Be thoughtful about your pricing strategy.
I remember a year or so ago asking a founder of an Austin startup what he was going to charge for his SaaS product (which is launching at DEMO) and he said $X.00/month. When I asked him how he came to that number, he replied “that’s what we think the market will pay”. A couple thoughts: (1) don’t “think”…survey, (2) don’t leave money on the table unless you are competing on price, and (3) if you are solving a pain point, price your product or service accordingly.
I would only go to market with one of 3 prices: free, just below market or at a premium to the market. This is an over-simplification and there are many difficulties to making the first two work as price wars are incredibly costly, but if you are anywhere in between the bottom and top, you need a huge marketing budget to educate the consumer why you are worth the price you are charging.
Rupert Murdoch has been struggling with pricing his prized acquisition, the WSJ, which I subscribe to (in print only) and read daily. They clearly have a problem segmenting with at least 5 different rates: online only ($2/week), print only ($2.30/week), print and online ($3.00), mobile only ($2/week) and mobile premium ($1/week if you subscribe to print or online). They need to simplify this as it causes a lot of customer confusion and is hard to reconcile. My sub recently came up for renewal and they tried to triple the price on me. When I didn’t renew, they sent me 2 letters in the mail, each offering a slightly discounted rate to their original proposal. They ultimately retained me as a customer since I googled a rate in line with what I was previously paying but why play the game? I am less happy with the service and they left money on the table. It pays to have a thoughtful (and consistent) pricing strategy.
