Our goal is 1,5k MRR. How much should we charge?
Hey, welcome in 2022 👋🏻
New year, new goals. We want to finally become profitable with our SaaS. And our goal is to make it to $1500 MRR by 14th of February.
We're just working on implementing the pricing for Raport. We have almost decided on the price today. But I'd like to ask you: How much do you think we should charge for our product?
We'll most likely go for a free plan and 1 paid plan for start.
I'd truly appreciate your feedback on that! Thank you :)
As your product is a B2B SaaS I would expect premium prices.
Don't know your value proposition in comparison to similar tools on the market. But make sure to not undercharge for your product!
Thank you! We've already read quite a lot about SaaS pricing and what we see most often is that we should charge quite a lot. Everyone says about raising prices and I'd be all in but I'm a bit worried that people won't be interested if we make it too expensive.
You can also calculate backwards.
So your target is $1500 MRR to start with.
Say you have 250 beta users right now. And let's assume 10% of them are willing to pay for your product as they really see the value in it.
To reach your initial target, you could set the price at 1500 / 25 = $60 per month.
When I first started using intercom.io they were still in beta and charged a flat 50 dollar fee. This allowed them to find out if people were willing to pay for the product.
This is the best advice, 100% agree.
For most B2B audiences, a product that is <$100/mo and solves a business problem is a pretty reliable no brainer price point.
Nice thinking, we kinda did this type of calculation but it turned out we probably need to charge around 100 USD/month. Hopefully that will be acceptable by our users.
I think you should get on the phone, talk to customers, and do sales.
For one, you'll be very likely to get paying customers in the door that way. High-touch sales will always lead to higher conversion rates than the people who just show up on your marketing site and self-serve.
But more importantly, you'll learn. Name a high price, and people might say yes! They might even tell you the reasons why they're saying yes/no, and you'll learn more about who makes for good or bad customers. And if people are saying yes to your high prices, you can raise them on subsequent calls until you get to the point where people aren't saying yes anymore.
I remember talking to David Hsu of Retool, and he did this in their early days. He kept raising prices, and people kept saying okay. People were willing to pay far, far, far more than he'd ever guessed. They were making something like $25k/year per customer, for a $500k/year run rate with just their first 20 customers and the founders doing sales.
(I think it should go without saying that you want to charge more $ per customer if you can. Expensive customers usually make for more successful, easier to run, and happier to run businesses.)
Thank you Courtland! I've also listened to both of your conversations with Steli Efti from Close and they made me decide to do direct sales. So that's exactly what I'm aiming for starting next week. I got the ebooks and sales materials from him so I'll have some knowledge to accompany my motivation. Right now I have almost no experience in sales so we'll see how it goes.
I've also listened to your conversation with Peter and Calvin from Segment, which showed me that other founders have similar problem with pricing and we all want to charge too little. They also talked about direct sales to enterprise customers which actually helped them become extremely successful.
I'll definitely keep updating here on Indie Hackers. Hopefully I'll have good news to share and something others can benefit from as well.
Thanks for listening to the podcast!
Thank you for recording it!
The product looks neat and BI-type things tend to be profitable.
It is hard to give a specific pricing suggestion because that is very dependent on your intended customer which is hard to gauge from your website. It is tempting with general-purpose tools to be vague about it's use-case, but it is more productive to target a specific audience.
For example, if the intended audience is marketers for storefronts (you show Shopify as one of the integrations), you can mention a specific problem that group has somewhere in the landing page. It should be a significant enough pain point that can drive a buying decision (or exploring a free trial) and have some sort of cost associated with it. Once you figure that out, you can work backwards from there to derive some kind of value-based pricing.
You mentioned that you want a free and 1 paid plan tier. How are you differentiating the two tiers? Specifically, what does inside the paid tier that will convert a free user to a paying one? It seems like you have several knobs available to you (e.g. number of integrations, alerts, and so forth).
EDIT: Another way of thinking about it is that your first pricing attempt is going to be wrong, but it should be testing a hypothesis about the customer. One nice thing about enterprise-type things is that you can directly talk to the customer and gauge their reaction (e.g if they accept your price without blinking, you are charging too low).
If you're trying to be a product-lead company based on natural inbound self-serve leads, it's harder because it is difficult to distinguish when it's the fault of poor pricing or ineffective marketing. The latter could be insufficient messaging to close the sale on a relevant lead or you are attracting the wrong type of person to your service in the first place. So if you're product-led, it's still best if you can get into a room/call with a prospective customer to figure out the scope/cost of their problem.
EDIT 2: The TLDR is that it's hard as outsider to suggest specific pricing because IMO that is a strategic decision and dependent on what you know about your customer
Hey Sasha. Thank you so much for this comprehensive answer. I really appreciate it and you made really good points.
We were thinking about differentiating the pricing as follows:
Free plan
Paid plan
And we plan to create pages with info about target audience and use cases.
What is a dimension?
