(from the latest issue of the Indie Hackers newsletter)
Pricing can be really difficult to nail:
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Pricing is a really difficult thing to nail. Entire books have been written about pricing, but from what I’ve seen, very little of what is written actually applies to indie hackers.
Here's what you need to know about pricing!
There are a ton of pricing strategies out there, but only a few really apply to indie hackers. Let's get right to the ones that count:
1. Competitor-based pricing:
Take a look at your competitors to understand how their product compares to yours, then price yours lower or higher accordingly.
When comparing products, it’s easy to get caught up in features. But think about quality, customer service, and brand recognition, too.
The beautiful part of this strategy is that the more established your competitor is, the more they’ve tested and honed their pricing. That means that you can let them do a lot of the heavy lifting for you! It’s easy, low-risk, and is a darn good starting point.
The biggest problem with this method is that, if you’re niching down hard, your audience may not have the same willingness to pay as your competitor's audience, so keep that in mind.
2. Value-based pricing:
This is the golden child of SaaS pricing strategies. Consider the value you’re providing, and talk to customers about it to determine a price that they’re willing to pay.
This also helps you create a great product with awesome customer service (as if you didn’t already have enough incentive!). And, it allows you to charge higher prices right off the bat, since you have the data to back up that decision.
While this sounds great on paper, it’s not an easy strategy to adopt. You need to really know your customers and what they’re willing to pay. That requires a lot of research, including interviewing potential customers. If you happen to be building something that scratches your own itch, you’ve got a leg up here.
3. Others:
I’ve researched other strategies, and they just don’t apply to indie hackers.
There is one more thing to take into consideration. I’m a big believer in going with your gut, and I don’t see any reason why that wouldn’t be a good starting point for pricing. The important thing to remember is that, after you launch, prices can (and should) be adjusted.
In addition to pricing strategies, there are four pricing models that will likely apply to indie hackers:
1\. Tiered pricing: This will be what most indie hackers go with. Under this pricing model, you offer multiple tiers of your product. It allows you to access different user segments, increase revenue, and anchor the price point, making it more likely that customers will opt for their preferred tier. There aren’t really any downsides. Note: I would probably include freemium pricing in this model.
2\. Per-seat pricing: This is another popular one, though it is used almost exclusively for B2B products. Under this model, you charge per user on a plan. It’s great because your revenue is predictable, and it scales. On the flip side, it can cause churn. According to Patrick Campbell, you should only go this route if each user has access to different things. If user A can log into user B’s account and everything is the same, this is not the right model.
3\. Flat-rate pricing: This means one price only, and one set of features. It’s the simplest way (both for you and the customer), but it ignores certain customer segments, thus leaving money on the table.
4\. Usage-based pricing: Think “pay-as-you-go." It makes a lot of sense if the value you’re providing is based on transactions, gigabytes, etc. It’s nice because the price scales with usage, which increases revenue while reducing churn. On the flip side, it’s hard to predict revenue.
First off, decide whether you’re opting for a one-time payment or a subscription model. Second, decide which pricing model makes the most sense for you. Let’s be honest, the vast majority of us are going to go with tiered pricing, since it’s tried and true.
Third, decide on your pricing strategy and use it to decide your price. Here’s my unpopular opinion: Don’t use value-based pricing. Not in full, at least. Yes, it’s the best way to go for most software products, but indie hackers are a different breed. Most of us have few resources to throw at pricing, so a mix between two strategies might be a better option.
Here’s my suggestion. It’s less scientific than value-based pricing, but it’s quicker:
Here are a few other things to consider while you go through the pricing process:
Here are some suggestions that I picked up while researching pricing:
While A/B testing is usually a good practice, most will say it’s a no-go for pricing. It’s inherently unfair to some of your potential customers, and you need a lot of sales for the test to be statistically significant, anyway.
Instead, just start at a price and increase it every now and then. Every increase is a test, and you can revert if necessary. And, of course, grandfather your old users in at their original price.
Don’t overthink it. You’re likely going to be wrong about pricing, anyway. Name a price, launch, then tweak accordingly!
What are your top tips for pricing? Share your experience below!
Discuss this story.
from the Growth Trends newsletter by Darko
💭 Seven AI predictions for 2023.
🍺 Lessons for B2B marketers from the booming craft brewing scene.
🎁 US retail sales have grown by 7.6% this holiday season.
📱 Maximize relevance for your Facebook Ads.
