MegaMaker - Val’s pricing conundrum

Choosing a price for your software is one of the hardest decisions you can make. Changing prices after you've launched is even harder.

I was recently reminded of this because my friend Val Sopi is considering adding some new pricing plans.

Val runs Blogstatic, a simple blog hosting tool.

Currently, his pricing is $19/year per blog. His pricing remind's me of Carrd, which became incredibly profitable with their landing page builder, and charge about $19/year.

In fact, Blogstatic has become known as "Carrd, but for blogging."

The challenge is Val hasn't yet been able to unlock the volume of customers he'd need to make the $19/year work. At that price-point he'll probably want to get to at least 5,500 paid blogs; which is a lot!

So naturally, Val is exploring alternative strategies to boost revenue, and adjusting pricing is a significant lever to pull.

Asking for public feedback on your pricing is tricky! After reading the responses to his tweet, and the responses on the MegaMaker Slack, I made a video for Val with some initial thoughts:

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Remember, the only information that truly matters is coming from the people who are searching for a product like yours.

Everybody has ideas on what pricing strategy is best. However, the only way to know is to watch people buy a product, and then figure out what went into their decision process.

This is one reason I send an automated email to every new Transistor customer that looks like this:

Having conversations like this with people who have just decided to use your product helps you better understand how buyers make their purchasing decision.

One reason I've been critical of generic pricing advice like "charge more" is that it's devoid of the purchasing context. Products aren't purchased in a vacuum; they're bought and sold in a market that has a unique mix of costs, competitors, and demand.

Before you can determine which direction you should go with your pricing, you need to ask a few key questions:

1. Who is in motion looking for this type of product?
2. What options are they considering?
3. What is the pricing of those options?
4. What product do they end up buying, and why?
5. What are your main costs for running your product? (bandwidth, hosting, etc)
6. What "value metric" for pricing makes the most sense? (charging per blog, charging for additional team members, charging for storage, etc)

I'll cover each of these in the next newsletter.

In the meantime, feel free to reply to this email and let me know what you think!

Cheers,
Justin Jackson
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