Hacker News new | past | comments | ask | show | jobs | submit login

Fair, but what if simple economics/margins do not allow you to offer the old price/package. Ex, say you license Twitter data at $0.10/1k, and Twitter decides one day that they want $0.15?

What do you do when your old pricing scheme is no longer profitable?




You can head this issue off by charging more, because your margins for a SaaS should probably be in the 80~95% region, and if you're finding yourself thinking "I'll just add a 20% markup on top of Twitter's API rates then compete on price" or "I'll make a payment processing solution which charges 0.25% on top of credit card costs" then you can reasonably anticipate that this will eventually happen to you. So, for anyone thinking they might ever be worried about this, charge more. Cost-plus pricing has no place in software.

There's some costs which are difficult to anticipate prior to launch. One is ongoing customer support, and it is entirely possible to price below profitability if you get a lot of pathological customers in on the ground floor. If you've just got a few and the business is fundamentally sound, consider it a marketing expense and let them get weeded out by attrition. If you're like Spreedly or Chargify and discover that a lot of the early adopters in your space are toxic, then it's time to have the "Look, we're not in the business of subsidizing you" discussion. I'd have the messaging for that discussion stress that you'd like to continue offer the old terms but circumstances are tying your hands, and try to be generous on e.g. giving 6 months or so of lock-in to the old prices or assistance in moving them to a provider which is more suited to their needs. But honestly, at the end of the day, if the choices are a) not making payroll for my employees and b) ticking off a bunch of pathological freeloaders, I know what I'd pick every single time.




Consider applying for YC's Spring batch! Applications are open till Feb 11.

Guidelines | FAQ | Lists | API | Security | Legal | Apply to YC | Contact

Search: