If you wouldn’t pay for my app, your pricing advice is worthless

What price should I charge people for using my app? It’s a pretty basic question, and one fundamental to your business: charge too little, and people won’t use your service. Charge too much, and you’ll have the same problem.

But – and there’s always a but – if you’re taking pricing advice from people who will never pay for your service, you’re making a big mistake.

By way of example, I wrote a while ago about InboxCleaner (another app design made easy with ThemeForest), and about the choices I was facing: keep it as a monthly subscription service, or charge a one-off fee, or raise the price, or lower the price; you get the rough idea. In the end, I chose to experiment with a one-time fee of $20. This month I’ve had 12 people sign up, and the app’s gone from earning $50/month, to $240. Colour me both surprised and happy. I guarantee that plenty of people will try to encourage me to return to previous price plans such as $5/month though.

You see, when you ask for pricing advice, some of it will be absolutely worth its weight in gold. Sadly, you’ll also receive a lot which is, frankly, crap. Something along the lines of “I wouldn’t use this service if you paid me in gold-plated puppies… but I think you should be charging $X” . You must discard any and all advice from people who say this; they’re the opposite of your target market and you will only harm your business by listening to them.

Likewise for anyone who comments along the lines of “You should charge $1/month, because there’s 6 billion people in the world, and if only 1 out of 6 of them sign up, you’ll be making $1 billion/month!” An extreme example, but I’ll tell you now: if you suggest charging $1/month for SaaS, it shows such a fundamental lack of understanding, I will discount everything you’ve ever said. and everything you will ever say in future. Rob Waling wrote a fantastic explanation of why $1/month will never, ever work, and the comments are also well worth a read, as is the Hacker News discussion. Just for the avoidance of doubt: in my mind this is very different to charging $X/year.

It’s very easy to be negative; here’s some proper, real advice: if in doubt, charge more. If you don’t know what to charge in the first place, pick a starting point and experiment. I’m still trying to get CampaignBar off the ground, and am starting with a price point of $20/month. I’ll shortly be writing a few A/B tests for the pricing, and seeing what sticks and what doesn’t.

Why experiment? Because ultimately, the best pricing advice you can get is from your customers: charge the most that they’ll pay, and all will be good.

In other news, a friend of mine has recently launched an amazing forum for people involved in SaaS and web apps: SaasAholics. Come and join in the discussion!