🔎 Realign your marketing metrics before the new year.
Check out Growth Trends for more curated news items focused on user acquisition and new product ideas.
by Sole Garcia
Why do you build in public? Is it still worth it for founders?
Amos Bastian says that it's all about community:
It can be lonely building by yourself, but by joining others who are building in public, you get a real sense of solidarity. I also love seeing others building things, and want to be involved with them.
You can get feedback from others about what you are building and find answers to any questions that you may have. It's super useful!
It's also calming for my mind to write down the things that I'm thinking about. Why not do it in public to get all of the benefits? It's nice to read it all back and reflect on your journey.
Edrick agrees:
Twitter is to indie hackers what LinkedIn is to professionals.
Personally, it's about building a personal brand and connecting with others. There are lots of great people to meet on the platform.
I basically have a brand new account, and I see more interaction when I add to the discussion of an existing tweet rather than posting my own. But, if you're putting out interesting tweets every day, and providing value to others by interacting with them, there's no way you can lose in the long run!
Upen says that building in public helps him come out of his shell:
As the founder of Micro SaaS HQ, I get this question a lot. If you are a dev, you will naturally be more inclined to build features than talk to customers and do marketing and sales. Coming out of this loop can be tough for many founders.
Note that building in public is not always about posting the positive things. You should share your challenges also, to help people connect with you on a deeper level.
Drew Meulemans agrees:
Iain Cambridge says that it's about the marketing aspect:
Some of it is marketing. If you're constantly reading about design decisions and why I made them, it keeps you interested so you remember the project.
The other part is to remove the risk. When you're building tech on top of other tech, your biggest risk is that will it just disappear. Building in public shows the level of effort going into it. It shows that it's very unlikely to just disappear. Also, people want to know what the roadmap looks like.
My buyer persona is the company CEO. I want to target businesses. When it comes to the tech you build on, that decision is normally not made by technical people. Technical people make recommendations, but they normally don't make the decisions. So, building in public helps make the process more accessible to all, technical and non-technical!
Why do you build in public? Let's chat below!
Discuss this story.
by Josh Spector
I'm sharing growth tips for creative founders! Here's this week's:
The easiest way to grow your audience is to connect to an existing one.
Find communities where your people hang out, and become an active participant in them. Don’t just show up and promote yourself. Build relationships.
Don’t make people come to you. Go to them!
Subscribe to Josh's For The Interested newsletter or I Want To Know podcast for more.
by Eddy Reynoso
Hi, indie hackers! I'm Eddy Reynoso, founder of Dimension, a platform that allows you to support independent artists that you believe in, while getting exclusive benefits and recognition.
I started working on the app with two friends in January. We spent nights and weekends shipping features for months, and this was to our detriment.
Read on for more about our journey!
We wanted to launch with tons of features to make our platform enticing to creators and supporters. Some of the features that we designed and built out included:
We launched all of these features before we solicited feedback or validated our idea. This led to months of building with no feedback, subpar features, and burnout.
One day, we all met to discuss our situation. We'd been building for months, we were burned out, and had a product with a bunch of unfinished features that we weren't even sure that people would use...if we ever launched it.
After spending some time debating whether we should just scrap the project, we decided that we wanted to launch with one completely finished feature, then validate that feature with real users.
We got the idea to stop over-engineering from Pieter Levels' book, MAKE. In it, he repeatedly stresses two points:
We decided to put all of our focus on one feature: Proof of creator support.
We were very confident about our idea for several reasons:
Our platform allows creators to set up a public page where their supporters can donate money in exchange for perks, like digital collectables, merch, discounts, etc.
In addition, our platform doubles as proof of the exact date a supporter chose to support an artist publicly, how many social media followers the artist had at the time of support, and the order in which the user decided to support, compared to other supporters.
We raised $1K with our first artist on our first day, funded solely by passionate supporters. Now that we know there's real interest from artists and supporters, we plan to add features incrementally, while onboarding artists.
We spent ten months building a product that we never launched or solicited feedback for, but those mistakes we made will never be repeated. We hope that this inspires you to not make that same mistake.
Talk to users and ship your product as fast as possible!
Discuss this story.
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Special thanks to Jay Avery for editing this issue, to Gabriella Federico for the illustrations, and to James Fleischmann, Darko, Sole Garcia, Josh Spector, and Eddy Reynoso for contributing posts. —Channing