22: SaaS Pricing - Is The Price Right?

Aaron and Darren catch up to end the summer of 2020. Darren is putting on a huge Local SEO conference with marketing benefits he shares and a recent bad experience with another SaaS product leads us to talk a bit on SaaS pricing and agreements.
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00:10 Aaron Weiche: Episode 22, SaaS pricing. Is the price right?

00:16 [INTRO]: Welcome to the SaaS Venture podcast, sharing the adventure of leading and growing a bootstrap SaaS company. Hear the experiences, challenges, wins, and losses shared in each episode, from Aaron Weiche of GatherUp and Darren Shaw of Whitespark. Let's go.

00:41 AW: Welcome to the SaaS Venture podcast. I'm Aaron.

00:44 Darren Shaw: And I'm Darren.

00:45 AW: And I think summer has just about set for me as we are in the last week of August here, and soon enough, hopefully, we'll be enjoying long weeks of Minnesota falls and then the inevitable winter abyss, but...

01:04 DS: Yeah.

01:05 AW: So so far, I've been doing a pretty good job this summer on spending my weekends up at the family cabin, and out in the boat with the kids, and on the water and things like that, which has made my July and August feel really great, much different than how like March, April and May felt. And how has that been for you, Darren, since... We haven't really talked in well over a month on the podcast anyway.

01:30 DS: Yeah, it's been a while. The summer's been nice, we've been trying hard to get our backyard all nicely set up, so we got things like a new swing, and we got a hammock. We just recently invested in a nice projector and a screen, so we can do backyard movie night, and so...

01:46 AW: I saw that.

01:47 DS: Yeah, we're trying to take advantage of the summer, and because this particular summer is the summer of COVID, we're mostly staying home. We're not going anywhere and so we're trying to make the most of our backyard, and enjoy being outside because we have such a short period here in Edmonton. It's getting cold, I'm wearing a sweatshirt right now. It gets cold the end of August. September is our only month of fall, we start seeing snow in October, so yeah. We've tried to cram it in, as much as we could.

02:19 AW: No, we're not there yet. I do... Fall's my favorite season, but we've still been doing 85-90 degree days last couple or so.

02:27 DS: Yeah, yeah it's getting cold here already.

02:30 AW: No, no good. Well, I know you have been extremely busy, Whitespark is putting on a local search Summit with 30 speakers?

02:41 DS: Thirty-three or 34 in total. So yeah, basically, if you are a somewhat known local search speaker or writer, like you kind of write about local search, you're mostly speaking at our... You're pretty much gonna be speaking at our conference. So I'm so excited about that, we have a huge lineup and yeah, it's been busier than ever trying to get all of these talks recorded, so the whole thing's gonna be pre-recorded, so I've been really busy with that. I'm also super busy trying to set up the local search ranking factor survey for 2020. That's getting put together right now. Aaron, you should get an email in your inbox this afternoon with an invite to take the survey, that's what my talk is gonna be on so I've been busy trying to put that together. And also another thing is, we have three different, sort of mini product launches that we're trying to time with the Summit, so...

03:37 AW: Oh. Wow.

03:38 DS: Dev is busy and yeah, it's been busy as hell.

03:41 AW: Yeah, what would you say, what's your weekly time commitment to the Summit so far?

03:47 DS: Yeah, over the last couple of months, it's probably been 20 hours, 20 hours a week for the last eight weeks-ish.

03:54 AW: Wow. Yeah, a considerable...

03:56 DS: But I would say the return on investment is going to be huge 'cause it's already big, we are already feeling it and it's because we're doing the marketing for the Summit, and so that ends up generating a ton of buzz. All the speakers are talking about it, everyone's sharing it, everyone is seeing the Whitespark brand everywhere, and so our business is better than ever right now, and we're seeing really good growth right now. And I think it's just gonna continue to grow up until this sort of pinnacle of the conference, and then we'll have a really good drop off from that, but then it's evergreen content, we're gonna keep using it. We'll do it again next year, and then we have like a year's worth of content we'll be pulling out for more marketing, so I think it's gonna be kind of nuts. I really think this is gonna be a great Whitespark.

