Ask HN: SaaS Pricing Model? Plans or charge per user
I am trying to figure out the pricing model to my new SaaS app. It is a B2B app similar to Yammer and Basecamp.
Yammer charges $5 per user, while Basecamp has plans (similar to X users for $Y). The Basecamp model would allow me to make "more" money off of the smaller customers, while the Yammer model would allow me to make more money off the the larger customers.
I was wondering what you think about these pricing models and which one you think is best to maximize profit(not user count, etc)?
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Sean - I always ask the following two questions first: "who told you they would pay money for this?" - which is a good place to start to figure out the types of companies interested in your offering. And then "why would they pay money for this?" - which helps flesh out the value perception of your offering for those types of companies.
The thing is, if you can't accurately answer those questions, you should go back and try to. That might mean seeking out potential customers and talking to them. There is a whole movement around this - Customer Development - which is all about product development that is aligned with customer needs. Turns out it applies to pricing, too.
You might find that you will have different types of companies with different value perceptions. This is where Market Segmentation will come into play and you could - as some of the other comments said - end up with pricing plans for different segments that are themselves quite different. Nothing wrong with that. However, as a small startup that might be taking on too much, which means you'll have to make that very difficult decision of whether or not to focus on a single market segment and dominate. Not easy - but nothing worthwhile is, right?
The problem with talking to potential customers is that you can't just ask them what they'd pay! You have to figure out what problem they have, how they want to fix that problem, how you can help them fix it, what value they see in having the problem fixed, how they'll buy (to the point of others here), etc. All of that goes into determining a price for your offering. Remember, Pricing is Marketing.
So what Yammer charges, or how 37Signals priced Basecamp is not relevant here until you fully understand who your customer is, what their value perception of your offering will be, and how & when they'll buy. Using those companies as a reference point is really only useful to see what others are doing out there, but what they are doing may - or may not - work for you.
That said, I Googled you (awkward, I know) to see if I could find what you're working on....ScoopBase is what I found. Based on your tag line "Your team has questions, give them answers" it would seem that there might be a need for some "super users" to answer questions / edit responses and perhaps unlimited "view-only" users. Perhaps you would price based on how many “super users” there are, or maybe based on the other features of your offering. Perhaps some companies – large or small – would rather pay based on certain features and the number of users should be irrelevant. Or not. Those are questions you need to get answered from your potential users. Pricing - no matter what - comes down to the willingness to pay of the customer. The metrics you use to build your pricing must be valuable enough to the customer for them to pay.
Good luck to you on your new venture!
What do you think the bulk of your customers will be, small or big companies? Small business tend to like static prices (plans) because it is easy to budget. It also makes it easy to offer 3/6/12 month subscriptions which can help lock in customers.
If you price per user, but not everyone at a company needs the product, they will tend to restrict the use of the product to minimize the expense to them. With plans, you still have this, but to a lesser degree I believe.
Depends. Precisely you need a histogram of customer/company. So you will know how many companies have <5 customers, how many 5-10 etc. Using this info you can build a quick model to decide how you want to go.
There are other factors though like how fast the companies are to adopt new software. The big ones are slow.
It will give you maximum profit if you charge both a base price for each month and certain amount for each user.
You could do both - e.g. 5 users for $x, 10 for $y, $z/user thereafter