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Pricing: Charge A Flat Fee When Others Charges Monthly

I’m going to start with a quote from Mark Twain.

“Whenever you find yourself on the side of the majority, it is time to pause and reflect.”

I’ve always loved this quote.

When everyone turns left, you should turn right.

There are layers to the quote. And I’d even say that there are times that we should ignore it.

Because there’s another quote: “Success leaves clues”.

Suppose something works for someone else. It can also work for you.

So which way should you turn? Follow the successful people and turn left, if that’s how they’ve gone. Or be different and turn right?

What about both?

Standard ‘SaaS’ Pricing

The common pricing model for a software product is as follows.

Come up with 3 “tiers” to offer different amounts of functionality to people. Depending on their budget.

Give each tier a monthly price.

Then offer an annual price for each tier too. But discount it. Offer 12 months for the cost of 10 months.

If I had a pound, for every pricing page I’d seen that had this structure. Well, I could have paid my mortgage off.

And I get it.

This structure plays into human psychology. And if it ain’t broke don’t fix it.

But are there downsides to this model?

“What If I Do The Opposite?”

Again this is a quote from Tim Ferriss. And it sits nicely with the Mark Twain quote from the start of the article.

“What if I do the opposite”?

But what does that look like when it comes to pricing a software product?

I can’t take any credit for this idea.

It comes from a gentleman called Marc Lou.

He’s launched a lot of small “micro SaaS” businesses. And what he has found. Offering a one-off, lifetime charge to use a software product is working well.

Also, he seems to have moved away from the 3 tiered approach. And offers two price plans. One very basic. And the other is stacked with lots of features.

Going back to the other quote. “Success leaves clues”.

Is the monthly/annual offering more suited to large software businesses?

That has the resource and VC-backed funding. To be able to push and market these more “standard” pricing models. And get people to subscribe.

Marc Lou is a one-man business.

Like me.

So is the lifetime offering the clue I need to solve the mystery with SaaS products?

With limited resources. Is it more appealing to offer a lifetime deal to get people on board?

As long as you aren’t losing money in the long run

The Case For Trying Something New

It didn’t make sense to completely change the pricing structure for the products I’ve already got out there.

But, I had a new idea that I had started building out.

So I started to consider offering a lifetime deal.

Here’s what I was thinking about:

Does it take more sales and marketing effort to convince people to subscribe to a monthly/annual deal?

They have to consider that the money will be coming out of their wage every month. Or, have to justify the spending to finance.

Also. If they don’t spend enough time early on. Use your software and get benefits straight away. That they can’t justify the spending.

That means they may not sign up in the first place. Only commit to the free trial. Or cancel the subscription after a month.

Not because your product is shit.

But because they’re too busy to commit enough time to get the most out of the service.

If someone pays once. Hasn’t got the mental battle every month to justify it. And hasn’t the pressure to use the product there and then.

That’s a good thing.

Value Your Time

It’s the only non-renewable resource in the universe. So don’t waste it.

Again, it’s a mindset switch.

But this is sticking with me: “Free isn’t worth your time”.

You don’t go and work for someone for free for 14 or 30 days before they pay you.

Then why do we do that for our software products?

As I said, I have limited resources. One of those resources is time.

So I don’t want to waste it building something, that people can use, but not pay me for.

It makes me think of a famous scene from the Batman movie The Dark Knight.

The Joker, when meeting with all the mob bosses, says “If you’re good at something never do it for free”

The Joker: "If you're good at something never do it for free"

Don’t Leave Yourself Out Of Pocket

One of the biggest challenges with moving to a lifetime deal. Is figuring out how much will it cost you to serve that customer “for life”.

This can be tough to figure out.

And that’s why the monthly and annual deals are so popular.

If you have a large or even small team, the monthly income is critical. Even if it’s only you in the business. There will be monthly costs you need to think about.

If you are getting enough people paying for a lifetime deal each month. Then this might not be a problem. But starting out, I doubt that will be the case.

But for a new project of mine SuperSub. It made perfect sense.

SuperSub is a WordPress plugin, that helps you get more newsletter subscribers on your blog.

The service I used to host the plugin and deliver updates. Was a commission-based platform.

I could use their service for free to get the plugin out to the world. But they only took a commission on any sales that I made.

Ideal for the lifetime pricing structure.

They get paid, when I get paid.

I’m not out of pocket up front. Potentially for months, if not years. Until I can figure out the best way to find customers.

Conclusion: Pricing Your SaaS Product

Don’t be a sheep.

Because everyone else does something a certain way. That doesn’t mean you should.

The same goes for pricing your software service.

Depending on your resources. It might make sense for you to offer a lifetime deal, instead of a monthly subscription.

It could mean less friction for a potential customer. Making it more likely for them to pay.

Also, you need to value yourself more. Don’t give away your time and effort for free.

But before deciding on a lifetime deal. Make sure the numbers add up. That it’s profitable long term, not for the next 3 months.

Doing something different can be more powerful than grinding harder and harder at the common way of doing this.

Oh. Before you go. If you like to know more about how I build SuperSub? Check out this article on how I came up with the idea and started building the plugin.

Wait, want more tips & tricks? Yes, please!

Who Is Phil Hughes

I am a coder, content creator & software consultant for start-ups and FTSE 100 companies. I am obsessed with productivity, self-improvement, and building a lifestyle business.
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