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2 Comments

Thoughts on pricing

Hello everyone!

Being new to pricing & tech, I’m curious about how people who’ve been in the SaaS industry longer think about pricing. I've come up with a short form to ask just that. Would you be willing to answer a few questions about pricing?

Thank you so much! 🙏

  1. 2

    There was actually a post on IH asking about this.: https://www.indiehackers.com/post/how-did-you-decide-the-price-for-your-saas-app-b176cdddbf?utm_campaign=digest-daily&utm_medium=email&utm_source=indie-hackers-emails

    And I'll share here what I said:
    It was actually really difficult. We needed to investigate what the unit/value cost was for managing a service. After a long history for our team of working with a bunch of companies that all tried to write their own authentication/authorization (so many mistakes made), we had some good starting ideas about cost to run over time (TOC).

    (Reference product: Authress)

    We know most of our users ended up having a dedicated team to build this. Then it was just a matter of breaking down the costs associated with the team and understand which parts of that we actually provide value for.

    The unit value, wasn't number of users for their products however, since some users can cause a high amount of cost, so we don't charge by user. A lot of companies are spending $1M USD a year supporting the technology with a fully functioning team, if they want to do it right. Sure there are lots of ways to bring that down (and we expected many Indie Hackers will never hit that number). So what was reasonable?

    It was clear what is important became: what does our market look like?

    We found out there are a couple of segments, with vastly different usage and necessary layers to support their products. We picked the segment we felt we had the most to offer and modeled it (spoiler alert: Indie Hackers). As such we adjusted for the types of usage in that segment and our expectation of team sizes, attention to security, growth potential, etc...

    The result was a table of calls/usage/users/costs. We expect X calls per day/per user in Y scenario and compared that to standard spend to get that functionality based from our research. Then we cut that number down even further, since it was too high for us.

    Another aspect is hidden numbers, we believe everyone should pay for what they need. Why would using more usage cause us to charge less? Our pricing is meaningful, there is no hidden up charge. You get a large number of free calls to start, then pay a fixed easy price based on scale that matches your unit value. Our "higher" plans, offer additional features, like priority support, but it is always $0.0011 per call.

    ----

    If you have further questions and want to chat, I'm always available: [email protected]

    1. 2

      Oh wow, thank you for your response! :)

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