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Ask HN: Dilemma on raising the price of SAAS product later
7 points by hemantshinde123 16 days ago | hide | past | web | favorite | 7 comments
We are a smart electricity meter company and planning to launch our SAAS platform. One of the strategies for increasing early adoption would be to have a lower subscription price. However, we are not sure if we could increase the price of subscription later? Although it is technically possible, is it practical? Or would it be better to have a higher price to begin with and reduce it later? I would be glad to learn from the experiences of HN members.

> Or would it be better to have a higher price to begin with and reduce it later?

If you have to reduce price of a product without a new replacement product in the market then that is a sign of trouble with business growth rather than a strategy. It goes down hill from there. Only few companies have managed to do this successfully and that too if they rely on commodity BoM whose prices go down or if their service does not require frequent changes/upgrade once developed.

One trick I learnt from a presentation few years ago was to set appropriate price for a product such that you don't make a loss, but give(for a fixed duration) a 100%(or whatever you decide) discount on that price for early customers. That way the customers know what the actual price of that product is and they are also aware that the discount is a fixed time offer. Now you have three levers to play with: the actual product price, the discount and the duration of the offer.

Another trick is to set the correct price for the product, but give some freebies along with the product to get customers on board. The freebies are one-time or for limited period.

The other way than charging old/new customers different prices for the same product(s) is to change the product 'bands' if that's possible. Rearrange the limits and features between bands to come up with a new set of offerings. This way the old pricing and new pricing can't be compared 1:1. Hopefully you can do this by offering better packages/bundles rather than shuffling only to change the prices.

This is a strategy used by auto makers for ages, the same model goes slightly upmarket so that even if you stick with the same model you pay more. Sometimes it a model will fall in price to make room for a new entry in-between. The other way thing that's done is renumbering models so that you're coerced into choosing the one slightly upmarket.

Start with the price that you need to drive adoption and early usage. Later raise the price as necessary as you understand the business and the value proposition, but only for new customers. Keep all the original subscribers around on a "founding member" plan at the original price.

Raising prices always results in some amount of pain and frustration for some set of users. You could just start with calling your low price as an introductory offer that will be available for a limited period. You could also give extended credits to paying users who refer others who become paying users. Have the introductory price locked in for life for those who get in early.

Bonus points if you can quantify what the limited period would be, instead of leaving it vague. This is how most of the good sellers do (be it a SaaS or some other content or service).

You can raise prices for new customers at any time. Just keep the price the same for all old customers.

Grandfather existing customers and raise price for new customers. do it often, as needed. Another strategy is to introduce "new plans" at higher cost.

Can you not start lower then raise it later where people on the lower price keep the same price? Not sure what the issue is that way around.

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