I, alongwith my team at Owlgrin, am busy working on pricing strategy for Gaurilla to find the best one that works. As they say, “pricing is never done right at the first attempt,” so seems to be the case with us.
While brainstorming, we stumbled upon a brilliant idea - converting free plan to $1 plan. My first thought was, “Okay, it might give us a few hundred dollars jump, but nothing more than that.” But when we discussed the idea and the psychology of a customer (by keeping ourselves in her shoes), we were amazed by the power it may hold.
As a customer, monthly fees of $1 is next to nothing. It is even less than what one pays for a cup of coffee. For customer it’d be a no-brainer to quickly enter her card details and start using app. Agreed? And that is the most interesting thing that happens - she gives out her card details.
(I may sound evil right now, but I ain’t planning anything bad.)
Now, just imagine you setting up your iTunes account. Apple tries to get your card details as soon as possible. Why? So that it can allow you to perform one-click purchases in the apps afterwards. And that is exactly, what we can do using $1 plan.
Once the customer has given her card details, we can show some non-obstructing tips in the app telling about benefit of upgrading to better plan. For example, $1 plan might come with 10MB of storage space and one-click upgrade to $4 plan would give her 100MB of space.
And at that moment, she’d have just one small decision to make - whether to perform one-click upgradation or not. And this small decision is easier to make as compared to deciding if she’d want to bring out her card and enter the details for an app that would cost her $9 per month.
We have seen it work with in-app purchases in mobile and we are assuming it may work with SaaS apps too. However, we are yet to test this assumption and when we do, we will share the results of the experiment.
If you too are working on pricing strategy for you startup, you may try offering $1 plan and share the results with all of us. :)