04:43 AW: That's awesome. And I think that's a great little marketing tidbit in there, even... You can look and see right, the event itself, the day it's carried out and you play all the presentation over those days, that's the marketing and that's the buzz, but just as you alluded to, it's like it's all of the pre-marketing with it right, where you guys are... It gives you a ton to post about socially on Twitter, I know you guys have been using LinkedIn and seeing great traction at LinkedIn, and then you have 30 plus speakers that they're all putting it out on their channels, there's some really great ripple and carry effect on this, and you're still a couple of weeks away from the event itself.

05:27 DS: It's just kind of amazing, and I'm gonna have to give a shout-out to Summit Beast. We've been working with this company called Summit Beast, run by Matthew Hunt and Edyta McKindsey. And they've been really instrumental in helping us put this together in terms of getting organized, what we need to do, helping us develop our ads, our sponsorship packages, our outreach, everything, it's... They've been really great to work with. So if this is something you're thinking about, I couldn't recommend them more. They're awesome.

06:00 AW: Yeah, well, I think I heard through the grapevine that Traject, who is our kind of group of products for GatherUp is likely gonna be a sponsor.

06:12 DS: It's gonna be great. Yeah, I had a talk with Katelyn about that, and we're looking at a sponsorship program with them. That's actually another marketing vehicle too, because these sponsorship packages, they end up getting the Whitespark brand in front of their audience too, right. And so... And then what we're doing is any sponsorship dollars we get, we funnel right back into advertising for the Summit 'cause our goal is to get as many attendees as possible, so it's not a money-making venture in its own right, we don't care to make cash from the event, but it's the brand building and authority we'll build through doing it.

06:51 AW: Well, make sure you take detailed notes on some of this stuff 'cause I think this would make a great topic of conversation after everything wraps up when you're able to do a post-mortem on it. Kind of break down all of those things and to see like, "All right, what did the 30 or 60 days after the event look like as well as pre, for how it impacted our marketing and sales and things like that. I think there's a lot there.

07:17 DS: Totally will do. What's going on with you these days?

07:20 AW: Probably, if anything, right now, just kind of sitting in this holding pattern 'cause the kids start school the second week of September, and my two oldest ones are in the high school, so they're on what's called a hybrid, so they'll be in school two days a week, and then they alternate an additional Friday every other week, and then the other days they distance learn. And then my third daughter, she's in middle school. She'll be alternating as well, and then my little guy, he's not in school yet, he's just four. So I don't have to worry about that with him. But yeah, so it's just gonna be interesting to see how this plays out. To some extent, like how long will this last? Will it be able to be carried out the way that they're thinking, will we see a spike in cases? You watch what's happened with some of these universities and reversing course from in-person classes to distance and... Yeah, it's just kinda like all right it's... I don't know, you definitely know you're getting on a roller coaster and it's like, "All right, well, you're getting on the ride and be prepared for the ups and downs, and fear and fun and [chuckle] whatever else is combined in it."

08:30 DS: Sure. Yeah, totally. Yeah. Violet, our daughter is staying home, so they haven't... Our school board has put out an online option, and so we're gonna take advantage of that 'cause honestly, for us, we just... There are too many unknowns. It's like we don't know enough about the virus. But it looks like the majority of her school's going back so she'll be one of a few that are just sticking with the online option, but we're just gonna play it safe. We'll see how it goes.

08:57 AW: Yeah, totally. Other than that, on the professional side, I have been missing lately, like conferences and travel and that just free time to get inspiration and things like that. And I really didn't, for the first three, four months of everything that's gone on since March, and it's like... I don't know, it was obviously so focused, there were so many things going on and you were focused on customer retention, and it's completely overwhelmed personally with figuring things out and keeping your family safe and all of those kind of things. And as those things have matured like just lately, it's like, "Man." And I'm just not built the way to like, "Wow, yeah, I just wanna get up and have five Zoom meetings every single day. Day after day."

09:42 DS: With everyone.

09:45 AW: Yeah, I like these breaks where it's like, "Hey, for a few days I'm at a conference and I'm talking to smart people, and I'm immersing in that experience," and it just allows me to get my head around other things, and network, and learn, and all of that. And I've definitely been missing that lately, so I'm looking for... I'm looking forward to your Summit. A few months back, we had the LocalU Advanced and that was a really fun day. It was great to see so many other familiar faces and just learn and see what people are talking about and things like that. It's not as good as in person, but it's still just access to so much great information, which obviously is great to spur in the brain but it just...

