My SaaS lose 300 users + $10.000 to a pricing mistake
Hi. Denizcan here!
Today, I will discuss not how to design a pricing strategy, but rather how not to design one.
Here is the expensive lesson I learned from my SaaS:
Let’s get started!
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I’m anti-conventional, I’m independent-minded.
This applies to the products and projects I work on as well. createtargetaudience.com was one such product.
And we launched it in Oct 2022.
It was a game-changer for Twitter ads.
It allowed users to target their ads to specific audiences by showing ads to handles (usernames).
It was an incredible method that most people were unaware of.
It had the potential to increase the usual 2% engagement to over 30%.
There was no clear alternative to the product, and the idea was simple yet fantastic.
That’s why my post remained at the top of IH for three days.
And around 150 people signed up for the waiting list.
I made a decision based on hypothesis for CTA’s pricing.
Until the day of the launch, we only had a waiting list and hadn’t disclosed the pricing to anyone.
We simply announced that we would let in the first 20 people.
The high level of interest raised our expectations.
But it didn’t turn out as we had hoped.
The launch day was a terrible disappointment (except for being the 3rd product of the day on PH)
Only 3 users made a purchase.
That’s when I started thinking about what went wrong.
Why weren’t people buying a product they found amazing?
On the launch day, we received about 1,000 visitors.
We embedded tool to our landing page.
1/3 of these visitors searched using the tool on the landing page.
The first thing that came to mind was the possibility of the price being too high.
I quickly decided to test this.
And we created a $29 starter package.
We wanted to test if people who purchased this package found the price to be too high.
We announced it through the waiting list.
Can you guess what happened?
There were no sales.
This confirmed that the problem didn’t stem from this.
1/3 of the visitors had used the tool on the landing page. (so, approximately 300 unique users.)
Since we placed the tool on the landing page, we didn’t collect email addresses through a freemium plan.
As a result, we missed out on converting those 300 potential users.
Offering a free plan was an option that came to mind. However, we could only implement one hypothesis.
And offering a free plan would contradict the hypothesis I had developed and built.
When implementing a scarcity hypothesis, offering a free version would create a contradiction.
These two things are different strategies.
So, I had to choose one.
With the increasing interest in the product, I opted for scarcity.
While it is a correct hypothesis, making a wrong decision cost us dearly.
We could have converted the 300 people who tried the tool on the landing page, giving us the opportunity to gather feedback and potentially upgrade them from the free plan.
Two days after the launch, I decided to change the strategy quickly.
We added a free plan to the pricing and made it easier for users to get in.
This was crucial for the long-term strategy (if it was part of the strategy).
We were thinking to implement tactics such as exchanging email addresses and offering options for future upgrades.
We quickly turned around and converted approximately 300 users.
But, despite a quick change of strategy, we lost about 300 users conversion.
After Elon acquired Twitter, he disabled the targeting feature based on usernames.
And as a result, we decided to stop CTA.
When designing a pricing strategy, it is crucial to develop multiple hypotheses.
But…
It’s also important to know how to learn to build in public, test and gather feedback.
Designing a pricing strategy can help you multiply your revenue with minimal effort.
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Good luck.
Denizcan
