
The 5$ SaaS - wzhack
http://alpblog.heroku.com/blog/the-5-saas/
======
jacques_chester
Availability bias. There are many SaaS companies making many different
offerings.

Choosing $5 as your price point because everyone else does it, or because you
think it would be an easy sale, or because you feel bad about asking more, is
stupid.

Don't do that[1].

Give pricing a tenth of the care and attention you give to your code. Because
it is the _single most important lever of profitability you will ever control_
, and it is much easier to pull it before you launch than afterwards.

[1] [http://chester.id.au/2012/09/12/review-the-strategy-and-
tact...](http://chester.id.au/2012/09/12/review-the-strategy-and-tactics-of-
pricing/)

------
hendi_
My SaaS app was priced exactly 5$/month previously. It had a decent conversion
rate, a handful of users, lots of support requests, and a bit of revenue.

Meanwhile I've increased the prices, the cheapest plan is now 29$/month. Guess
what? Conversion rate didn't change, thus I gained new users at the new price
point (I of course grandfathered old users), and of course the revenue
increased almost by a factor of six. What's also interesting is that I get way
less support requests from the people who pay more, thus the six-fold increase
of the monthly price resulted in _more than six times_ profit (profit = 6 *
old_revenue - 3 * old_support_request_rate)

~~~
Juuumanji
Is your SaaS B2B or B2C?

~~~
hendi_
My SaaS is Bunker App (<https://www.bunkerapp.com/>), and its customers are
freelancers. I don't know if this qualifies as B2B since most of my users are
single freelancers or at most small shops.

------
zizee
Can a mod please change the of this article to point directly to the blogpost
(<http://ahmetalpbalkan.com/blog/the-5-saas/>), not via Heroku.

There is no reason for this redirect, plus I clicked through thinking that
this article was from the good people of Heroku.

------
netcan
The the relatively recent rise of two big types of software pricing &
distribution is a opportunity to notice how different things in markets
interact in these markets. If you spend your career in software you forget how
weird an industry with n marginal costs is.

An app store lends well to $1-$10 apps creating a demand creating a supply.

Web based Saas lends well to $5-$50 apps creating a demand creating a supply.

If you need a sales consultant or a long decision making process you need to
go into the 5-6 figures realm.

These things didn't happen because consumers really wanted smartphone apps
that happened to cost around $1 or webapps that happened to cost $5 per month.
The marble dictated the sculpture

Consumer webapps need to be sold as monthly subscriptions. Subscriptions have
a customer decision making and vendor responsibility overhead that makes $5
roughly the lowest possible price, so you naturally get the "cheaper" apps
bunching around the lowest viable point.

B2B web apps/services were able to crack into a price range that was
inaccessible before. $1500 one off payment for a shrink wrap version is too
expensive for self service sales & too small for a sales teams. $99 p/m with
30 days free isn't. Whole programming cultures formed around this new opening.

------
impostervt
I priced my side project at $5/month, because it was the lowest amount of
money that made it worth doing the work.

I did A/B testing before I started charging, and there was no difference
between charging $12/year, $3/month, $4/month, and $5/month. Which is crazy,
but it reached statistical significance according to optimizely. And fewer
customers for the same money sounded good to me.

~~~
scott_meade
Why price at the lowest amount that makes it worth it instead of the highest
amount that people will pay? Said another way, did you test $6/month,
$10/month, $20/month?

~~~
impostervt
No. I should have, but at the time I wasn't getting very much traffic so it
was hard to test many options and achieve significance. I was honestly
surprised people would pay more than $12/year, and just counted my blessings.

------
sondh
He mentioned the github $5 plan however I always pays $7 each month since the
beginning. I checked github pricing[1] and it's showing the micro plan starts
at $7/mo. Is there a lower plan by buying in bulk, paying annually or else?

[1]<https://github.com/plans>

~~~
6ren
I have a free account on github, but I must be a terrible customer, because
starting from my account, it took about 8 clicks to find the pricing
information. I ended up having to go through the FAQ, and one question
happened to link to the plans. Either that, or github has very relaxed
attitude about sales. Maybe they only alert you to it when you attempt an
action that requires an upgrade (e.g. too many repositories).

~~~
damncabbage
It tells you about paid plans whenever you go to create a new repository, and
on the front page when you're logged out, but otherwise, yeah, it's pretty
obtuse if you're an existing user.

------
andrewkkirk
Most of my paid SaaS plans are closer to the $9-$19 dollar per month range.

Examples: Freshbooks, HootSuite, MailChimp, KISSmetrics, Dropbox

~~~
bdunn
And all of the above are B2B products, whereas the OP described B2C products.

That's a very important point to make: There's a comfort zone of about $5 a
month that the typical consumer will pay for SaaS software. There really is no
cap for businesses, as it's much easier to gauge the ROI of software that
eliminates a position vs. software that tracks your runs.

------
danieldk
The site seems to be down already. Google Cache works:

[http://webcache.googleusercontent.com/search?q=cache%3Aahmet...](http://webcache.googleusercontent.com/search?q=cache%3Aahmetalpbalkan.com%2Fblog%2Fthe-5-saas%2F&oq=cache%3Aahmetalpbalkan.com%2Fblog%2Fthe-5-saas%2F)

~~~
damncabbage
dilara: You are currently hellbanned, nobody can see your comments (including
the useful one you just posted with the real link to the blog).

------
jpalomaki
When will we see somebody starting to bundle the services from different
providers? Throw in number of useful services, give some discount.

~~~
fmavituna
So 19$ instead of 25$ for 5 services? Why bother? Or you got something more
elaborate in your mind?

------
Mythbusters
Netflix is not at $5 but almost there. So is Hulu+. Does the Xbox music have
subscription or is it free?

~~~
jbigelow76
The current incarnation of XBox music, the Zune service, is only 10 bucks a
month, but no free option.

~~~
Difwif
Also with Windows 8 and Windows RT devices Xbox music will have a free ad
supported version.

------
pdonis
The big thing I notice about this list is what's _not_ on it: Google and
Facebook. Imagine if you could pay $5/month to Google for search services and
_not_ have to worry about the long-term consequences of the ad-supported
business model.

~~~
fakeer
Yes I imagine that and "you" will be a very small (tiny) subset of the entire
population that uses Google and it will be so inconvenient seeing the
(growing) dependence.

------
debacle
Back when I used it, MyFax was absolutely critical for pretending we had a fax
machine.

------
fmavituna
Although it's one of the worst models for startup. If volume is possible that
means too many players in that market. Startup is already a risky business,
why make it even harder by going into a space where you have to fight with
lots of other big / small / medium players?

~~~
mattmanser
What a load of utter nonsense. Many of HNs favourite startups operate in
saturated spaces.

~~~
fmavituna
Survivor bias?

