

Ask HN: Should I drastically increase my pricing (grandfathering included)? - 3a0e8ff4e557

My SaaS app tends to attract a lot of customers who upgrade to paid plans but are actually ultimately not really interested in running a business long-term. Our app is actually an ecommerce platform. Our churn is pretty high, but customers are not switching to competitors, just dropping out. I know because their domain names tied to their online stores remain abandoned.<p>Should I increase my pricing by at least 200-400% to see if this attracts only the most serious customers, and so that I can better focus my effort on serving them instead of spreading myself too thin? Currently, we are definitely underpriced in the market (an indirect consequence of me being the sole employee and living in a country with much lower expenses), and there are also signs that potential customers have problems taking us seriously because of that.<p>Once we hike our price (to $200/mo), we will be comparable to other competitors. I just felt that undercharging hasn't done us any good for so many months.<p>What do you think?
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patio11
Yes, you probably should increase prices, but _just_ increasing prices isn't
going to get you instantaneous credibility to make sales with more qualified
clients. It is difficult to point to things you could do to improve perceived
credibility without seeing your site, but examples would include a) making
sure the English is flawless (only mentioned because of the country with lower
expenses -- your writing here is very good), b) displaying social proof such
as logos of credible existing customers and/or media mentions and/or vanity
stats, and c) generally having a design and experience which screams Credible.

You'll note that your situation is seen over and over and over again by folks
who build business tools, by the way. At low prices you get pathological
customers. This is exactly what Spreedly and Chargify reported on HN
previously, and it comports with the experience of many other companies which
have not said so publicly.

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3a0e8ff4e557
Hello Patrick,

Our landing page is actually converting pretty well, at >5% conversion rate
(visit-to-trial signup). The problem is that I'm not sure if the right people
are converting. We have no indication on the quality of those signups.

If you are willing to help me out, I'll send you an email with my website, so
that you can give quick thoughts. I would say the things you pointed out are
_generally_ fulfilled, but I may be wrong and biased too.

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patio11
Drop me an email and I'll give it a quick once-over.

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bap
I"m not in any way involved with the OP but:

Thanks for being awesome Patrick. :)

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debacle
If your intial costs are very high, and that is causing the issue, just wrap
people into a contract - maybe 6 months up front (with a 30 day trial) and
then you can go month-to-month after that.

It's becoming bad form to charge 'registration fees,' because everyone thinks
that with IT you can do all of the paperwork for free. Especially in business-
to-business when you're dealing with tightwads quite often.

Figure out what your minimum contract duration to break even ( _t_ ) would
need to be at your current prices. Multiply _t_ * 1.25 and round to the
nearest 4 or 6 month interval. That's your new initial minimum contract
length.

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kellros
I think you need to consider how this will impact your bottom line. Is your
cheapness (excuse the pun) your major selling factor i.t.o competitiveness?

Is your 'market share', only the cheap clients? Generally businesses carve out
a niche inside their market.

If that above statement is true, you'd probably lose almost all your business.

If you want more money (without losing your client base), add functionality
and give them the option to use it (at a price).

I'd say if you already have all or most of the el'cheapos, then cater for
them. Make it easier to setup shop and for you to manage them.

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3a0e8ff4e557
Unfortunately, it is possible that both the questions you posed are answered
in the positive. We are grandfathering existing customers, so hopefully if we
ever hit a brick wall with new customers, we can just rely on existing income
from existing customers for the time being.

But we really want to take a bite at the enterprise/corporate segment, since
we believe that what we have is even better than what our premium competitors
offer. We have a couple of those now paying a lot of money but are succeeding
in making profits, perhaps because their higher fees make them treat their
business more seriously.

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brudgers
A relevant HN'ers blog post and the HN discussion:

[http://jacquesmattheij.com/Double+your+price+%28and+no%2C+I%...](http://jacquesmattheij.com/Double+your+price+%28and+no%2C+I%27m+not+kidding%29)

<http://news.ycombinator.com/item?id=1639712>

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3a0e8ff4e557
A quote from JangoSteve that really resonates with me: "There are ways your
users tell you your product is too cheap, without actually having to tell you.
One good indicator is when you have a lot of people signing up, and then not
using it, in which case your product is so underpriced that it attracts
indifference."

Our product attracts a lot of indifference. This is good in the short-term
(free money), but ultimately we don't get to provide the value we want to
provide, garner feedback from their regular usage, and they also eventually
cancel and not even switch to a competitor.

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nreece
The first thing you must do is find out why your customers are abandoning your
product. I think increasing the price without fixing the core problem will not
help much.

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3a0e8ff4e557
Talking to them, I realise that a lot of it is just, "Wow, it's taking up much
more time and money than I expected." While we can abstract away some of this
time and money investment through better features and better UI/UX, a lot of
them are just gunning for building a passive income engine without even
investing much money and time in the initial stages. They are the classic get-
rich-quick-passive-income-work-from-home crowd, if you will.

Certainly, there are many aspects of our SaaS platform that can be improved,
but we have been constantly learning from our customers who are still
continuing their subscriptions with us. So hopefully we are indeed improving
our platform over time and tackling some core problems (sample bias, of
course, but better than nothing).

P.S. Out of 39 people whom we surveyed over a few months (mostly people who
continue to upgrade after the trial), 26 said that they will be "very
disappointed" if they could not use our platform again, so hopefully this says
something about our product/market fit.

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kappaknight
What is taking up most of their time? What can you do to help reduce that, if
anything?

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3a0e8ff4e557
The nature of our industry (our customers' industry, to be precise) is that
you need to have fresh products/offerings up every other day or so. So the
process of adding content is time-consuming. But the same can be said for our
competitors. This is one aspect that is very difficult to abstract away.

We have tried: letting them create copies of content, letting them create
drafts, and also letting them appoint other users to create content on their
behalf.

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kappaknight
Not sure if you've tried this because you didn't mention it...

How about letting them schedule and set future publish times for the items? As
a small biz owner, if I'm in the groove of adding products, I would love to
just spend 4 hours straight on a Sunday night adding all the products for the
week and have the system publish them on a schedule I set. It's much harder
(and more annoying) to do this fresh every day for 15 minutes than doing so in
a large block of time.

If freshness of the content is a real concern, I'd pay for something like that
to make my site appear more fresh.

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jurre
Can't you do A/B testing on it?

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douglee650
why not add a 'platinum tier' with an easy to give away service that you know
most customers already don't use, and charge extra for it?

or add incremental charges to existing plans to push customers towards the new
platinum tier?

and, btw, if you don;t know the lifetime value of your customers by source and
date, you should do more tracking

