Ask HN: Help me price my SaaS app | Hacker News Reader

Ask HN: Help me price my SaaS app

5 pointsthrowAway2021_19 comments

I've finally finished the MVP for my first SaaS app, but I'm having a hard time figuring out the pricing plans.

It's not something new or revolutionary, but marketed properly will gain traction.

Here's a description of the app: - register and account and allow your clients to book services with your business - businesses can opt-in to send clients SMS notifications on several events (confirmation, reminders, reservation changes) - as a business you get a booking page for your services - domain.com/my-business - you can integrate it with your website: iframe, redirect or js widget - businesses can have multiple staff (staff = people, gym rooms...etc) - clients can book any imaginable service (free, fixed price, variable, group bookings...etc)

Main selling point(s): - there's a new law locally which kinda forces businesses to digitalize as much as possible - there are a few solutions, but they all lack SMS notifications

How do I price it now? -- V1 I went to meet a few clients (6 actually) and they all said it's too cheap (of course they signed the contract) Currently, I charge a fixed fee per staff (paid at the end of the month) + fee per SMS sent (prepaid, load the account with SMS credits). So, if a business (hair salon) has 3 employees, which have an average of 100 bookings/mo, the business would pay 3 x staff fee.

-- V2 Another option would be to price it per reservation and include the sms notifications in it, but 1 client out of 6 doesn't want all the sms notifications, he wants only 1. So if the business will have 200 bookings in a month, it would receive the bill at the end of the month. But what do I do with the cancelled bookings and what if the client doesn't pay the bill? I still pay for the sent SMS notifications :(

-- V3 Please help!

PS. this is a throwaway account because my work colleagues know my real one and I want to keep this business private. PPS. sorry for the long post and thank you for reading it

It's great that your customers have said it's too cheap. That tells you two things.

1) they value what you are selling

2) they don't want you to go out of business.

What have the businesses said about how you charge them? I assume you've had this conversation with them? How do they expect to pay?

My gut instinct, (not knowing your business) is the price per staff is a good way to go as it's simple for the business to understand. You should also be able to figure out how many SMS messages that business would send per month, as there are only so many appointments each staff member could take. Of course, this is an average, so if you used an average number of SMS messages, and include that into the staff fee, you make it easier for the business to understand what they'll be paying per month.

You can take that SMS fee and and try to 5x or 10x it in your pricing model and see what the response is. This also helps to make sure your costs are significantly covered should there be an increase in SMS usage or pricing.

Keeping the pricing model simple for your customers has the dual effect that it's simpler for you to build, simpler for them to understand, and simpler for you to explain to them.

Simple, simple, simple. I made the pricing on our website WAY to complicated when I thought it was simple. We charged by the number of views with decreasing amounts as people used up views. It was a nightmare. Seemed simple to me, lots of customers didn't understand it, then thought it was too expensive, while others thought it was too cheap. TBH, they were both right, depending on what type of customer you were. I optimized for the little guy, when they didn't want to pay at all, and didn't charge the big guys enough.

Hope this helps, best of luck, and congrats!

Hello and thank you for your time.

Yes, I'm trying to catch both small and mid customers, maybe that's a rookie mistake.

Another problem would be that a customer said he doesn't want SMS messages, he wants just the app.

So pricing based on SMS, would still result in unequal pricing for those who don't want SMS notifications.

Should I tell them: price per reservation is 5 units with SMS notifications included? (the problem with this would be that in the future I plan to add more SMS notifications and I cannot raise the price every time).

One thing I can tell you. Early on, focus on 1 segment if possible. Small customers are very different than Mid-size customers. Different pain points, different needs and possibly different budgets. I would try and focus on finding that product market fit which is to figure out which segment is the best customer segment for your product in the early days. Start with them. Forget the others. Once you get enough traction, you can add other segments later.

This is one hell of a truth.

I think the customers I met are mid size. The number of current reservations they get over the phone and site contact form are between 100 and 300 per month (20-21 working days).

A way to convert these customers from phone to the web app is to include a link to the app and let them check the details (I'll think of something...).

Finally, I'm taking your advice: price per SMS notification and let's see how it goes :D

Top line: work out how much value it's giving your clients and then aim to price to capture a fraction of that.

Without your app, it'd cost your clients $X in hours worked doing the book keeping, organisation and confirmations plus $Y in lost business due to mixups / confusion / etc from the alternatives.

What units you charge in to capture this fraction (billing for usage, per seat, whatever) is your second question, but you want to keep it as simple as possible while aligning to the value that the client is getting. Per successful booking probably makes sense here (I would imagine...)

>But what do I do with the cancelled bookings [...] I still pay for the sent SMS notifications :(

I'd suggest accepting these as a cost of doing business and pricing high enough that it doesn't matter.

Without the app, the client is wasting 1h per day answering the phone and calling customers for reminders (or texting them). I don't imagine that all the customer who are calling will use the app all of a sudden, but it will happen in time.

45m-1h/day = 15-20h/mo (on average) 15h/mo = 10% of employee's working time

> Per successful booking probably makes sense here (I would imagine...) Another competitor is charging a fixed fee per booking and a booking is considered billable, if it's not cancelled after X hours after the start date/time.

Does your product have competitors? What is their price? You can learn about its pricing method.

You can be cheaper than them, and then you can adjust the price dynamically. It's no big deal, because this is the MVP process, such as my product https://care-eyes.com. Initially, our price was US$4.9, but then we made a lot of adjustments, and now it’s adjusted to US$39.9, which is a necessary stage

Yes, I've already checked them: they are pricing per seat or per reservation.

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