How can I encourage big customers to pay more for my product?


4

What strategies do you use to offer a range of prices, while encouraging big customers to pay more?

I offer a range of prices with different restrictions. I didn't want to exclude individuals, but the idea is that enterprise customers wouldn't mind paying more to get fewer restrictions.

What ends up happening is that everyone gets the low-cost version.

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asked Jan 18 '10 at 02:18
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Steve Hanov
596 points
  • Not answering your question but you should watermark the diagrams generated by the demo. – Olivier Lalonde 8 years ago
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6 Answers


2

Rational consumers are always going to pay for only as much as they need, so if your different packages are just bigger versions of the initial small one, they're only going to upgrade as they absolutely need to. Which means you need to do one of two things:

  1. Trigger an irrational response. A lot of larger packages from SaaS companies aren't offering almost any additional functionality, but instead include something that caters to an emotional need, like ego or aesthetics.
  2. Don't include things in smaller packages that individuals can live without, but companies can't (or, the opposite: something individuals can live with, but companies can't). Give your use cases a significant review / re-thinking. Can you add increased branding to the lesser packages that larger companies would rather not have on their deliverables. Looking at usage of different features, are there things individuals use less that you can restrict to premium packages?
answered Jan 18 '10 at 03:51
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Jay Neely
6,050 points

2

Personally, I think you need to re-evluate your entire value proposition... I think the fact that you are not making enough money on this reflects a lack of focus on how your customers might use your software.

For example: I see what your software does, heck the name is "Web Sequence Diagrams". But doesn't your software do more than that? I mean a sequence diagram applies to many more things than just web access, no? Is there any reason you are only highlighting the web access portion of it? Sequence diagrams have many applications, and the last time I had to make one, it was a royal pain to do it in Visio, which was the best tool I could find at the time.

Now, I have spent several minutes trying to figure out how to navigate the site: There are many things that seem off:

  • Why cannot I click on the title image and get back to your home page?
  • Why cannot I click one of the images on your order page and see a larger version?
  • Why do you not say from which languages I can use your DLL version?
  • How much does your DLL version cost?
  • As a customer, why do I need a more expensive version?
  • I just find your web site confusing, you might do well to redesign it; make it up to date.

Some general comments:

  • Can you make the output graphics more high quality? It is relatively easy to create spiffier graphics, it would help your product greatly.
  • Do you know how your customers use your product? Is it used by business analyst types? If so you need Microsoft Office integration. This is far more important than multi-platform.
  • How about you use the competition for your advantage? Make a Visio plugin for creating these diagrams. Make sure you have a Word and Excel version too. Business types love to put stuff into Excel, they hit a key, and then magic happens.

But the biggest problem by far is this: You are giving your product away. Frankly, I don't know why anyone would buy the product if they can go to your home page and generate all the graphs they want. Why does anyone have to buy your product? Like Oli said: Put an ugly watermark on your site-generated graphs immediately. Put a URL on the generated graphs. If people want a clean version, they have to pay.

This is not actually a list of things to do. What I would advise you to do is to re-evaluate your whole product offering. Find our who your customers are. Are they really doing this web traffic analysis that your server version supports? Are they struggling with the command line version when what they need is a GUI-based program? And who the heck is freeloading off you on the diagrams you are giving away? You may be wise to continue giving them away for free, but start asking for a registration in order to use them. Part of the registration is to have them input their industry. Keep track of how many graphs they generate (and how often), and that will be the key to your pricing and possible product revamp.

After you do this analysis, then you can start figuring out how to maximize your profits based on who your users are.

answered Jan 18 '10 at 18:48
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Gabriel Magana
3,103 points
  • Thanks for your detailed input! – Steve Hanov 8 years ago
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2

First of all, I agree that I'm suspicious you're giving too much away in the first-page demo. That said:

You've priced based on a particular concept of what your customer is like: they're a large company with multiple employees carrying out process modeling. It looks like experience is showing you that concept is not correct.

You probably need to know more about your customers to really change the pricing, but I can take a few guesses at what's going on.

First of all, your $99 price point might be so low that an individual employee can put it on their company credit card without having to get purchase approval. If that's the case, what you've got is one individual at one company buying your product one time -- nobody's trying to use the cheapest version, they're all using the version they can most easily buy. Your model of how customers spend doesn't match how customers actually spend.

Second, you don't really know what specific needs differentiate one customer from another. What you need to do is position different feature sets of your product to match those different needs. (Adobe, for instance, tries to do this. Badly.) Number of seats is one possible need, but so is sharing, or output format (PDF download?), or different styles of model output (Rose, UML, etc.). You need to call up a number of actual or potential users and talk to them about the output they create and see how that differs. I bet that more big enterprise users need to share diagrams and edit them as a community, and probably also use styles like Rose, but I have no real data to make that bet. Call or at least survey your users and get that data yourself, then try to fit your users into 3-5 buckets of features, then price for each bucket.

answered Jan 19 '10 at 15:10
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Wade Armstrong
181 points

1

When I think of enterprise software, I think of:

  • multi-company, multi-user capabilities
  • integration with other applications
  • collaboration capability

Other than collaboration, I don't see your product being used by multiple employees in a single company. Non-technical users are not going to like the text & command-line style of your app over a WYSIWYG graphical application.

If you could have some automation to diagramming a workflow, document sharing or a computer network, you could charge for each one. Larger enterprises all use these types of apps and they change frequently. Being able to dynamically create diagrams after changes would be a huge benefit; you could charge an additional fee for a Microsoft SharePoint, BizTalk or the computers and servers on a LAN.

I know a firm that is adding a generic workflow module to their application (Currently they have some prebuilt models). They may be interested in embedding your application.

answered Jan 18 '10 at 10:24
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Jeff O
6,169 points

0

You can just try offering multiple level of packages (e.g. Platinum, Gold, Silver, Bronze) each with its own list of features. In general, you'll find that very few companies will pay for the Platinum edition, and many will prefer one step down from the top of the list. So the idea is to create one more level than you realistically intend to sell, and be aware up front that very few companies will pay for the top package.

answered Jan 18 '10 at 02:49
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Elie
4,692 points

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Offer a unique feature in your product that nobody else has. Then you can demand a higher price (at least for a while until competitors follow suit).

answered Jan 18 '10 at 09:08
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Output Logic
341 points

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