SaaS Pricing Strategy: The 10x Rule(sixteenventures.com) |
SaaS Pricing Strategy: The 10x Rule(sixteenventures.com) |
Two questions:
(1) would trying this with products that don't include anything physical alter the effect?
(2) how ethical is it to use the Decoy Effect?
I am not really sure why ethics would come into this discussion. Do ethics come into picture when you are considering/selecting databases or programming languages?
edit: rephrased.
This is easy said than done though, depending upon what business you do.
Normally, I like to test pretty much everything (start with 10x, compare with 9x/11x maybe) but when it comes to prices, I personally feel A/B testing them is a bad idea.
does a metered pricing fall into value? meaning if someone generates 1000 reports should it cost them 100 dollars? what if it's an all or nothing situation. the value comes from when they receive most of the 1000 and no value when it falls lower than 300? does a metered pricing make sense in this case or does a monthly subscription makes sense?
So if your user benefits by making an additional $100 by using your product, you charge him $10.
For example, if you have an accounting app that saves the customer $2000 a month in manual bookkeeping, then your app should cost $200/month.
2) Show how you've worked out the value (e.g. 1000 reports = 20 hours saved. 20 hours x $100 (wage of target users) = $2000 value generated)
3) Use conservative figures and say 'get value from X' OR use higher figures and say 'get up to X value'
So in this scenario, say you don't know what the end user is planning to do with the collection of reports and that the user themselves might not have a clear idea of ROI until the report is in their hands and they are able to extract some value from it. Simply having more of it does not necessarily guarantee value but rather what they do afterwards that determine the value of the reports and the quality of the reports (which they choose the data source).
Does this make sense? Basically the issue I'm raising is, what if you can't predict a positive ROI from the reports generated by the user of your software until their intentions with the report is known and after they take action?
...but someone will argue the act of generating the reports automatically and the volume of reports generated IS the value. This argument also has merit because if they were to hire someone to do this, it would cost them X amount of money and using software saves them X amount of dollar and time. The quality of the data source they chose to generate the reports is outside of the software's control.
Maybe I'm just overthinking this...but it does seem like metered billing makes sense because in order to generate the same number of reports, it would cost time and money. If somebody determines that they can do it better and faster and cheaper but still wants to use the software and not pay for even 1/10 of the cost of hiring someone to do it, then maybe they are a niche to not pay attention to. Maybe there's no money in that niche, and it should be ignored altogether. Perhaps even targeting this niche that is resistant to paying for even 1/10 of the cost of generating reports without the software should not play a factor in pricing.