I have referred to Jason Cohen a few times this year as I read his blog at asmartbear.com. Jason is the founder of WP Engine and has quite a track record. As we try to fine tune our pricing in this piece in reference he talks about the pricing positioning – one that could potentially help you 8X your price. Super tempting.
What is the right price? Are you charging too high leading to fiction in conversion, long sales cycles thereby reducing the revenue velocity? You need to closely examine if the extra per deal is worth it in terms of the friction it adds to the sales process.
Jason Lemkin, Founder SaaStr in a recent Q&A addressed this question. The pro for the selling organisation is obvious. Predictable revenue – irrespective of usage. But is it sustainable and will users continue to pay based on this model? He raises important questions like : “….
- Can’t a customer pay in part based on usage, if they want to?
- Does my price automatically go up, even if I just add 1 or 2 users to my account?
- Does every type of user “cost money”?
- Do I have to figure out now how many users I need for the best pricing, when I don’t really know? “