The paid tier seems odd given that you restrict the number of seats/projects. Is that for consideration of a future tier or add-on pricing?
It seems like the main forcing function to upgrade from the free to paid tier is data source connections in the marketing use-case (i.e. tracking the affect of campaigns on sales). Is that correct?
The unlimited metrics and data history seems kind of scary without some kind of tiered pricing due to data retention costs. Be careful there.
This is a "breakdown" of metric. e.g. for metric Visits, dimensions are Entry Page, Device, Source(cpc, google, bing, direct) etc.
We definitely need to explain it, probably by showing visually the dimensions for one of the metrics.
True. We changed the pricing, it no longer looks like this 😅 Now we have 3 paid plans + 1 enterprise. And We're going for 10-day Free Trial.
Data source connections is the main forcing function, correct. This is because the main functionality of our app is connecting data from different sources. So we thought that limiting that should be best. Another thing are dimensions. And this is because they generate quite a lot of costs and they are helpful when analyzing metrics.
Unlimited metrics are ok because we have a certain amount of metrics for each data source so it is limited this way. But as for data history, we decided to limit it to 3 years in the "middle" paid plan.
Thank you for help and taking time to write all that!
Cannot imagine a BI product that'd charge less than $49-99/mo. If anything, a higher price point for a B2B data tool likely makes it look more like a real, ongoing concern, not something new.
(that said, I'm already mentally lowballing what I should charge for my product, and it's scary to charge "more". but then you have Superhuman with a $30/mo email app...)
Thank you for that encouragement. We probably undervalue our product. I think this is because we have some vision in mind and we think that until we build all the features we want, the product is not worth the "full price". I guess we need to let the customers decide.
I didn't realize it costs that much. But there are plenty examples like that and these are generally successful companies. I think we sometimes underestimate how much individuals and companies are willing to spend on things that they find valuable.
One other way to look at it is that you can always launch today's feature set at price X, then when you build out more features, include those in an "Enterprise" plan that you charge 2-4X for. That, or launch at a higher price point but with an "early bird" discount.
We'll go for the "early bird" discount :) So if you'd like to become an early bird, it's a perfect time to join 🤫
Like @paulNL mentioned, I definitely think you should go for a premium price.
One way to find out how much people would pay for it is by directly engaging with your target audience on Twitter/Reddit. I did this with my last app, and it worked great.
Since you're offering beta registration, you could possibly reach out to people who're already using the beta version of your product and see what they think.
As a sidenote, your site is absolutely gorgeous! Looking forward to watching Raport grow!
Thank you for that! I definitely need to go talk to people ;)
Good luck!
Thank you Atul!
Most welccome.
Hope you reach your goal soon!
Thank you Fajar.
Charge $1,500 then you only need to make one sale!
I'm only half way joking. Your tool is B2B, these customers expect to pay more. Make sure to offer some kick ass support and custom onboarding. I think it's reasonable to put together a package that is $400-$500 a month, then you only need to sell to 3 people to make your goal. Identify your niche, and go after them one-by-one. Schedule a demo, and show them how it will solve their pain.
Part of what you mentioned is my plan. I'll go for direct sales starting next week. But I didn't think about demos or 400-500/month plans. I'll definitely read about doing demos as I'm completely unexperienced at it, yet it seems very important.
Btw. I checked out your products at IndieHackers and your revenue is my dream at this point. Congratulations Shane!
Don’t have a free plan. Have 4 plans: $49/mo. $99/mo. $249/mo. And custom. You don’t want the support that comes with free/cheap customers.
Thank you! We made almost exactly what you wrote here. We now have 4 plans and they start from 24USD + 1 is custom (enterprise)
No advice beyond "try different numbers". We'll be exploring the exact same mystery for a very different product in a few months - good luck!
Thank you and good luck as well! Pricing is damn hard 😅
Check out how much your competitors charge for the same service :)
We did that. We don't have competitors that do exactly what we do (at. least we didn't find them). But there are companies with similar products. And they charge at least 100$/month.
Than don`t be scared to charge $95/month :)
Don't undervalue your work!
Thank you!
You can try doing a test run maybe, and create let's say, 10 slots for $75, 10 slots for $95 and so on to test how willing are people to pay, if all the slots that you created filled up, then you can be sure that there will be a lot other businesses willing to pay the price of your highest slot. Let's say customers only filled up the 10 slots for $95 and below; that would mean that there is a resistance there and other businesses might have a similar thought.
It's all a matter of testing.
Hope you are able to figure out, and if you run some test, making a post with the results would for sure be helpful for others here too. :)
Thank you, that's an interesting concept. So it's done by A/B testing? You show 75USD to some people and 95USD to others and see how it goes?
I'll definitely make a post if we manage to make some profit 🤞🏼
A/B would be a bit different than what I thought. More like, "a special deal" so, you offer maybe 3 different options, first come first serve kinda thing.
Ok, I get it now. Thanks!