Brief Summary
This video discusses five common pricing mistakes that SaaS startups make, which can hinder their growth and revenue. The video emphasizes the importance of avoiding subscriptions, anchoring prices, free plans, free trials, and pricing too cheaply. It provides practical examples and insights based on the creator's experience building 24 businesses.
- Avoid subscriptions: Subscriptions can be a barrier to entry for customers and lead to lower conversion rates.
- Anchor your prices: Use price anchors to provide context and make your pricing seem more reasonable.
- Remove free plans: Free plans can attract a large user base but often lead to low conversion rates and limited revenue.
- Avoid free trials: Free trials can lead to customers not committing to a purchase.
- Don't price too cheaply: Pricing too low can signal a lack of value and hinder your product's perceived worth.
Why your SaaS makes $0
The video starts by highlighting the importance of pricing in SaaS marketing. The creator shares his struggles with pricing his products and how he eventually found success by experimenting with unconventional pricing methods. He emphasizes that pricing is crucial for determining a product's value and attracting customers.
Mistake 1: Subscription
The first mistake discussed is relying on a subscription model. The creator argues that subscriptions can be a deterrent for customers, as they perceive the recurring cost as a burden. He provides a comparison between a subscription product and a one-time payment product, demonstrating that the latter can generate more revenue upfront. He also addresses concerns about potential overuse by offering alternative solutions like credit-based systems.
Mistake 2: No Anchor
The second mistake is not anchoring your prices. The creator explains that without a reference point, customers struggle to understand the value of a product. He recommends using price anchors, such as offering a more expensive plan with additional features, to provide context and make your pricing seem more reasonable. He illustrates this concept with examples from his own products, Zenvo and Indie Page.
Mistake 3: Free plan
The third mistake is offering a free plan. The creator argues that free plans can attract a large user base but often lead to low conversion rates and limited revenue. He provides a mathematical breakdown to demonstrate how a free plan can require a significant number of visitors to achieve a desired revenue target. He also highlights the benefits of removing free plans, such as attracting higher-quality users, increased motivation, and cost savings.
Mistake 4: Free trial
The fourth mistake is offering free trials. The creator argues that free trials can lead to customers not committing to a purchase. He suggests three alternatives: improving the landing page to clearly explain the product's value, offering free credits tied to specific actions, and reducing the trial duration to 7 days while requiring a credit card upfront.
Mistake 5: Cheap
The fifth mistake is pricing too cheaply. The creator emphasizes that pricing too low can signal a lack of value and hinder your product's perceived worth. He recommends pricing slightly higher than you think your product is worth, suggesting a minimum of $19 for one-time payments and $5 per month for subscriptions. He also highlights how higher pricing can lead to customers valuing the product more and getting more out of it.
But but but...
The video concludes by acknowledging that these mistakes are tailored to the creator's experience and may not apply to all situations. He encourages viewers to experiment and find what works best for their specific products and target audience. He also emphasizes that he is not affiliated with any of the products mentioned in the video and does not accept sponsorships.
