Today I decided to make less money…
- My pricing page before
- My pricing page now
Up until now, figuring out pricing for my SaaS has been unbelievably difficult. I’ve spent days playing with
different models and I just couldn’t find one that I was happy with.
So far I’ve made 2 big mistakes, and hopefully, you can learn from them.
For context, my tool Ferndesk has two core features:
- It can writes and publishes help articles from your codebase, your changelogs, videos, internal docs etc
- It scans scans your support inbox + product releases and find gaps and outdated content in your KB
Mistake #1. Pricing based on costs
I am running a very tight ship at Ferndesk.
100% bootstrapped, still solo, zero outside funding.
So I’ve been super wary about how much I spend.
Running both core features at a really high standard is VERY expensive.
Thinking about how much I \ lose from power-users made me overthink…
“What if I have 0% margins from one power user, or worse, negative?!”
So I started to penny-pinch on features, and went for usage based pricing.
Example: I was charging for every article drafted, regardless of whether they were good enough to publish or
not.
But customers aren’t stupid.
When they visit my pricing page, their first thought is- “so I’ll be charged even if the output is bad?”
That’s no bueno.
So instead, I’m switching to outcome-based pricing.
$0.5 for every article PUBLISHED – not drafted.
Even though this will undoubtedly be WAAAAYYYY more expensive on my end – this removes a HUGE
cognitive burden from my customers.
Mistake #2. Introducing unnecessary complexity
- Every single line of copy…
- Every single concept introduced…
- Every single clause…
Gives customers something extra to think about.
Stack up enough of them, and they get overwhelmed, and leave.
Simplicity >>>>> than everything else.
ESPECIALLY if you’re building something new and don’t have the proof to back it up.
If your users ask,
“What do I get for $X?”
Complexity #2. Adding tiered pricing when I really didn’t need it
I split my pricing into 3 tiers- Solo, Startup and Business with increased limits on each plan.
Again, I fell into the trap of doing something because it’s what everyone does.
Again, every additional word on your page is extra complexity that must be explained to the user. Introducing
tiers wasn’t making things easier for me.
At my former company Senja, we only really started growing when we killed all tiers and opted for a single plan.
1. Kill as much complexity as you can.
Do you really need those extra paid tiers?
Can you pick one tier and meter it.
Do you really need to introduce a new concept? Can’t you anchor it to something your customers already
know?
2. Focus on outcomes, not on running costs.
You will almost certainly lose more money this way.
Margins may be tighter, and you will have to watch out super carefully for abuse.
But in return, you will get happier customers who know you care about their success with your product.
