You know, I remember some old Tom & Jerry cartoon where an older mouse was explaining capitalism. How a factory that sells great volumes is able to reduce its margins and make even more total profit. Something like that.
So... what is wrong with a "low" price?
Must pricing nowadays be all game-theory where you want to extract the maximum amount without any regard for underlying value or actual costs?
It's almost a meme on HN: "you are asking too little!" "Raise your prices, double your consulting rate!" "Businesses don't even notice bills under $4999!"
I'm from Romania where my "business" cell phone (with 1GB internet and basically unlimited calls) is costing me $7/month. My build server on AWS used to cost me $25/month. Nowadays I use my own machines so I only pay for some leftover storage and I get a whooping $1.50/month bill on my card. I pay $39/month for accounting.
No matter how great a startup believes their thing is, a business has to cover a lot of expenses and 100 super-duper-products to purchase do add up. At some point it might even make sense to say: yes, I'll have an employee waste 1 hour each month on this problem instead of adding another vendor/product/contract to the list.
1 million checks a month. If the problem rate is even 1%, that's 10,000 "problems" that need to be resolved. At 1/minute, that's a full-time person on the job! If that's not worth $$$$, the business isn't in the target audience.
And for people using this for fraud, it's gonna take more than a minute, and there might be even more damage. For instance, avoiding chargebacks on 0.1% would more than pay for itself. And that's a good selling point: "Our product will save you $x% a month". It makes it a no-brainer, instant ROI.
So getting, say, $995 vs $25 means he has to find 40x less customers! He can afford to spend a bit on sales. It's a meme on HN because it's true and us engineers have a terrible habit of repeatedly undervaluing things.
He could even offer a "pre-launch" plan if he's worried about startups not wanting to rack up bills before actually having customers. That way they can maintain price plan integrity.
Overall I feel HN/engineers (myself included; I have to force myself here) worry too much about edge cases and keep thinking somehow these cases will make a serious business.
So... what is wrong with a "low" price?
Must pricing nowadays be all game-theory where you want to extract the maximum amount without any regard for underlying value or actual costs?
It's almost a meme on HN: "you are asking too little!" "Raise your prices, double your consulting rate!" "Businesses don't even notice bills under $4999!"
I'm from Romania where my "business" cell phone (with 1GB internet and basically unlimited calls) is costing me $7/month. My build server on AWS used to cost me $25/month. Nowadays I use my own machines so I only pay for some leftover storage and I get a whooping $1.50/month bill on my card. I pay $39/month for accounting.
No matter how great a startup believes their thing is, a business has to cover a lot of expenses and 100 super-duper-products to purchase do add up. At some point it might even make sense to say: yes, I'll have an employee waste 1 hour each month on this problem instead of adding another vendor/product/contract to the list.