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14 Comments

Would you reduce your SaaS plan prices if it's not growing to your expectations?

Let's say you come up with a price point $29.97 / month for your "Starter" plan. You plan to onboard at least 2 new customers each week.

However, about 6-8 weeks down the line; data shows that you are only converting 1 customer every 2-3 weeks.

If you talk to some users who did not subscribe; ~50% of them say the pricing is too high. If you ask them; they want starter plan for free and 'promise' to pay for higher plan when they cross the limits of starter plan.

Your choices:

  1. Start offering Starter plan for free - but you already have a few customers paying $29.97/mo.

  2. Keep pricing intact - start looking for new customers.

  3. Reduce pricing for existing customers to say $24.97 OR $19.97 per month and run another experiment for another ~10 weeks.

Option #3 is interesting; because there is no guarantee that people will pay your new asking price. You may end up in the same situation as before.

What'd you do?

PS: If there's a better way to go about this; I'm all ears! Thanks!

  1. 8

    Don't lower your prices if you're not getting conversions.

    That's just a band-aid fix to a deeper issue. The real issue is that your users are not seeing the value. So you need to make that value clearer - that doesn't necessarily mean building new features, it means investing in customer success with the right kinds of customers.

    If you fix the real issue, by:

    • improving your targeting
    • improving your onboarding
    • improving your product

    It'll be quite likely that you can raise prices, not lower them.

  2. 2

    If they want something for free, they're not interested in paying. Not now, and likely not ever. These people aren't potential customers, I would go for #2.

    Since you already have paying customers, it validates that price is likely not the issue. I'd talk to your current customers to get a better understanding of the difference between them and those that don't want to pay.

  3. 1

    Reading through the comments I saw everyone pick one option and then tell you their reason. Just to offer a different perspective: Here's what I would do.

    I'd try all options.

    And I would add one more option.

    Experiment with each option. Take 4 weeks, and do a test each week of one option. Commit 100% that week to that option.

    Plan each week as a sprint. Set a goal of number of people you'll get the price in front of. Measure how many convert.

    And I'd add two billing plans: Yearly and lifetime deal to your pricing. If someone is not willing to pay $29 a month, then ask if they'd pay for $19 a month for 1 year upfront. And then if someone won't do that. I'd offer a lifetime deal at around $300-400, It's a great discount if they use the product for at least 2 years: ( 29 * 24 = $696 )

    1. 1

      Very interesting option, @AndrewKamphey. Definitely something to consider.

  4. 1

    Wow! Really awesome answers. I think not lowering the pricing is the way to go.

  5. 1

    offer them the plan(any paid plan which they like) free for a month and revert it back after that, if they like the product definitely they will purchase

  6. 1

    Option 4. Offer trials and add good markers that make users want to convert before their trial is over.

  7. 1

    Just because you have a few paying customers, don't let this stop you running a "special promotion" and giving a basic version away for free. It may be worth the experiment; lots of companies run freemium plans very successfully (eg. Crisp chat).

    That said, my advice would be to listen to other posters here - your problem is you're not providing enough value to this particular segment.

    (I am going to assume your product doesn't suck, because you have some paying customers!)

    So keep pricing intact, understand exactly why people find it valuable... and then find more of the people who really get value.

    To give you a real life example, I run a form builder SaaS. It has 2 main types of customers:

    • TYPE A: Consumers just wanting to replace Typeform - these customers sound just like your "$29.97 is an issue" customers
    • TYPE B: CRO professionals who are driving leads worth $100s each. I could charge these guys 3x as much, because they know the value of building a form that converts better.

    Once you understand your customers well enough, you can carve functionality out of the basic plan such that your type B customers can't survive with the basic plan, but the TYPE A customers are having their needs met and you're not turning down cash!

  8. 1

    I'd echo the comments about making sure you are providing enough value. What are your revenue goals and how long will it take you to reach them at the new lower price point? It seems like you haven't reached product market fit yet, ideally your customers should be begging you to pay for the product, not only using it if it's free.

  9. 1

    Increased pricing is an option as long as you can convey the value, people look to see if the price is worth what is being offered. If you don't have many paying users right now I would suggest getting more aggressive in your outreach and keeping the price as is. Once you start converting more people it would be better to start testing pricing then. If the numbers are too small theres not enough data to make decisions, only assumptions. If you need help with email outreach let me know and i'd be willing to provide guidance.

  10. 1

    A lot of the time people say price is the problem when it's actually lack of value. So, yeah, run an experiment at a lower price and see what happens. If you have enough traffic you can A/B test it... but most of us don't.

    1. 1

      Yes; but it feels wrong when you've a few customers who're paying higher price. The general advice seems to be 'charge more' - but does it really work?

      1. 1

        I've been there... I should write a blog post about it. Finding growth is way more important than the revenue of the customers you have right now. Just lower their prices and grandfather them into the new prices even if you settle on a higher price.

      2. 1

        Charging more absolutely does work but only if your product is good and solves a genuine problem for people on a way that’s pleasing to them.

        A lot of times the reality is that your product may just be trash and no amount of pricing changes will solve that.

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