10:26 AW: It feels really weird, right. I was thinking about this 'cause there's another virtual conference next week in our space. SaaStr's Annual is doing it, and it's like, I'm like, "Oh, should I put in a couple of not days off to attend talks that I want to attend to on this?" or, can you not take the time off because you're at home. So just you have two or three open hours, so you can only go to talks then. I don't know, it just feels really weird to me as opposed to, "Hey, I'm gonna be out of office for these three days at a conference and just so be it," right. It's not vacation, but it's not normal, like grind of the day, it's still work, but I don't know, it just feels different to me and I guess I'm just kind of struggling. Like, "How do I structure this? There's a bunch of things I'd like to go to, and do I just tell people I'm not gonna make these normal meetings that are important and keep things flowing and whatever else because I need some education and interaction and inspiration?" I don't know.

11:26 DS: Yeah, it's so much more clear cut when you're getting on a plane and going to another city to go to a conference that you're like, "Hey, I'm gone for the next three days." [laughter] But when you're just sitting at home, and you're like, "Well, I guess I could answer those emails and jump on this call. This important meeting," or whatever. And so even though you're supposed to be attending a conference, it's hard to dedicate that time when you're not actually physically out of your office.

11:48 AW: Yeah, yeah, totally. So I don't know... I need to figure something out, but a little bit of a loss with it, right. It wasn't like a... I didn't have a clear feeling right away like, "Oh, this is how I wanna handle that," or present it or manage my schedule, which, I don't know, kind of interesting, usually I'm pretty clear cut on those things, but not this time.

12:07 DS: Yeah. Yeah. Well, I look forward to getting back to meeting in person.

12:09 AW: Yes, absolutely.

12:13 DS: I think we're a while away from that, but it'll be good when we get there.

12:15 AW: Somehow, someway, we're gonna get there. You know, Darren, I couldn't help but notice since I'm connected to you on more than a few different social channels that our topic today was kind of born out of the fact that you had, you had a not-so-great experience around kind of pricing and customer engagement in a contract that you were in, and that led me to say like, "Oh well. Pricing is always on my mind. There's a lot of things to talk about, so let's talk about pricing," but let's start with what you recently have gone through, and I think there's some things we can pull out of that that are like what I would consider to maybe be no nos or a great way to alienate or piss off a customer just as it did.

13:07 DS: Sure. Yeah, so we were using this CRM... Actually, not we... It was just me. I had signed up for this CRM called Copper, and I quite liked it, it seemed pretty good, but I found that I wasn't really using it because as the leader of the company, and I'm just too busy with many things, and I'm not really doing much for sales anymore. When I tried it out, I was trying to be a bit more organized with my enterprise sales stuff, but I've just backed away from that and I'm like, "Okay, other people in the company, you handle that. I'm not doing it right now. I'm too busy with other things." So since I wasn't using the software, I actually even put it in my calendar, I put a little reminder in my calendar, "Cancel Copper before it renews," and so that was like five days before the renewal. So I went into the Copper settings, I'm looking. How do I cancel it? And so I canceled it and I get an email from support and it says, they go "Sorry that it didn't work out for you. If you have any feedback, we'd really like to hear it, just wanted to let you know that your subscription will continue running until the end of August 2021."

14:11 DS: And I saw that and I was like, "Huh." So I replied and I was like, "Oh, I think you meant end of 2020? My renewal is up in about a week," and he said, "Oh yeah, no, sorry, we have a 30-day cancellation policy, you have to cancel within 30 days, otherwise it renews for another year," and I replied and I was like, "Well, this is actually why I canceled, 'cause I haven't been using it. And if you check my account, I haven't actually logged in or even touched it in about seven months. It was a bit of a mistake to sign up for an annual plan anyways." I was like, "Is there anything you can do? I am not using the software, I really don't wanna pay for it for another year," and he was like, "Well, no, sorry, that's our policy." And then I even gave him one last chance. I was like, "Okay, I know it's your policy, but it's not really great customer service, and I gotta tell you that if you're not willing to help me out here, I'm probably gonna complain all over social media, and I don't know if that's in your best interest." And he's like, "Sorry, there's nothing we can do."

