Pricing a SaaS: How do we introduce a cheaper tier without cannibalizing our existing customers?
Context:
Our pre-launch pricing for progressionapp.com is currently a simple per-user price. We have a bunch of teams paying that price but through now close to 100 sales calls we're aware that for many others it's cost-prohibitive (and there are a set of features that they aren't as fussed about anyway).
We're launching next year and want to introduce more options for simpler plans. However I'm a bit nervous about the fallout from any existing customers wanting to downgrade to a cheaper plan.
Questions:
- Am I trying to 'have my cake and eat it too'?
- Does anyone have experience of doing this in a smart way that preserves that revenue while opening up options for others?
- What are some easy-to-implement enterprise quick wins that we can throw into that top tier?
Thanks!
Thanks @szferi! Yeah custom integrations and removing branding from public pages are two easy wins.
Are your costs actually cost prohibitive, or is the cost sensitivity a symptom that these organizations aren't ready for your app?
I would focus this work on buyer personas to better understand the need for segmentation.
Develop a buyer persona for the type of potential buyer who actually can't afford the app. They will likely be buying for different reasons and possibly want different features. Do you want to sell to this buyer yet?
My recommendation would be that since you're pre-launch and you have customers, focus on that buyer persona first. Grow there, unless you have reason to believe that's not a large opportunity. Later on, you can go down market (or possibly better: upmarket).
Great advice. We do have some buyer personas for sure but need to do masses more to validate them with data.
Re. selling to more of the same, I agree with you. However there are other strategic reasons why it would be very valuable for us to capture more of the market, so we do want to test whether we can convert a cohort of the unsuccessful trials with something lower priced and more basic.
We've heard anecdotally that there's appetite for one half of the product for a cheaper price and the dream is that it's additional revenue, not undercutting what we have.
(This pricing change would be most likely as part of a launch btw!)
That's a good question. I recommend to post it also on Facebook group SaaS growth hacks, it has 17k members and it's quite active, there are lots of users, if not the majority, SaaS owners that most likely went through this.
Thanks Virgil. Alas I'm off facebook now, but it inspired me to look on reddit instead...