Product Launch

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E143: Pricing Your B2B SaaS Responsibly

A lot goes into pricing your B2B SaaS.  Let’s talk about the free trial stage and what that may be costing you so you know how to properly ‘gate’ it and just how much to give away to try and convince users to become paying customers.

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Episode Transcript
 Hey folks, Sean here, and today what I want to talk to you about is how to price your product after you have a number of users and customers that have converted plus regular usage with your product. Now, one of the things that’s hard to know in the beginning is what is regular usage and demand on your product ultimately going to look like.

One of the things I wanted to know to figure out how I would kind of accurately gate my free trial. Was, what did the typical usage look like during that period? So I know essentially how much I may essentially be giving away, or how aggressive I want to be in providing free value before I expect a user to convert into a paying customer.

So, Ultimately what I did was I looked at and I measured what that average usage looks like and then figured out what the cost may be range wise with a level of confidence in terms of what that’s ultimately going to cost me. So now I’ve got an idea how much more I’m theoretically investing into converting those users into paying customers.

Cuz I’m already, I already have paid channels, which is driving those. Kind of views, impressions, and clicks to my site. I know what that costs. Now I need to figure out, once they convert into using the products, once they begin a free trial, how much are they using the product at that point? And what is that costing me to then try to get them over the next milestone, which is going from just a free trial user to a paying customer.

So if you haven’t done this exercise before, figure this out by. Getting a better understanding of what average usage in your product looks like, and then attempting to add up all of the costs associated with what essentially that free trial period may be costing you based on where you draw those lines.

So how you gate, essentially the free trial, that’ll give you an idea of how much more budget is being invested into attempting to convert those users into paying customers so that you can figure out where you wanna draw that line and how aggressive you want to get. Now there’s a certain amount of value in.

Kind of this somewhat lost leader mentality, or investing a couple of extra bucks or whatever it may be for your product in order to try to get your users to become paying customers, um, without essentially, you know, giving away all of your budget or putting your product at risk financially. That is because first impressions are important, and if you can convert someone successfully into a paying customer, obviously they’re seeing value, especially if they’ve used your product through a free trial.

Plus, if you have converted them, then they’re essentially yours to lose, meaning that if you’re driving the product in the direction that they want to go, then more than likely a solid percentage of those should remain paying customers, which is the name of the game here. So, Those are a number of things to keep in mind when you’re figuring out how to price your product for success, but a more data driven way to think about it so that you’re not, so that you’re being responsible with the budget in terms of how you’re leveraging it to try to get your users past those activation points to become recurring paying and happy customers.