Tuesday, February 16, 2010

Experiments in lean pricing

I strongly feel that, especially for SaaS products, starting with free and figuring out premium later (all too common) is backwards. If you know you are going to be charging for your product, start by validating if anyone will pay first. There is no better success metric and it leads to less waste in the long run. Focusing on the premium part of freemium first lets you really learn about your unique value proposition — the stuff that will get you paid. You can then come back and intelligently offer a free plan (if you still want to) with more intelligence and the right success metrics clearly defined. Even if you think you have a one-dimensional pricing plan like I did (e.g. number of projects), you’d be better served testing it with paying users because pricing experiments take a much bigger toll than other types of experiments

Great guest article by Ash Maurya, who went thru and telling about his experience with pricing experiments and how valuable can they be. Although I'm not very agree that free-to-paid approach is backwards most of the time, he's still very right that putting out your original intentions to charge is a great way to start working on your pricing scheme.

# Posted via web from opportunity__cost