On SAAS products, who's NOT following the advice of charging more?
I read everywhere that it's important to charge more for SAAS products. Curious to hear if anyone charges less on purpose, or thinking of doing it?
And if so, what is/was your rationale?
Feel free to chime in if you've got any stories of where you charged more and things didn't go as planned (ie. lost business, had to cut prices in the end).
Notion and Basecamp are two examples that come to mind. They basically exchange one currency (money) for another (social validation + free advertising). It can totally be a strategic move to "charge less", but it depends on a ton of factors.
That’s a pretty good observation.
Others that come to mind are probably Dropbox and Backblaze. Arguably its super expensive to operate infrastructure like they do, but they make it up in volume as word gets around they’re the best choice in town.
I charge less for one of my products (and it resulted in more sales) for a few reasons:
All of my customers are non-profits. My product is providing value for them, but it's not a simple business decision like with other target markets, where customers can say "I'll make X more money for just Y dollars a month when I use this product". So it's tough for them to logically justify what they might consider a high price.
I'd also gotten feedback from a few customers that my price was too high and I was often being asked for discounts.
Most importantly, I had raised prices and waited for over a year, and it resulted in far fewer sales. Of course, it's hard to know if that was the only reason, as I obviously continued making changes to the app in the meantime. But it did seem to be correlated to the price increase.
Finally, I think having market share and then raising prices at some point in the future is a viable option for my business since it's profitable even with the lower price.
I'm sure you know but for others: many if not most purchasers in non-profits are required by their organization to ask for a discount for every purchase, no matter what it is.
It seems like there's some price sensitivity in the target market.
Just curious, how much lower is your price compared to other competitors in your market?
In January I decided to cut prizes for my SaaS, I wrote a few lines about the reasoning behind it here: https://www.indiehackers.com/product/quizme/cut-prizes-launched-annual-plans--LzDyyR7IEiDaBP-cb0I
Thanks for sharing the link to your reasons for cutting prices.
Great rationale and I agree based on what I’ve seen as well.
Have you noticed any difference in customer conversions or churn?