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Micro SaaS Academy

Pricing Your SaaS

Pricing for Profitability

Charge more than you think

Underpricing is one of the biggest killers of any SaaS business

You should plan to charge more as your app gets better

Example: Business #1

Stats

$9/month

10K revenue a month

1111 customers

If you ahve a 1% conversion rate. You need 111,000 visitors

(The above does not include churn)

Example: Business #2

Stats

$49/month

10K revenue a month

204 customers

If you have a 1% conversion rate. You need 20,400 visitors

(The above does not include churn)

Bulletproof Tiered Pricing

How to Create Multiple Plans

Feature Gating

Restricting certain features to certain plans

Business features often sit on the higher plans

Resource Limiting

Restrict the valuable resource of your product

E.g. The starter plan can create 50 descriptions a month. The business plan can create 500 descriptions a month

Per seat pricing

Each user pays X amount of dollars per month

Great for targeting B2B markets

Offering Free Trials

Why Not?

Cost: offering a free trial can be costly in terms of resources required to set up the trial and support trial users

Low-Quality Leads: free trials may attract users who are not necessarily interested in your product but are only looking for a freebie

Length of Free Trial: if the free trial period is too long potential customers may use the trial period to get value from your product without paying

Why you should?

Customer Acquisition: more users equals cheaper acquisition

Increased Conversion: allowing potential customers to experience the value of your product before making a purchase decision

Customer Feedback: a free trial can provide valuable feedback from customers on your product

The Dangers of Lifetime Deals

Why do it?

Generates cash flow: lifetime deals can provide a significant amount of upront cash flow, which can be useful for funding product development, marketing and other expenses

Customers in your niche may be tired of paying monthly costs. Dependent if your product is something customers will use regularly

Why not do it?

Lower lifetime customer value

Increases support costs: lifetime customers may require more support that regular customers, as they are more likely to encounter issues or have questions over the lifetime of the product

Reduced pricing power: prices cannot be changed

Requiring Credit Cards Up Front

Why you should?

Only serious users will sign up

You don’t have to get them to pay when their trial is over

Easier to convert them when they are excited for to use your product

Increased trial to paid conversion rates

Why not?

Lower your conversion rates

Fewer users will use your product. This means less feedback.

Harder to sell users just on your landing page

The Importance of Annual Plans

Annual

Predictable and steady cash flow since customers pay for the entire year upfront

Higher customer lifetime value

Reduced churn, since customers have already paid for the year and are less likely to cancel their subscription

How to get upgrades?

Offer free X

Typically it’s free months. Phrasing it as free X seems to have a higher conversion rate.

Don’t Offer a Free Plan

#1 Misleading Signals

If you’re offering a free plan, you won’t actually know if users are just using your product because it’s free or if there is enough to warrant paying for it

Your free users may give you an incorrect signal if there is actually paying demand for your product

Your free users may not even end up being your target market. This could be some subsection of your niche that isn’t what you actually want to target.

#2 Free Users Aren’t Free

As a solo founder, time will be your most limiting resource. If you have to spend half your day handling free users, you’ll be neglecting your paid ones

This will decrease your motivation to move forward. It’ll feel like you’re doing work for nothing.

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