Where is the Price Point of Indifference for SMBs with a Web Presence?


5

Internally at our startup, there's a lot of belief that at some price between $15-$35/month, small-medium businesses are both:

A) Much more likely to convert and try a SaaS product
B) Much less likely to cancel that product so long as they're seeing some tangible value or think they will see it next month

Some examples from the consumer world include Netflix, where the average customer won't cancel for ~6 months even after they've stopped using the service (giving Netflix an opportunity to re-engage them) and gym memberships, where $29.95/month memberships go on for 4-6 months after disuse (I'm guessing due to the pschology of - "I'm going to try to go next month.")

Just wondering if anyone here has direct experiences providing web software to SMBs and noticing this behavior - and, more specifically, knowing at what price point it occurs ($19/month? $25/month? $34/month?).

Pricing SMB Saas

asked Feb 7 '10 at 04:26
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Randfish
1,001 points

1 Answer


2

One interesting data point:

ConstantContact just reported its most recent quarterly results. They have 347,000 customers and are focused in the small business space.

A few interesting points:

  • Retention is 97.8% (it has been in that range for a while)
  • Average monthly revenue is $33 (and has been in that range for a while)
  • Customers in the $15 and $30 revenue bands are about 78.7% (historical range has been 80%)

This is, of course, anecdotal, but I find it interesting.

Disclosure: Gail Goodman, the CEO of ConstantContact is on the board of directors of my startup, HubSpot. However, all of this data is publicly available:

http://finance.yahoo.com/news/Constant-Contact-Announces-bw-89189521.html?x=0&.v=1

answered Feb 8 '10 at 09:40
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Dharmesh Shah
2,860 points

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Pricing SMB Saas