The 5$ SaaS

Can a mod please change the of this article to point directly to the blogpost (<a href="http://ahmetalpbalkan.com/blog/the-5-saas/" rel="nofollow">http://ahmetalpbalkan.com/blog/the-5-saas/</a>), not via Heroku.<p>There is no reason for this redirect, plus I clicked through thinking that this article was from the good people of Heroku.

Availability bias. There are many SaaS companies making many different offerings.<p>Choosing $5 as your price point because everyone else does it, or because you think it would be an easy sale, or because you feel bad about asking more, is stupid.<p>Don't do that[1].<p>Give pricing a tenth of the care and attention you give to your code. Because it is the <i>single most important lever of profitability you will ever control</i>, and it is much easier to pull it before you launch than afterwards.<p>[1] <a href="http://chester.id.au/2012/09/12/review-the-strategy-and-tactics-of-pricing/" rel="nofollow">http://chester.id.au/2012/09/12/review-the-strategy-and-tact...</a>

My SaaS app was priced exactly 5$/month previously. It had a decent conversion rate, a handful of users, lots of support requests, and a bit of revenue.<p>Meanwhile I've increased the prices, the cheapest plan is now 29$/month. Guess what? Conversion rate didn't change, thus I gained new users at the new price point (I of course grandfathered old users), and of course the revenue increased almost by a factor of six. What's also interesting is that I get way less support requests from the people who pay more, thus the six-fold increase of the monthly price resulted in <i>more than six times</i> profit (profit = 6 * old_revenue - 3 * old_support_request_rate)

The the relatively recent rise of two big types of software pricing &#38; distribution is a opportunity to notice how different things in markets interact in these markets. If you spend your career in software you forget how weird an industry with n marginal costs is.<p>An app store lends well to $1-$10 apps creating a demand creating a supply.<p>Web based Saas lends well to $5-$50 apps creating a demand creating a supply.<p>If you need a sales consultant or a long decision making process you need to go into the 5-6 figures realm.<p>These things didn't happen because consumers really wanted smartphone apps that happened to cost around $1 or webapps that happened to cost $5 per month. The marble dictated the sculpture<p>Consumer webapps need to be sold as monthly subscriptions. Subscriptions have a customer decision making and vendor responsibility overhead that makes $5 roughly the lowest possible price, so you naturally get the "cheaper" apps bunching around the lowest viable point.<p>B2B web apps/services were able to crack into a price range that was inaccessible before. $1500 one off payment for a shrink wrap version is too expensive for self service sales &#38; too small for a sales teams. $99 p/m with 30 days free isn't. Whole programming cultures formed around this new opening.

I priced my side project at $5/month, because it was the lowest amount of money that made it worth doing the work.<p>I did A/B testing before I started charging, and there was no difference between charging $12/year, $3/month, $4/month, and $5/month. Which is crazy, but it reached statistical significance according to optimizely. And fewer customers for the same money sounded good to me.

He mentioned the github $5 plan however I always pays $7 each month since the beginning. I checked github pricing[1] and it's showing the micro plan starts at $7/mo. Is there a lower plan by buying in bulk, paying annually or else?<p>[1]<a href="https://github.com/plans" rel="nofollow">https://github.com/plans</a>

Most of my paid SaaS plans are closer to the $9-$19 dollar per month range.<p>Examples: Freshbooks, HootSuite, MailChimp, KISSmetrics, Dropbox

The site seems to be down already. Google Cache works:<p><a href="http://webcache.googleusercontent.com/search?q=cache%3Aahmetalpbalkan.com%2Fblog%2Fthe-5-saas%2F&#38;oq=cache%3Aahmetalpbalkan.com%2Fblog%2Fthe-5-saas%2F" rel="nofollow">http://webcache.googleusercontent.com/search?q=cache%3Aahmet...</a>

When will we see somebody starting to bundle the services from different providers? Throw in number of useful services, give some discount.

Netflix is not at $5 but almost there. So is Hulu+. Does the Xbox music have subscription or is it free?

The big thing I notice about this list is what's <i>not</i> on it: Google and Facebook. Imagine if you could pay $5/month to Google for search services and <i>not</i> have to worry about the long-term consequences of the ad-supported business model.

Back when I used it, MyFax was absolutely critical for pretending we had a fax machine.

Although it's one of the worst models for startup. If volume is possible that means too many players in that market. Startup is already a risky business, why make it even harder by going into a space where you have to fight with lots of other big / small / medium players?