Open Startup Report - Jan '24
We're back with a different type of update.
It’s been a while since we published anything on this blog. Up until July 2023 we were regularly publishing our numbers (MRR, churn, bank account) publicly. I’ve decided to stop doing that for the moment. Instead I’ll be writing about what we’re focussing on as a business. But first, why stop sharing MRR numbers?
There’s a few reasons we stopped sharing:
Fuel for copycats. Publishing a growing MRR chart is like an invitations for all and sundry to come and clone your work. Competition is great but mindless copycatting just to grab a few dollars is a distraction at best.
Our revenue is no longer that simple. I’ll go into this later, but looking at MRR is no longer a good way to see the health of the business.
I didn’t get much out of it. The original idea of this newsletter was for me to write an “investor update“ even though we don’t have investors. Partly as practice and partly to help clarify things to myself.
So, what’s been going on at PriceWell….
Flying solo
My business partner has fallen off the radar. So currently I’m on my own. I’m handling support, marketing and feature development. This isn’t a problem for the business as I was doing the lion’s share of all this anyway. I’d actually love to have a business partner on the marketing side of things but I’m not actively looking right now and PriceWell is getting my full focus.
The ‘C’ word
I’ve had a feeling for a while that PriceWell probably should have started as a consulting business. I’ve become the “payments guy“ at every company I’ve worked for so in that sense I’ve become a bit of an expert. I’m reading the bible on pricing which really focusses on value based pricing. This got me thinking what the main value of PriceWell is to our customers. One things that’s not captured in our pricing model currently is the onboarding call I offer every customer. I take up to an hour with some customers to help them get set up. If we take the $19/mo price and the fact that some customer churn after a few months when their business isn’t working out, my hourly rate comes out lower than minimum wage.
So, this lead to offering Stripe consulting at 30mins for $99 via the PriceWell website. The main goal is actually to expose the value customers of the software get. But to my surprise, people started booking calls with me!
The price is right
Continuing the pricing discussions. It was clear that $19/mo doesn’t capture all the value we provide. Especially if we have customers churning after 2-3 months when their business doesn’t work out. One thing I wanted to try was asking customers to pay for a year upfront. That lets them keep the same price point but gives us 1 year of guaranteed revenue rather than an uncertain amount (our customers are often solo founders just starting a business using Bubble.io).
As part of this I’ve experimented with adding a 7 day (cc required) free trial to take the pressure off paying for a year upfront. The results so far are not in favour of the free trial… So we need to work something else out.
Another part of this pricing change was to make it clear how much value a customer gets. Instead of saying “free onboarding call“ we now say “free consultation (worth $200)“. It’s the same call, but we now articulate how much value is actually provided on that call, and how much you save by paying $19.
Lofty goals
What would you do if you had to charge 10x your current price? I love this thought experiment by Jason Cohen. Actually, I would like to charge 10x my current price. I’ve decided $19/mo is a terrible price point for B2B SaaS, it attracts price sensitive customers who are demanding both in terms of time and resources.
So the goal for PriceWell is to charge $199/mo and we need to provide value worth that. My current thinking is that our A/B price testing tool can be the thing to do that. It would be used by companies who already have traction and revenue (and thus don’t worry about spending $199). I have some indication from conversations with potential customers that this could work out.
Watch this space…