How do you decide the pricing of your products?
Ishan Sheikh
11 replies
I have seen many posts about many types of pricing models but they did not mention how to calculate the cost of the product.
I would like to know how you decide the cost of the product/subscription. Suppose I am creating a SaaS and it allows users to create records in the database and also to store documents. Do you consider the storage space and all these technical things? How do you come up with an estimate, for example, storage?
Any helpful links will be appreciated.
Replies
Igor Lysenko@ixord
It depends on what market you will be launching into. If you go to America, then they have their own price, and other countries also have their own price.
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Hi Ishan, check out Hyperline, they launched on Product Hunt a few months bac and offer a SaaS pricing comparator.
explorer.hyperline.co
Normally I look at competitors and make my products a little bit cheaper.
pricing is an art and a science. let's break it down.
cost-based pricing is straightforward. calculate all costs - server, storage, labor, etc. then add a margin.
value-based pricing is trickier. what's the value you're delivering? can you quantify it? maybe you're saving your customer 10 hours a month. what's that worth?
competition-based pricing is also an option. look at what others are charging for similar services. position yourself accordingly.
don't forget elasticity. are your customers price-sensitive? if you lower the price by 10%, do you get 20% more customers? test it.
freemium models are popular in SaaS. give away basic features, charge for premium. be cautious. you need a large user base for this to work.
dynamic pricing can also work. think uber. prices go up when demand is high. it's complicated but can be lucrative.
finally, iteration. you're not gonna get it perfect out of the gate. so keep tweaking. collect data, analyze, adjust.
links won't do the work for you. you've got to dig into your own specifics. but start with articles from 'price intelligently', they know their stuff.
Yes, the cost is the most important thing people overlook.
Everything that costs you should be counted.
market research mate!
We are now in the middle of the process. The most helpful thing for us so far has been to ask our beta users what price they would be willing to pay to use the feature.