We're ready to launch. I was thinking of initially launching with a simple 15-day trial and a single paid plan that's around the average price point our competitors charge.
This is fast to do and will only take a few days of dev effort.
On the other hand, ALL of our competitors offer a free plan (restricted features, etc) and 4 paid plans on average. Each paid plan has feature restrictions, limits on other stuff, etc.
That will probably take us an extra 2-4 weeks of dev effort to add the restrictions into the app on a per-plan basis, make sure it all works, let people upgrade between plans, etc.
My question is this - should we just launch fast with sub-optimal pricing and fix it later, or should we invest the time to build out the plans with feature restrictions and a free plan, etc?
Having done 10 startups operationally as head of sales and marketing and having researched why startups fail and succeed over 25+ years, I believe that it all depends on what you are trying to accomplish. Do you know who your target customer is? if so, do you know the problem you are solving for them and the degree to which they are struggling with solving it now? If so, do you know that the solution you are putting forth is solving it in the way that is useful to them? If so, do you know the value they place on you solving this for them? That is, have you done some type of rudimentary pricing analysis? The follow up to each of these questions is "How do you know these things are true?" I believe that the key is to find out truly why they would hire your product over whatever way they are getting it done today and how much that is costing them. Please note that you have a theoretical 9X problem to deal with as well. That is, founders typically overvalue their solution by about 3X and the customer overvalues the current "solution" by about 3X. If you have not done these preliminary things then I would make sure that the launching of your product moves you toward these answers (and is not too expensive as you do not want out run out of money unnecessarily). If not, get out of the building and talk to your target customer to find these things out first. BTW - Do not assume that your target customer assumption is correct. Life is too short to build something that no one wants.
Launching with a one-size-fits-all approach carries substantial risks to a) your market perception and customers' perception of your brand / product, b) your sales team's playbook breadth and options to draw on when customer isn't immediately sold on your first (and only) offering, c) your ability to harvest different levels of WTP (willingness-to-pay) from different customer segments, and learn about the different values different customers place on different features of your product in the most consequential way possible: by seeing what they're willing to pay for, and how much. Those are the reasons all your competitors have given up the benefits of "simplicity" ... while obviously preferrable from an initial cost and time of execution standpoint, lack of "options" means you'll be leaving value on the table with most of your customers. That may still be a valid decision for you if your upfront constraints and importance of speed to market are just overwhelming, but you shouldn't make it lightly. On your second point, the ability to go back later and fix it, I'd advise you to understand the challenges of doing that first, before you sign up for it. Once you have a pool of customers paying under (one-and-only) plan X, and a market perception centered around the price points and terms of X, anything you offer to new customers will have to be thought through from the standpoint of "what will customers already on X think if new customers are now offered Y, and will this raise issues of fairness, etc." Again, may well be feasible (and is in fact done frequently by companies large and small), but a solid plan with clear contingencies will serve you well.
I strongly recommend the "latter" in your question. You're making a mission-critical decision, and "great" pricing over "ok" pricing will pay for your extra effort many times over. The nuance I see is you refer to the extra "dev effort" (understandably), but don't refer to any extra "consider best plans to offer, why, to whom effort". Building the ability to charge multiple plans may well be a poor use of resources right now if it's not paired with the effort to build up thoughtful pricing strategy and a "why" for your plans beyond just averaging the competition's :-).
As it happens, I am working with a SaaS company right now facing new product launch questions ... it is never simple, and the work upfront to understand why your pricing strategy is what it is and a sense of your customers' WTP will help not just your decisions, but also the ability to congeal internal teams and sales folks around the WHY, not just the HOW MUCH ... then they will hopefully sell it that much better.
Best of luck, feel free to get in touch if you have further questions.
I would highly suggest you consider being spot on competitive with those you are in the market with. There will be thing to overcome going to market, remove all of the obstacle that you can. Make your buyers choice easy.
I think at this stage there are a couple things to research 1) your audience and their behavior in trying new things 2) Test it out... it's really hard to tell unless you try it and see what works. Most companies are using the freemium approach only cuz it makes sense with their product/service but also it makes sense with their business model.
Where will you get your leads from?
Much more important question. Where are they and how are you determining their quality?
The question itself suggests that to some extent you're thinking about your product as generic, which I'm sure it's not. If your product can meet some of your customer's needs better than competitor products, that's what matters.
Based on my experience, if you position your product accordingly, you could very well acquire subscribers without free trials or freemium plans. Why not get paid up front and offer a satisfaction guarantee?
I would start with one plan. It's easier to add plans than to drop them.
Please call and we'll brainstorm together.
Great question, and pretty common in a new product launch. There are a lot of factors at play which may affect your go to market strategy. In line with Lean methodologies, the simplest approach is the best. You can launch with what you have already and iterate later once you have some feedback and analytics to guide you in what your customers like. It also depends on how you plan to launch. If you are going to run a national marketing campaign and pump lots of money into it, then I would advise doing more research first. Maybe first launch in a small focus group and experiment with various pricing models until you see which one works best.
On the other hand, if you have existing competitors which are not significantly differentiated from your product in feature set, and target the same customer groups, then you can trust they may have already figured out what works, so replicating their model may be the best choice. Happy to discuss more.