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New SaaS entrepreneurs:
Don't discount the opportunity to go into an established category and offer more value (for less cost) than the incumbents.
"Lower price for more value" is a great competitive wedge.
Don't discount the opportunity to go into an established category and offer more value (for less cost) than the incumbents.
"Lower price for more value" is a great competitive wedge.
Too many founders have drunk the "charge more" Kool-Aid and try to offer a premium price from day 1.
In many established categories, you're not going to be able to compete if you have fewer features but a higher price point.
In many established categories, you're not going to be able to compete if you have fewer features but a higher price point.
Before I get too many replies and emails:
YES, in certain cases offering a higher price (for a truly premium offering) is a better approach.
But in software (in most categories) your pricing is already being anchored by your competitors:
https://justinjackson.ca/charge-more
YES, in certain cases offering a higher price (for a truly premium offering) is a better approach.
But in software (in most categories) your pricing is already being anchored by your competitors:
https://justinjackson.ca/charge-more
In many categories, the incumbents have gone upstream, and their pricing is now aimed at the enterprise. They've left the SMB market behind.
There's a huge opportunity in targeting SMBs/prosumers who can't afford enterprise prices.
There's a huge opportunity in targeting SMBs/prosumers who can't afford enterprise prices.
I'd argue that most new businesses have to compete on price because they're... new and unproven. 
You haven't earned the right to "charge more" yet.
You don't want to compete on price forever, but in the beginning, it's often necessary. https://twitter.com/N0RESP0NSE/status/1359226922593628162
You haven't earned the right to "charge more" yet.
You don't want to compete on price forever, but in the beginning, it's often necessary. https://twitter.com/N0RESP0NSE/status/1359226922593628162
BTW – I'm not talking about charging $5/month when all your competitors are charging $99/month.
I think @crisp_im is a good example: they charge $99/month for their unlimited plan, which is significantly cheaper than what Intercom charges.
More value, at a lower cost.
I think @crisp_im is a good example: they charge $99/month for their unlimited plan, which is significantly cheaper than what Intercom charges.
More value, at a lower cost.
Another example:
@endcrawl provides software that generates film credits. Their pricing starts at $499 per project.
That might seem like a "high price," but they're still faster + cheaper than doing it the old way. https://twitter.com/iampliny/status/1359229092198043664
@endcrawl provides software that generates film credits. Their pricing starts at $499 per project.
That might seem like a "high price," but they're still faster + cheaper than doing it the old way. https://twitter.com/iampliny/status/1359229092198043664
Both @crisp_im and @endcrawl are upstarts in established categories.
Neither is offering "bottom of the barrel" pricing, but they do offer a significant amount of value (for a lower cost) when compared to the alternatives.
Neither is offering "bottom of the barrel" pricing, but they do offer a significant amount of value (for a lower cost) when compared to the alternatives.
Even premium-priced upstarts end up being a "lower cost for better value" play.
In WPengine's case, they were more expensive than Bluehost, but they dramatically reduced the amount of time + money a site owner had to spend on security and updates.
(h/t @asmartbear)
In WPengine's case, they were more expensive than Bluehost, but they dramatically reduced the amount of time + money a site owner had to spend on security and updates.
(h/t @asmartbear)
In the beginning, you have to prove yourself!
Your product hasn't built any trust. There's no reason to market it as a "premium service at a premium price."
Many of the luxury brands you know today had humble beginnings.
Most folks have to start small.
https://www.crfashionbook.com/fashion/a26934683/evolution-gucci-designer/
Your product hasn't built any trust. There's no reason to market it as a "premium service at a premium price."
Many of the luxury brands you know today had humble beginnings.
Most folks have to start small.
https://www.crfashionbook.com/fashion/a26934683/evolution-gucci-designer/
Plus: many old incumbents have crusty, slow software (with bad UX).
Enterprise customers have to put up with it, but SMBs want more:
"They don't have the features I want."
"The features I want are stuck in $999 enterprise plans."
"This software is unusable and expensive."
Enterprise customers have to put up with it, but SMBs want more:
"They don't have the features I want."
"The features I want are stuck in $999 enterprise plans."
"This software is unusable and expensive."
