The Great Pricing Debate: The Reason Behind Our Low Prices

on May 12, 2015

The great pricing debate – something every SAAS company goes through at least once (if they’re lucky) during their business or launch of a new software.

 

If Rand Fishkin, the founder of MOZ was facing this debate, than I knew we were on the right track.

 

Here is a quote from Rand himself in regards to the great pricing debate:

 

All I knew was well, it cost us this much to maintain our tools, so we’d better get people paying us every month instead of a one time download, because it costs us money to keep it up. I had the most simplistic of thinking that you can imagine from a business perspective.

 

And we, like many other SAAS companies debated between the same types of conundrums on a business, marketing and user perspective.

 

  1. Should we just look at our competition and come out with a lower price?
  2. Do we charge per user?
  3. How many packages should we have? Should we do the “small, medium, large McDonald’s effect?)

 

And then of course there is the ever-dreaded set up fees – to charge or not to charge.

 

Since we knew we were new to the marketing automation and sales management software game, we knew we had to come in with competitive pricing for our kick-ass product.

 

But then this led to another discussion – are we pricing it too cheap? Are we de-valuing the software by charging too little for what it’s actually worth for our users?

 

The common misconception is that when something is more expensive, people value it more.

 

How do we convey that TieiT is valuable without charging the Ferrari price tag?

 

And I wish I had the answer for you because to be honest, I don’t. And that is something we are struggling with on a daily basis when speaking to users and conducting demos.

 

We demo our amazing product and the client is pumped and can totally see the benefits and then when we get to the price question, we are confident with it and some users completely jump on board and cannot believe the value they get for the price.

 

And others you can hear that really quiet voice in their head saying “what’s the catch?” or “oh no, there must be something wrong with it.”

 

So what we have decided to do is test the market.

 

We decided not to charge set up fees for now.

 

We have launched TieiT with really competitive rates compared to our competitors, starting at only $99/month (for more detail on our pricing, click here).

 

PLUS, we decided to give a 30 day free trial for users who truly want to try out the product. (You can request an invitation here).

 

This way we can test our conversion rates to see which yields higher results.

 

Until we hear feedback from all of our users across different industries and different company sizes, we won’t know the true value of TieiT.

 

I mean, we think its great, and you can call us needy, but we need to hear it from our users too.

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