

Ask HN: When should I raise price for my product? - vgurgov

Dear HN community,
My startup videolla.com needs your advice. We launched in Nov during HN Nov launch pad. I decided to put a minimum price for product - $5/month just to measure interest.<p>FFD to today. We has like 49 paid customers, around 400 free customers, with 1-2% conversion visitor -&#62; customer(we are still experimenting with homepage layout but that seems to be quite reasonabl number). So site pays for itself(servers, hosting etc) and brings few bucks/month We had zero marketing bugdet/zero press attention and site grows mostly organically(thanks to embeds of existing customers) and viewers becoming customers<p>So my question - should I experiment with prices at this moment and try to raise them or continue experimenting with project and maybe try buying some traffic with ads?<p>Any ideas are appreciated. Thanks in advance!
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bartab4u
What's the distribution of revenue per customer? How many users will make $10
a month? $100? $1000?

Once you have that info you can segment your customers and maximize your
revenue while being fair to your customers. The more money your customers make
the more incentive you'll have to keep them in the FREE category because it
maximizes your revenues, but your customers won't be too happy - it's a
balancing act.

You may consider just keeping the free account and seeing what the usage is
like before segmenting... as badkins pointed out it's hard to raise prices on
your existing customers. If you introduce a new "tier" later the high revenue
customers will be happy to move over to it, regardless of the price, if it
will save them money.

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badkins
From what I have read (but I do not have personal experience here yet), if you
do decide to raise prices, be sure to grandfather your existing paying
customers at their current price. People become furious over raising prices of
a subscription, even if it is a tiny amount.

To decide if you should think about raising them, I think it would be nice to
know what your current profit margin is per paying customer.

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profitbaron
Clickable Link: <http://videolla.com/>

Feedback:

I believe that your website design and UI needs abit of work on but right now
we are focusing on the product itself and its pricing strategy.

Firstly, if you raise your prices, you should honour the rate that current
customers are paying. As you are offering $5/month package and taking 10% +
$0.10 on each sale even if you change this aspect this should always remain
for your current client base.

However, what I recommend you doing is offering a "new tier" in the payment
pricing in the form a Gold, Silver and Bronze packages.

Example prices you could charge/offer to your customer base:

Bronze being the FREE package

Silver being your existing package although you could tweak this to be $5
month although you could take 15% and $0.15 per each sale.

Gold being say $20/month taking 10% per sale and like $0.05 per sale.

Then eventually this also leaves the option to introduce another tier like
"Platinum" where it can just be a monthly fee and a small percentage per sale
and/or a fee per sale.

Additionally, you should make "extra features" available to higher tier
customers to encourage signups to the more expensive packages

Obviously you know more about your business than I do, so you will know more
about the convertions etc but you should A/B test the prices for signups etc
and see which one especially focusing on the distribution of revenue per
customer so that you will know how much additional revenue it will bring in
for your business.

You should also consider making your signup page like CrazyEgg's Plan Page -
<http://www.crazyegg.com/plans> where it encourages users to pay for the
$19/month package over the $9/month package.

