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How To Read A Pricing GridMost revenue: 33% to 50% of total revenue comes from most expensiveplan.Most users: Either the plan called out or the second cheapest plan.Highest support costs: free customers or, alternatively, the ones on thecheapest plan.Biggest surprise: There is probably a “call us” option which is arbitrarilyexpensive even if none is actually listed.
SaaS Mathematics 101 Per-customer margins: very high (80~95%) Low fixed costs (~$500) Many founders would like $8,000 ~ $12,000 amonth: $9 plan: 1,000 to 1,500 customers $29 plan: 300 to 450 customers $79 plan: 115 to 175 customers $249 plan: 35 to 50 customers Enterprise pricing: 1 to 2 customers
How To Price Stuff? Align plans with customer success. Names matter. Feature segmentation can work, particularlywhere $$$$ customers have particular musthaves (HIPAA, etc). Charge. More. You are ridiculously underpriced. Your software costs less than 10% of the fully-loaded cost of their cheapest full-time employee. Avoid pathological customers – they’recheapskates.
“My biggest business mistake waswaiting so long to start building anemail list.” – Ramit Sethi (and me)
Email Is Like RSS That ActuallyWorks Email actually gets read. Email actually gets read by normal people,too. Email is “necessary time” rather than “luxurytime.” The psychological framing for your email willbe “surrounded by important work” not“surrounded by 56,000 items of unimportant,meaningless Internet chaff.”
Email For Fun & Profit Collect: offer an incentive for email +permission to content Educate: send pre-scripted content series toyour users, with goal of establishing trust andeducating about problem domain Sell: give them option to buy something whichsolves their problem
Tips For Successful Email Capture Ask for as little information as possible: name& email Have an attractive, boldly colored button whichpromises value not pain Minimize distractions – works best on landingpages Include a compelling offer.
Quid Pro Quo: Ask At Trial• Add an email opt-in totrials.• More opt-in than youwould expect: 25%+• Modestly depressesconversion rate to trial.(e.g. 45% to 42% on myAdWords pages)• Mostly a good optionbecause it is stupidlyeasy to do.P.S. Consider using the “onefree email” you get onsignup to do some lightmarketing.
Quid Pro Quo: One-OffResource• Gate a download onopt-in.• Incredibly highconversion rates –much higher thanto trial.• Fairly low cost:creating onebeautiful PDF notreally that hard.
Quid Pro Quo: One-Off Tool• Break out yourprogramming chops anddo a mini-project, gatedby email.• Opt-in rates around thatof trial through muchhigher (for high touch).• Can provide veryqualified, valuable leads.• High cost: do one of theothers as a placeholderfirst, then extend to this ifresults warrant it.
Three Simple Ways To Put OutThat Fire In Your HairHiya $NAME,Your hair is on fire, which is why you signed up for this handy emailed course onFirefighting: Hair Edition at doesyourscalpburn.com. This is your second out of sixemails. You can unsubscribe at any time.Water: Why The Obvious Choice Is All WetMany people have tried extinguishing the fires in their hair with water. You may haveyourself. If so, you know that it doesn’t work, because oil-based hair care productslike shampoos and waxes don’t mix with water. Thus, the fire just spreads evenmore. When we surveyed our customers over 72% reported failure with water.Repeat two more times.Continued on next slide…
Three Simple Ways To Put OutThat Fire In Your Hair (cont…)Have a question about your hair’s fire?We love hearing from folks. Do you have a question about your particular fire?We’ve probably put one similar out. Feel free to ask us a question. All emails areread by our Chief Firefighter, who has personally squashed 6,312 fires in the last 18months. We try to respond to everyone within 24 hours.Regards,BobChief FirefighterP.S. Got this far? Great, I’ve got a gift for you. Go here to download a free 15 pageguide on extinguishing fire on necks.
More Salesy Stuff To Do Pick the right plan for them. Make it decentlyexpensive. (e.g. Suggest column 3 out of 4.) Offer a time-limited bonus if they pull thetrigger in the near future. (Free consultingservices for onboarding = Total. Win.) Pre-answer all their objections. “Pointy” customer testimonials directly focused onthese issues.
Learn from the Masters Ramit Sethi (iwillteachyoutoberich.com) Motley Fool Whoever is outbidding everyone else in anyhigh-money vertical with a liquid affiliatemarket, like e.g. mortgages or online nursingdegrees, since they’re probably not stupid.
Three Steps To Improving FRE Script their first 5 minutes like invasion ofNormandy. Measure all user activity in first 5 minutes. Implement and test engineering / marketingefforts to change behavior in those 5 minutes.
A Deep Topic But In General Try to get people all the way to “activation” Tell them they got there! Just like Vegas, you’renot having fun unless people tell you soconstantly! If there is a social / viral component, put it inhere and obsess over it This builds companies. c.f. Zynga(boo), Dropbox (yay!) If the software requires lots of data entry /analytics / etc to work right fake it for now
For more details http://training.kalzumeus.com – I’ll swap youyour email address for a 45 minute videoteardown of the FREs for both of my apps plusa few others I rather like. Special bonus for Microconf folks: I don’tpresently sell anything, but when I do, it’syours. Send me an email.
Thanks for Listening Blog at http://www.kalzumeus.com Slides will be posted. See @patio11 Send me email. I love chatting about firstname.lastname@example.org
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Patrick McKenzie's talk at Microconf 2012, covering building systems to achieve marketing objectives.