15:19 DS: So I did, I complained all over social media 'cause I hate that shit. Why would you do that? In our company, if someone forgot to cancel and then they come back to us a week later and they said, "Hey, I'm really sorry, I haven't been using the software. Could I get a refund?" Our answer is, "Absolutely, no problem." We look, you haven't used it in two months, you know what, we're gonna give you a refund, we're gonna refund that last month too. So you gotta take care of your customers. Why do they want that $228 more than the goodwill that they will foster? It's like that $228 is gonna cost them way more because I posted on LinkedIn, I posted on Twitter. My LinkedIn post has 142 reactions, 79 comments, and 24,000 views, 24,000 people saw my post where I was saying, "Don't use Copper, I'm really not happy with their business practices, this is what they did." The damage to their business is astronomical.

They got $228 from me, but man, did they create a reputation problem. And a lot of people that were thinking about using Copper probably won't now because it just leaves a bad taste in your mouth, it's just really poor customer service. That's what I'm annoyed with right now. [laughter]

16:47 AW: Yeah, no, I get it, right. And you see this more and more like we just... There's a deal we recently signed, and I didn't have a great time in the process, but it was buying some data and access to contact information, and in doing so, one, I felt like they were making it hard for me to buy, which I thought really stunk and then the same thing is like when you read their contract right. It's like it's almost like this poison pill thrown into it that you know, "Hey, this is going to auto-renew unless you cancel X amount ahead of time," right? And it's like the same way where you had to go put something on your calendar, you knew you needed to cancel before the renewal, you didn't know you missed the 30 days ahead of the anniversary date on it. That's just crazy, right? Our financial person has to go and put a reminder on their calendar to then reach out to me and make sure that we don't wanna renew at that time, just as a checks and balance, and that's...

17:49 DS: Sure.

17:51 AW: It's just so much extra work and it just feels like, "Hey, we feel better," like, "We hope you forget. We hope you forget, and then you just keep paying us." It's not even the attitude, it doesn't feel like this attitude of, "We wanna make a great product that's really valuable that you're gonna pay to use over and over."

18:08 DS: Yeah, totally. I will give them credit. After this exploded on social media, I did get an email from their customer support team lead, and she said, "Oh, we've actually canceled it. You won't have to pay the renewal fee." But in my opinion, it was too late, it was like, "I already gave you the out," and so it's not like I went back and deleted my social posts because I feel like, it's like you're only gonna do right by your customers when you get called out. That's not cool. Right?

18:41 AW: Yep. No. And I agree with you. Many times within ours, when somebody's said, "Hey. I forgot about this." And whatever else, the same thing you described. We'll go look at the account, we'll see what that looks like, and we're gonna propose something reasonable. It might not... To some extent, it is fair to say like, "Hey, it's not on us to remind you to use it to anything else like that, but it is easy to look at a number of these and say, 'Okay. Here's meeting in the middle,' which is very reasonable for both sides, because we do wanna treat you with a great amount of respect. We'd rather that you're like, 'Yeah. It wasn't for me, but they were fine and they were easy to work with.'" As opposed to how you ended up feeling and what you've now put out there, and even if someone who's come across that can't remember directly what went down with Darren Shaw Scorn, they definitely might have this feeling of, "You know what? I feel like I haven't heard the greatest things about them."

19:42 DS: Yeah. Exactly. Yeah. And I look at it that way too. If anyone comes back to us, it happens infrequently enough that the goodwill you foster by helping out someone who needs a refund, who knows what their reasons are for the refund, right? Maybe that money is really important to their business and they're like, "Dang it, this thing renewed, I wasn't using it." It's like, "I don't want that money, I wanna help you out." And I would much rather not have a situation where someone feels crappy about my company because when they feel bad about the company, they tell other people, and that's about the worst thing you can have.

20:22 AW: Yep. Yeah. You definitely wanna stay with that, I think there's obviously some great takeaways here. Some of these seem like no-brainers, but one is, don't create an environment where you hold your customer hostage 'cause that's really what they ended up doing, is saying like, "Well, no matter what, we're gonna get this 200 and some bucks out of you. We really don't care because the fine print says we can." And that, at the end of the day, is holding your customer hostage. Then after that, you had communication, you introduced this in a number of ways, and they obviously haven't trained or created a system inside of their company for that support rep to raise their hand and be like, "Hey. I think we have a situation that could go sideways here, or the customer being upset, and as another human, I feel like there might be some validity." It sounds like their only playbook is just to say, "Nope. That's what it said. Nope. That's what it said." That's just not how you solve problems or build any goodwill or relationship, whether they're gonna be a short or long-term customer, there's still someone out there talking about it.

