We're ready to launch. I was thinking of initially launching with a simple 15-day trial and a single paid plan that's around the average price point our competitors charge. This is fast to do and will only take a few days of dev effort. On the other hand, ALL of our competitors offer a free plan (restricted features, etc) and 4 paid plans on average. Each paid plan has feature restrictions, limits on other stuff, etc. That will probably take us an extra 2-4 weeks of dev effort to add the restrictions into the app on a per-plan basis, make sure it all works, let people upgrade between plans, etc. My question is this - should we just launch fast with sub-optimal pricing and fix it later, or should we invest the time to build out the plans with feature restrictions and a free plan, etc?
Having done 10 startups operationally as head of sales and marketing and having researched why startups fail and succeed over 25+ years, I believe that it all depends on what you are trying to accomplish. Do you know who your target customer is? if so, do you know the problem you are solving for them and the degree to which they are struggling with solving it now? If so, do you know that the solution you are putting forth is solving it in the way that is useful to them? If so, do you know the value they place on you solving this for them? That is, have you done some type of rudimentary pricing analysis? The follow up to each of these questions is "How do you know these things are true?" I believe that the key is to find out truly why they would hire your product over whatever way they are getting it done today and how much that is costing them. Please note that you have a theoretical 9X problem to deal with as well. That is, founders typically overvalue their solution by about 3X and the customer overvalues the current "solution" by about 3X. If you have not done these preliminary things then I would make sure that the launching of your product moves you toward these answers (and is not too expensive as you do not want out run out of money unnecessarily). If not, get out of the building and talk to your target customer to find these things out first. BTW - Do not assume that your target customer assumption is correct. Life is too short to build something that no one wants.
I think at this stage there are a couple things to research 1) your audience and their behavior in trying new things 2) Test it out... it's really hard to tell unless you try it and see what works. Most companies are using the freemium approach only cuz it makes sense with their product/service but also it makes sense with their business model.
The question itself suggests that to some extent you're thinking about your product as generic, which I'm sure it's not. If your product can meet some of your customer's needs better than competitor products, that's what matters.
Based on my experience, if you position your product accordingly, you could very well acquire subscribers without free trials or freemium plans. Why not get paid up front and offer a satisfaction guarantee?
I would start with one plan. It's easier to add plans than to drop them.
Please call and we'll brainstorm together.
Great question, and pretty common in a new product launch. There are a lot of factors at play which may affect your go to market strategy. In line with Lean methodologies, the simplest approach is the best. You can launch with what you have already and iterate later once you have some feedback and analytics to guide you in what your customers like. It also depends on how you plan to launch. If you are going to run a national marketing campaign and pump lots of money into it, then I would advise doing more research first. Maybe first launch in a small focus group and experiment with various pricing models until you see which one works best.
On the other hand, if you have existing competitors which are not significantly differentiated from your product in feature set, and target the same customer groups, then you can trust they may have already figured out what works, so replicating their model may be the best choice. Happy to discuss more.
While some experts have already share their thoughts, I am excited to share this excellent post by Price Intelligently, at: http://www.priceintelligently.com/blog/value-based-pricing
In general, their blog is GOLD for SaaS pricing. I am sure you will make the right decision!