Growth Hacking, Retention, Acquisition, Conversion: Growthmint

Day 14: Pricing

Proper pricing is hard to nail down, but it’s very important. Price too low and your costs will quickly overcome your profits. Price too high and you’ll risk not bringing in enough sales.

You need to do your research and collect data from your industry. What are you competitors' prices? Is your product positioned as a lower price option?

You'll also want to consider the actual costs of running your business and the value of the products you’re replacing.

Grandfathering customers

There’s a good chance you’ll raise your prices at some point. I highly recommend you don’t raise prices on your current customers and “grandfather” them in instead.

Your customers will appreciate it and you'll avoid bad reactions spreading on social media. Often the money you'd make by raising prices on your current customers is not worth the ill will.

Pro Tip

If you must raise your prices on current customers, though, think carefully about how you communicate a price raise as they can easily get upset.

Pro Tip

You want Goldilocks pricing - not so high that people don’t buy from you, but not so low that you can’t sustain your business. This requires testing out different prices to see how potential customers react.

Pricing structure for Plans

Talk to your customers and group them into segments based off common characteristics (company/team size, industry, etc.) or usage of your product.

SaaS companies typically break apart plans by usage or features. Creating plans around how your customers work can be very effective and make them easier to understand.

Pro Tip

Consider including options for teams. It often requires small tweaks to the overall product and a team is much less likely to leave than an individual. Also, you can experience negative churn as a company grows and adds more team members.

Annual plans

For enterprise sales, annual payments can be a helpful analogy for enterprise buyers who are used to the legacy enterprise pricing model of annual licensing fees.

They also help to guarantee cash flow or recoup customer acquisition costs more quickly as you recieve a year's worth of revenue from the customer up front. Annual plans with appropriate discounts can be a great tool for getting a much longer commitment from your customers while rewarding them for making that commitment.