21:28 DS: And I think that's so important. It's like, "What are we building here? What is our company... We're supposed to help people solve some problem, we're gonna do that with technology through our SaaS companies." And so if you're not solving that problem, they're not even taking advantage of it, then don't take their money.

21:43 AW: Yep.

21:44 DS: And provide good customer service. Be a good company. Be good people. Be a fellow human.

21:49 AW: Yep. Yeah. We actually, for any of our written agreements, our, like SOWs, there are for that term, a one-year or a two-year term, and then if we have to renew it, have a signed agreement, there's out clauses in there and things like that. It's very straightforward, and yeah. At the end of the day, it's about people can still respect you even if they're not gonna work and use your product. And I think too many take it like, "Well, if you're not gonna work with us, then we couldn't give a crap how you feel or what you're gonna say or do." That's just silly.

22:19 DS: Yep. Yeah.

22:21 AW: With that, I wanted to talk about, there's some not things to do within pricing and how you structure working with you and stuff like that, and I wanted to spend just a little bit of time talking a little bit about pricing. I wanted to hear how you've approached some of those things. I can share some of our struggles and thoughts and challenges, but pricing is such a complex thing. And...

22:44 DS: It's so hard.

22:44 AW: Yeah. As I've learned over time, it's such both a science and math problem and an emotions, psychological problem, and that that just makes for this constant combustion of what's there and how you look at things. Maybe share, as any time you've done something and you've recently added services like your Google My Business as a service product, like how do you approach setting a price? Have you ever raised prices? I'm curious to know some of those things for Whitespark.

23:21 DS: Yeah. It's so hard. I find pricing to just be a crapshoot most of the time, and it's like, on one hand, pricing is based off of what I think the market value is, but then there is some math to it. It's like, what are our actual costs for this thing? And you try to calculate the cost of your support team managing it, your dev team developing it, your design team, putting all of these things together, and that's your operating costs, and then you should have a markup on that for your profitability. And when we launch something new I try to factor in that math a little bit, but then sometimes it's hard not to be like, "What is everyone else charging and can we undercut them a little bit so that we're a bit cheaper?"

24:07 DS: And that's a mistake I've made a few times, where it's like, "Yes. That might be the case, but a race to the bottom is probably not what you want." And so I feel like I've mostly made mistakes with every price I've ever put out. [chuckle] I look at our software, and I'm like, "No. It was too cheap." I look at our services and I'm like, "Dang it, we under-charged again." And we're looking at raising prices for our GMB service because, well, there's a lot of hidden costs that you don't even think about, and they start to eat into your profitability and your ability to grow a great company, and you need that revenue to grow a great company.

24:45 DS: And you can just keep breaking even for the rest of the life of your company, but do you want growth, and do you wanna turn your company something big? And they talk about pricing. It's like the biggest lever you can pull. I saw a quote the other day that said, "The number one thing you can do to grow your company is raise your price." And it's the easiest and quickest, it's like, boom, you just add X amount to your price and you just added X amount to your revenue, and it's true, if you can do it and not destroy your customer base, then do it.

25:18 AW: Yeah. An important mindset, and depending upon where you're at with your product stage of your company, the biggest erosion I see is in confidence because especially when you're just starting out with the product, you're kind of feeling like, "All right. This isn't the best version of my product." We've got the staples out there, the base needs and things like that, and I think it feels really hard for people to then say... To put a price out there that's anything, but feeling like, "This needs to be cheap and I just don't want... I don't want price to be an arguing point." That's where I don't want them to get ahead on.

26:00 AW: If we pick a price that feels good, to me, usually for that business that, "That feels good" price is usually too cheap, and I've heard a lot about people doing experiments, especially when they're like... If they try to sell their product pre-revenue or pre-being put out there and they're talking to someone saying like, "Hey. Would you... We wanna sell this, would you buy it ahead of time? The release date is next month," or whatever else, "would you pay this for it? Would you pay that?" And keep increasing in those calls and seeing if you can land people at that higher price to try to get yourself there.

