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Is this kind of experimentation feasible for expensive products targeted at businesses? A product that costs $300 a month. It would seem dangerous to try this and get bad press and angry customers. The problem is (1) people know how much it cost before, it's not impulse buying (2) one business might decide to buy a second license and notice that the price has doubled.

So, is there a way out?



The best way to do this experimentation (based on my experience when I started selling RateMyStudentRental to colleges and universities), is to start directly selling to businesses before posting official prices. Put up a general "Call for pricing" information page (no, this doesn't necessarily mean anyone will actually call you), and hit the streets.

One thing we found early on selling to universities was that if we priced ourselves to low, some schools wouldn't give us the time of day, other schools would start comparing us to "competitors" who weren't our competitors at all and did nothing like we did, but who shared a similarly low price.

I still remember when we sold our first (small 3000 student) school for $6000/yr. When they gave us the check they said, "Eh, that's a drop in the bucket." Talk about leaving money on the table.


Anyone who does custom proposal/sales work has had those moments. The moment after they say yes when you suddenly realize you charged drastically too little. Live and learn.


Create a premium product with a number of features that you can defend as costing lots of $ to develop, see if you can interest people in the premium package.

If enough people do drop the original one and make the premium package the 'normal' one, offer a discount to your old users.


I don't think that will work. If you have a choice between "cheap but does what I need" and "expensive and does what I need", which will you pick?

People aren't going to spend more for the hell of it. I don't think this is a useful technique for determining the minimum viable cost for a service.


Every car ever sold had to compete with other cars that were 'cheap but does what you need', and yet, more expensive cars still get sold.

Even the same model car but a more expensive trim will sell for a higher price than the same model without the trim.

Features can be used to substantially increase the price of a product while only marginally increasing the cost.


You're assuming that people always act rationally when spending money. Any salesperson will tell you that they don't.


Start (too) high, go down. When you stop getting more-than-double the users for half the price, stop.


I don't think you piss off too many existing customers if they find out it's more expensive later on. They will feel like they got a deal. Now if it was half the price you could easily deal with some anger.




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