Open Startup Report - April '24

If you target everyone you target no one

This changed the way I think about SaaS.

I was finishing up Rob Fitzpatrick’s excellent book The Mom Test and I came to a section on customer segmentation. By now we’re familiar with talking to customers and asking questions that pass the mom test. But what if you’ve been talking to too many types of customer?

I’ve fallen into this trap with PriceWell. It’s very easy to target so many customer profiles with a billing product. I thought I was being so clever when I decided not to target e-commerce (or anything that needs shopping cart behaviour). But I’ve realised there are still too many customer segments.

PriceWell targets Stripe users who are:

• Non-technical founders building with Bubble (or other no-code tools like Softr etc).

• Founders who hired devs but don't want to pay them to integrate Stripe.

• Founders who have a dev team but want control over billing (being able to switch pricing without dev making a change).

  It’s time to pick one.
  
  Rob suggested a few questions to help narrow down your segment, starting with a broader segment.. ask yourself

• Within this group which type of person would want it the most.

• Would everyone in this group buy/use it or only some?

• What does that sub-set want (their specific problem)?

• Does everyone in the group have that motivation or only some?

I’d add another question here. Is everyone in the group willing to pay for your solution (price sensitivity)?

There are some groups (bubble users, I’m looking at you) that feel the pain that PriceWell solves strongly, BUT those people (I’ve found) are less willing to pay for the solution because they have very strict budget constraints. They are often solopreneurs, using their own money and they are just starting their business.

Other segments (e.g. founders who have a dev team) are much more willing to pay. They already hired developers and PriceWell costs a fraction of that which also doing the developers work for them.

Was increasing pricing a good idea?

That’s a question I ask myself a lot (we increased our prices back in March). Going back to the previous topic, increasing pricing helps us cut out those users who have a low willingness to pay. Looking back at it $19/mo was just bordering on B2C pricing (customers will start a subscription and just try it out for a month) and we want to be firmly in the B2B category.

So yes, increasing pricing was a good move. Plus, we still get new accounts created every day, the website conversion rate still sits at 3% despite the changes.

We’re heading for a B2B future. More on this next month…