26:40 AW: And to me, some of that... Yeah. It's really interesting because I don't even know the right way to frame this up, but it's like I can tell you, I think what our product is worth right now and what our pricing is are not... They're not aligned. Price rarely becomes a sticking point, it does at certain times and certain customers, but that's like... That's business  ____. I think a lot of times people will get, "I wanna offer it at a price where everyone can say yes, but that usually isn't living up to anywhere near what your value. And one thing that I know first-hand from our life cycle is we started off way too low. Just way, way too low. And the climb out of when you're low, that's hard because it's emotionally hard when you need to go raise prices because you start looking at each individual customer and then you're like, "How are they gonna react?" You know if you have dozens or hundreds or even more of customers, you start looking at each individual one and how are they gonna react to when you put that out there and what that looks like.

27:54 DS: Wouldn't you grandfather though, I know what you're thinking with this stuff, but, what about grandfathering? You've got an existing customer base, you've already got them in at the product at this price, you wouldn't raise prices for them, but you would increase your prices for everyone going forward, they get grandfathered in at the rate that they signed up for.

28:13 AW: Yeah. The one time we did a straight price raise, we actually did that, it's like you're basically saying, "Moving forward, we're now charging." We moved from... Our lowest level plan was like $29 a month, and we moved it to $39. That was three years ago now, and we said to our old customers like, "You are all staying there, here's the new price on that." But what we did at the same time too, that was when we only had one plan for our product, then we rolled out a couple of plans up above that and we used... We more fall into, our pricing setup is feature-gated. It's like, "Here's the five features you get at this price, then you get another three features that are super valuable at this price, and then you get all of these at this price." You're using different features to move people up in their plan price, that's there.

29:10 AW: And I do believe that grandfathering is good. The one thing I would caution people to do is like forever grandfathering, I do think is not a great idea, especially in SaaS because you level up your product so far. I think it's just far smarter to be able to say like, "Hey, we're gonna do this. For the next year, your price is gonna stay the same." Or, "The next two years, your price is gonna stay the same." And I think it would have been even better if when we had done it, we had set a time frame, like we just said, "We're gonna grandfather you, your price isn't changing right now." We never said, "You're at this price forever." We didn't close that door or tie ourselves down to that. But I do wish, in hindsight, even though it would have felt difficult, I wish we would have said, "Your price is locked in for the next year," or through... If we did the raise in the middle of the year, 18 months, but, "Starting on Jan 1 of this date, you will move up to this price." And it's like if you've kept that customer that long, you're delivering the value, you have every right to do that.

30:11 DS: And at that point, if they'd been with you that long, they're committed to the product and that extra $10 a month, if that was what it was, that's not gonna really be a deal-breaker for them, and they probably will see the value. And in fact, if you communicate it really well and you send that email that says, "Listen. Since you signed up, look at all that we've added to our features that you're benefiting from now that this is why we're innovating, this is why this is... " And I also tell them what this money is going to because I guarantee all of us have a number of those price-increasing emails in our inbox that we could look back at, and there's so much precedence for this, and it's okay to raise your prices like that. How are you planning to do it? Do you have any thoughts on that that you can share?

30:58 AW: Yeah. We had some things in motion and COVID crushed that, that would not be the right time to... We weren't essentially doing a, I guess you could call it a pricing raise, but if you consider us having three plans, we were basically gonna sunset our lowest level plan and move people up to that and say, "We're no longer offering this plan as of this time, everyone will move up and have this plan, this is where all of our features are... " Everything else. That's how we... For us, instead of just saying... The hardest price raise is when you say, "Hey. The exact same product that you have and you've always had, but now it's gonna be $20 more a month." That's a harder... Still can and likely should be done in many markets, because you also have to take a look around you... When I look around at some of our competitors, especially in smaller location  ____, their price can be anywhere from... The ones who I think are even close to us in a feature set and value, they are three to 5X more expensive, and that's just...

32:13 DS: Sure thing, yeah.

32:15 AW: Yeah. It's like, "Why do we have to be the bargain basement price?" Well, it's because we started there and we haven't found the right way to cycle up, move, whatever, and a lot of these guys came to market at a much higher price and then have escalated from there and they're larger, so they have even less care. The bigger you are, the less care you have with some of these things because you can play the numbers game, you'd realize, well, if we raise this much and we get 80% retention, here is the... Here's how far in the plus we are on this.

32:48 DS: Yeah. Totally. You can run the numbers, they can tell you exactly what it's worth to take the risk to upgrade. I wonder if there's any data out there, like other companies that have... There must be... We could find the blog posts where they raised prices, they tell you how much they raised their price by and how many customers they lost, and I bet you it's a relatively small amount, they probably didn't lose too many.

