

Ask HN: Handling price objections correctly? - curiously

So I am running into a lot of similar situations where:<p>Prospect loves my SaaS and the tool, sees a ton of value but says they won&#x27;t pay more than low double digits per month for it.<p>Common reasons include their supervisor is stingy, they are able to use teams in India etc.<p>My software has already saved thousands of man hours for customers who are paying the full price, and for these folks they don&#x27;t seem to object to the price, rather they understand that the software saves them time.<p>How do I respond to these price objectors who demand a whopping 86% in discount, yet interestingly enough they are the MOST demanding when it comes to support and feature requests.<p>&quot;Oh but I can get someone in India doing it for $2&#x2F;hr to do it for me&quot;<p>Are these people simply not a right fit? Should I drop them? IF so, how would I tell them that they might not be a good fit in a polite way?<p>OR is does this signal a poor market-fit of the product and the price needs to drop?<p>I just don&#x27;t understand why the current customers paying the full price are so happy while the new prospects seem very stingy and selective, even after claiming they see the value and the time it will save them.<p>If saving 100s of hours is worth very little to someone, doesn&#x27;t it mean that their time is probably worth very little? Where as someone who&#x27;s time is worth a lot (executives, managers) saving 100 of hours would pay off greatly?
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adrianhoward
_" How do I respond to these price objectors who demand a whopping 86% in
discount,"_

Say no…

 _" yet interestingly enough they are the MOST demanding when it comes to
support and feature requests."_

… because of this ;-) If you have happy customers at the higher price point
I'd be investing my time trying to find more folk like those — unless you
think that a lower price point is going to give you a much, much larger
market.

 _" would I tell them that they might not be a good fit in a polite way?"_

I dunno what & how you're selling — so hard to say. Me — I'd lean towards just
saying "Sorry, no. We have a standard pricing structure for all clients." If
you're offering just monthly pricing maybe offer them an annual plan with
12months for 11months of money. That would at least help cashflow.

~~~
davidw
> I dunno what & how you're selling

Yeah - link to it!

------
davidw
Are you getting some customers? If so, I'd concentrate on them and finding
others like them and simply forget the cheap ones.

> price objectors who demand a whopping 86% in discount, yet interestingly
> enough they are the MOST demanding when it comes to support and feature
> requests.

patio11 has written about the same thing: the people who are cheapest are
often the biggest PITA in terms of "do it now! I want to talk on the phone
right away! It doesn't do this - it sucks!".

~~~
curiously
> Are you getting some customers?

Yes and they are quite happy based on our calls. They even said our price is
good. However, they were still demanding. My biggest shock was when they said
they were pitching to people they know.

> patio11 has written about the same thing

I vaguely remember it...would love to read that again.

~~~
davidw
I'd concentrate on improving the product and listening to those people who are
happily paying for it.

> My biggest shock was when they said they were pitching to people they know.

I'm not clear what that means, exactly.

~~~
curiously
basically they liked it so much they were introducing other people to it
(their words).

the people who want the deep discount also seem to like the software.

both were quite demanding although the people who want deep discount seems to
be way more.

~~~
davidw
> basically they liked it so much they were introducing other people to it
> (their words).

That's awesome! Definitely concentrate on them and what they'd like to see
improved.

> the people who want the deep discount also seem to like the software.

Most people like Ferraris, too, even if they don't buy them.

~~~
curiously
I thought about it hard today. It was tempting to give them a discount and
offer a crappier version with crappier support but ultimately decided against
it.

First time I said no

------
DanBC
You could, for those customers, give the software away for free but charge for
each support request?

HN has some advice about "firing customers".

[http://blog.aaronklein.com/post/59393862062/firing-a-
custome...](http://blog.aaronklein.com/post/59393862062/firing-a-customer)

[https://news.ycombinator.com/item?id=4045251](https://news.ycombinator.com/item?id=4045251)

[https://news.ycombinator.com/item?id=3131372](https://news.ycombinator.com/item?id=3131372)

