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! 
Written by Tom
Are you looking for web development or just someone who will work with your business needs and not against them? Get in touch with me here, or take a look at my consultancy’s website: Moo Unlimited. I’m confident I can help you.
Would love to sign up for the Saasaholics forum and start posting, but I didn’t get a confirmation email. That is absolutely my least favorite thing about signing up on a new forum.
Hey Andrew,
I setup saasaholics.com, please feel free to reach me directly at [email protected] and we’ll get ya squared away with an account. I’m waiting on the gmail email activation process currently for the root domain, hence the bouncey emails. Sorry about that.
Darrin
Oh, and when I emailed the contact address, I got “Delivery to the following recipient failed permanently: [email protected]“. Could you reach out to them?
Wow, that’s embarrassingly annoying, I’ll try to see if I can get an email through
Alright, emails appear to now be working. Feel free to reach out now at [email protected]
Great advise, who would have thought you should sell games for $ 0.99 when even budget titles were $19.99 just a few years ago. Ultimately putting your product in front of your customers is the ultimate feedback.
..and people still complain about paying $0.99. LOL
It’s always an extremely difficult decision on what to charge for your app. I’m currently trying to figure it out as well, do I go with a month to month, yearly plan or one time charge…
This is a complicated problem,balance is not to be solved overnight.So, should more time to find the balance .
“charge too little, and people won’t use your service”
Wow, your service must really suck.
Do you always buy the very cheapest of everything in your life? I know I don’t. And if you’ve never been put off by a low price, well, frankly, good for you
This is a great post. Trying to establish a pricing model is so hard because of the glut of cheap apps on the market. People are becoming spoiled by that and seem to want something for nothing. I’m not convinced you can charge ‘what it’s worth’ anymore. You’ve given me something to think about. Thanks.
It’s not the price they don’t like, but what they understand they are (or are not) getting for that price.
Understanding your customers enough to create relevant offerings and value messaging that targets each segments wants and needs . . . is very effective.
Appreciate your post . . . thanks.
From the Wikipedia:
An ad hominem (Latin: “to the man”), short for argumentum ad hominem, is an attempt to negate the truth of a claim by pointing out a negative characteristic or belief of the person advocating it. The ad hominem is normally described as a logical fallacy, but it is not always fallacious; in some instances, questions of personal conduct, character, motives, etc., are legitimate and relevant to the issue.
Are you suggesting that people who would not buy your app are bad characters with dishonest motives and so your ad hom is appropriate? I would not think so.
I think you are actually recommending rejecting the advice from any pricing authority figure if the sole criterion is if he/she would buy your product or not.
After all, you clearly illustrated the proper approach in your example – the sole test of knowledge is experiment. A pricing authority must have applicable experience pricing actual products similar to your own. Don’t believe any fancy arguments, it’s the data.
[…] hits the nail on the head when he says “if you’re taking pricing advice from people who will never pay for your […]
I don’t think that the pricing advice of a potential customer is worthless, you have to take into account peoples’ feelings to some extent. It shouldn’t define your entire decision-making process, but it should inform it. I think that testing and using AdWords and Facebook (lots of companies listed at [dodgy-looking site removed by TBB] can help with this) to test out various features and see what kinds of ads and what kind of language converts better can give a better result. There’s a left and right brain approach here with raw statistics and pure emotional reaction giving people the opportunity to approach pricing in different ways, but I think that the wisest approach uses all possible information at its disposal to come up with the best possible answer.
I don’t think that the pricing advice of a potential customer is worthless
Agreed, and that’s why I wrote pretty much the same 😉