33:11 AW: Yeah. I would definitely think that the one Patrick Campbell at ProfitWell, puts out a ton of content on pricing, that's so much of their content marketing strategy. They offer a billing system to help you run reports on all of your revenue and things like that. But I've definitely, from being around and knowing a few other SaaS companies and what they've done, there've been really massive gains when they've done it, and the hard part as a founder or the person running the company, you look at it like, "I don't wanna lose anybody. I want everybody to still be happy. I wanna get the dollars from everyone, I feel like that's there." Everything else... And so it emotionally becomes really hard for you because it's hard for you to say, "Well, we're gonna lose 20% of our customers, but we're gonna make 60% more." Mathematically, you're like, "That's a no-brainer." Why are we not... Why are we not doing this? And it allows us to hire better people, keep progressing our team, invest in other technologies or processes. There's all these wins with what you can do with the financial gain, but you just end up emotionally focused on, "Somebody's gonna be mad and they're gonna leave us, and I'm gonna feel bad that that customer left us over a $20 a month."

34:38 DS: Yeah, nobody wants to feel bad. [34:39] ____.

34:39 AW: No. Not at all. But you have to free yourself of doing that, and that's the one that I think anyone going through a price raise, one of the biggest things you have to do is learn to keep your emotional side in-check, especially if you are rooted to, "I want everybody to be happy. I want everybody to like this. I want everyone to think we're fair," and those kind of things because that can feel really difficult.

35:04 DS: It's blowing my mind right now, the massive opportunity we missed, we've talked about it on the podcast before, but we launched a massive complete overhaul of our local citation finder software, which is our most subscribed system, and holy cow did we miss the chance to raise our prices when we launched that. Jeez! We should have done that.

35:24 AW: Yeah.

35:24 DS: That would be the perfect time to raise prices and be like, "Hey. We've got a new local citation finder, it's a hundred times better than the old one, and we're raising the price." Most people would have stayed with us. And all the new people signing up would be giving us more money today. So, that move, should have done it.

35:40 AW: I think there's a lot of things inside of pricing where it's like, "Should have done this, should have thought about it." And then we're not gonna spend the time to go into it today, but then there's just a lot to think about how you do it, the timing, how do you present it. Communication is everything. There's right and wrong ways to do this, getting the number, getting the price increase is one thing, and you have a lot of research and a competitive landscape and what else you've delivered in the product and things like that... That's the easy part. The hardest part to execute on... I shouldn't say it's easy, the hard part is how do we get this right so that we give our customers time to adapt, we give them answers, it's easy for them to understand how their pricing is changing, all of that stuff, that's where I've seen companies completely blow it or do a good job and end up on the right side.

36:40 DS: Yeah. I think you already suggested this, but if I'm thinking about our case, let's say I'm gonna raise prices for our local citation finder. I think I would almost double our prices across all of our plans, and I would grandfather any existing users for a one-year time period. I think that would be a pretty decent approach, and so that way, any new people signing up for it, we're already making... I think what I would call the proper value for the tool, and then everyone else is on this sort of timeline where once that year is up, it'll switch over, everyone's price will increase, and I think the majority would stay with us still too.

37:17 AW: I think you could even go lower than that, I think you could lay it out in like six months, you could... I think you could ratchet it down, I don't know, maybe this is something we should talk about offline 'cause I think if you have another next big feature, and improvement plan...

37:37 DS: Totally.

37:38 AW: That might just be the time. And you can always... Even if you're not gonna do anything grandfathering... And we did this with our basic plan that we're gonna sunset, we removed it off our website last summer. We're not bringing on any new customers on it and we're still seeing the same account growth with our entry-level plan that was now $35 a month high. It was like the difference between $40-$75. There's a lot of little things you can do, but I do think, like I said, from what we've done in the past, I would have done a timeline on grandfathering and just said, "You're still gonna keep your price through this amount of time, and then it is gonna switch to this because of everything that we've added and done, here's the latest addition." And then there's gonna be more additions by the time that your pricing increases, we know we're delivering that value.

38:34 DS: I think that's also another smart takeaway, a nice strategy, drop your lowest level plan, just drop it. And then going forward, anyone that's on that plan, you can eventually upgrade them to the better plan 'cause then it's a much easier sell because it's not just like, "Hey, you've got the existing product and we're gonna charge you more for it." It's like, "We're moving you to the higher plan." So there's some justification with the price raise.