[https://www.groovehq.com/support/how-to-fire-a-bad-
customer](https://www.groovehq.com/support/how-to-fire-a-bad-customer)

~~~
patio11
_You could, for those customers, give the software away for free but charge
for each support request?_

This cannibalizes the primary value you're creating _and_ you're going to get
people arguing about every single support request.

If a customer thinks they can get professional work done for $2 an hour you
say "Interesting. I wish you the best of luck in your endeavors." and write
them out of your life.

------
chrisbennet
As you've discovered, the cheap customers aren't worth the hassle - they cost
you time you could better spend on other things.

Find a competitor in your space and suggest them to you problem customers.

------
brudgers
There are leads and there are prospects. A lead is anyone who might possibly
become a customer. A prospect is someone who has been both qualified and
expressed a reasonable interest in becoming a customer.

You want good customers. People who insist on not paying or only paying
pennies on the dollar aren't good customers. Your price is a qualifying tool.
It weeds out those who are ok if you go bust.

"Give me a good price and I'll tell my friends about you" is a red flag.
People don't praise what they don't value to friends...control the message;
you don't want more people like your bad customer.

Spend energy closing good prospects. Thank loose meat leads for their time and
ask if they'd like to get your company's newsletter. Touch base quarterly or
on some other periodically appropriate cadence.

Good luck.

------
jarcane
_How do I respond to these price objectors who demand a whopping 86% in
discount, yet interestingly enough they are the MOST demanding when it comes
to support and feature requests._

Don't.

You have a product. You've set the price. Not everyone has to like it, and as
long as you're meeting your bottom line, you've no obligation to come down to
the lowest bidder if that bid isn't worth it.

Once you start letting those kinds of customers drag down your scale, you'll
go broke.

------
dsacco
A lot of the advice in this thread is good, so I'll stick to one point.

Let me tell you what a _qualified_ lead is :)

A qualified lead is a potential customer who fits all of these criteria:

1\. Is willing to use your service or your product at the non-negotiable price
you set for it,

2\. Has long term financial resources such that #1 is a stable and basically
unchanging reality each month,

3\. Understands that your product or service is premium, and while might not
ultimately choose you, can be persuaded that you are worth your price,

4\. Is willing to negotiate on project scope (if you're a consultant) or
enterprise plan terms (if you're a SaaS) instead of price,

5\. Will not spend more resources in customer support that they are paying you
(or anywhere close to it),

6\. Understands your price as a percentage of the value you are either saving
them or giving them, and

7\. Obviously, has a need for what you're offering.

Now, that's a qualified lead. How to find them is a different story, but you
should not actively pursue a customer unless they fit all these criteria.

Understand that your price includes in the built-in cost of pursuing customers
and making sales, be that as an individual consultant or SaaS company. You
can't waste time with bad leads.

Once you find a single good lead, pursue referrals from that customer, because
you've found a potential wellspring of good customers. You also should change
the channels through which you're looking for leads.

Someone coming back saying that they can get $2/hr for what you're offering is
not a qualified lead. That's...laughably opposite. My grandmother would offer
to pay me more for a completely irrelevent service setting up her blog.

Let me give you an example of myself: I primarily cater to startups in the
series A funding category - newly funded enough to be able to pay for
security, but small enough that they haven't done so yet. Are companies
outside this range prospective clients? Sure. Are they qualified leads? No.
That's my successful market, the one I've determined my services are tailored
to. So I'll talk with a company that approaches me _but not burn time with
them, and only actively pursue my qualified leads._

Look at what you're offering, determine who your qualified leads are, and
reach out to them. Make an offer. Be sincere with a decision maker and make a
pitch for your services.

Finally, without knowing what your SaaS is, I can't say if the market is
responding that you need to drop your prices, but if it is helpful as you
claim, it's most likely an issue of approaching the wrong customers. I'd like
to believe you entered this SaaS business understanding the market for it and
an appropriate price point - if not, you need to analyze that immediately.
That said...a SaaS needs to be sustainable, and about the lowest I could
imagine one would be profitable at scale is $19 a month (maybe $10 for the
basic price tier).

Read a lot of patio11's work on this. Don't use a gut feeling for price, have
a rational motivation for the number you pitch.

~~~
curiously
Would having a form that filters out the bad ones make sense here?

Like I'm even thinking of getting rid of signing up form for a 30-day trial.
It seems that people make up their minds within a day or two once they see it
working.

I have a very good idea of what the target market which would be happy and I
think from all the answers here this makes the most sense.

~~~
anderspetersson
It's hard to tell if you should get rid of a free trial without knowing more
about your SaaS, but if you can get away with a shorter period you definitely
should. Use the shortest period of time that it takes for your customer to get
value from you business.

You should A/B test these things.

