium, short trials, Pay as you go. All of which add un-needed complexity at the moment.

        1. 1

          Okay, now I totally get where you're coming from, you've cleared things up.

          Responding to price sensitivity is a good way to grow faster later. [...] All of which add unneeded complexity at the moment.

          Could not agree more with this statement. I especially align with your thoughts regarding "responding to price sensitivity later" - as in adjusting this specific lever at a later time is a wise thing to consider. Love it, had never thought of it this way. Food for thought is strong this morning lol

  13. 1

    Take it as an opportunity to have an interesting talk, you can only win:

    • If they don't follow-up, case closed
    • If you talk to them, you get feedback about your pricing or marketing, which you can adapt (or not).
      I would offer a discount if they have a compelling argument/context only, aside from knowing your previous price.
  14. 1

    If they're looking to sign up for a monthly plan you could upsell them to an annual plan at the old price.

  15. 1

    Love what you're doing with BannerBear, Yongfook! About your question, I will probably explain to them that the pricing they saw before was an "early-bird" pricing for early adopters, but if I'm enjoying our conversation I'm usually open to giving them a discount and let them buy at the early-bird pricing. Similar to @rosiesherry though, I'm also a sucker for giving out discounts - I probably gave out way too many discounts for One Word Domains as long as they asked nicely 😅

  16. 1

    I hold a particular opinion on this matter, I'll share it here to be challenged. :)

    You ought to disassociate yourself from the idea that selling is convincing people of something. To sell is to connect a person with an outcome they find valuable - to politely and gently find fit, like softly placing pieces to a puzzle.

    As an example, I don't convince prospective customers at my firm of anything, I hold conversations and I ask questions - plenty of them - to assess fit to our services, like a specialist doctor would assess fit between her patients and her specialty.

    "Oh, you have eye problems... well that's not me, I'm afraid, let me refer you to [...]."

    I understand that this example may not translate fully to the SaaS world but the principle remains the same.

    @yongfook Here's how I would reply to your prospects:

    "Hello Jane Smith,

    Thank you for your question. Yes, in fact, the prices have increased in the past few months. This price increase is reflective of the value we've added to the product (there's plenty to see, I promise!). I would be more than happy to schedule a demo if you'd like. We could chat about your goals and interests and see if our product is a fit for your needs.

    We can pencil you in before the weekend, how about Friday at 2PM PDT?

    I deeply appreciate you taking the time to talk with us. :)"

    1. 2

      @daveandreu I think this is a good strategy personally and I've tried that in the past. It shows you are kind and confident in your own product such that you can refer them to a competitor which is lower on pricing. P.S Stealing this reply :)

  17. 1

    I would ask them why the new pricing is bothering them (digging deeper than just "too expensive") and try to give them arguments to convince them to sign up.

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