38:58 AW: Yeah. If you're doing feature-gated, feature-based plans like that, I totally think that's an opportunity. Obviously, that's a lot trickier if you end up in seats or number of users is what moves you through the plan, or it can be a little trickier if you're metric-based where it's like your plan is based on the number of email subscribers you have with us, or the number of contacts in your CRM or the credits in this SMS marketing system, that can be a little bit tricky, but with all these things, there are ways... But my biggest cautionary tale is like, push yourself to the top of what you're comfortable with on pricing 'cause once you put yourself out there, moving away from that low price anchor, it's really hard and you will spend a lot of time cycles, emotional value, doing it. There's even times where you end up believing, "No. We are maybe only worth that." And if you're doing the right things, you're not, you're worth so much more.

39:50 DS: Yep. Yep. Smart, especially for anyone who hasn't set their prices. Let's say if they're in the early stages of developing, really put in the effort to do your research and come out of the gates a little bit higher than you think that you should have. I think everyone should be doing that.

40:08 AW: If you can avoid leaving money on the table and starting from a place too low, you're gonna be all that much better off as you... Down the line of success.

40:14 DS: Yeah. Totally.

40:15 AW: All right. Well, let's wrap. We're trying to make it a goal of not talking as long, I don't think we... We didn't hit our goal, Darren, but we definitely didn't blow out a whole hour today, which we've done in the past. [chuckle]

40:27 DS: Yep. Yeah. 40 minutes. That's all right. Yeah.

40:31 AW: All right, cool. Well, hey, if people get a chance, this will be out still well ahead of Whitespark Summit, if you're interested in local SEO at all, definitely go to whitespark.ca and click on the Summit tab. There's your shameless plug for that, I'm one of the speakers. The other 33 are fabulous. I might be questionable, but I'm gonna be there anyway, so hopefully, you'll take in my talk as well, and...

40:57 DS: You're gonna be amazing. Yeah.

41:00 AW: All right, well, you're gonna have to doctor it up quite a bit to get me to amazing.

41:03 DS: Okay. [chuckle] I don't think so, but all right.

41:06 AW: All right. Cool. Well, great catching up, Darren. Hopefully, your blood pressure's back down now and you're fully vented on Copper and you can move on with things and get back to normal. [chuckle]

41:19 DS: Yeah. I can get on with my life now. Yeah. [chuckle]

41:20 AW: Awesome.

41:22 DS: Should be all right. Okay.

41:25 AW: All right, all the best, man. Great talking with you. Thanks, everyone for listening. As always, we'd love it if you drop us a question, drop us reviews on whatever platform you're listening to us, or drop us any suggestions for our future podcast episodes. We'd love to hear from you and appreciate you listening.

[OUTRO music]

41:42 DS: Yep. Thanks, everybody.

41:43 AW: Take care.

41:44 DS: Okay. Bye.


Creators and Guests

Aaron Weiche
Aaron Weiche
I'm the Co-founder and CEO of Leadferno, a business messaging app. Leadferno creates delightful connections at speed through SMS and messaging platforms centralized in one app to close more leads faster. I designed my first website in 1998 and never looked back. I have co-founded and been in executive roles in multiple digital marketing agencies and SaaS companies. I speak frequenty at conferences of all types on digital marketing, customer experience, mobile and local SEO. I'm part of Local University and a founding board member of MnSearch. Outside of work I'm a sports fan, love Nebraska college football, Minnesota Twins baseball, snowboarding, boating, BBQ and anything with my 4 kids and amazing wife. I live to the west of Minneapolis, Minnesota.
Darren Shaw
Darren Shaw
I'm the founder and president of Whitespark, a local search company with software and services that help businesses improve their rankings in Google. I started developing websites back in 1996 during my first year of university. I failed plenty of courses because I was skipping class to work on my HTML, CSS, and Javascript projects in the lab. Fortunately, people wanted to pay me to build websites, and in 2005 I started Whitespark as a web design and development company. In 2010 we stopped doing web development projects so we could focus on local search, and we launched our first SaaS software, the Local Citation Finder. We now offer multiple SaaS applications and services. When I'm not speaking at conferences, researching the latest in local search, or designing the next best local search application, I like to spend time travelling, skiiing, and dining with my wife and daughter in Edmonton, Alberta, Canada.
22: SaaS Pricing - Is The Price Right?
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