The easiest way to start a B2B internet fight - talk about pricing

Ask "How much should I charge my customer for using my product?".

You ask that question and fireworks are guaranteed.

Ask 10 people and you'll get 17 different answers

I don't know what causes more damage, pricing for a SaaS or tabs vs spaces.

I don't want to cause a war in the comments, but I'm still starting a SaaS and want to discuss pricing. So I'll talk about my take on pricing and what I will do.

But before I spill the beans, let me give you some context.

I'm building a SaaS in public, posting progress every day today is day 19.

I'm adding lessons from my mistakes and learning from current events.

I'm live-sharing as I build holding nothing back.

If you're interested, you can binge-read all the past updates in my newsletter.

I'm building a SaaS so re-inventing the business model wheel makes little sense.

I want recurring revenue so I'll put in place a monthly subscription model. In case you're not familiar with it, the famous MRR or ARR that's monthly/annual recurring revenue)

There are 2 main reasons why that's a good idea:

1. Recurring revenue is highly predictable. After a while, you have a good idea of how much money comes your way every month. Music for people like me that want to pay themselves a salary.

2. Higher LTV. Lifetime Value is the amount of money a customer brings to the business for the duration of their business relationship. If I keep providing value the customer will stay for longer and I'll get more money. Win-Win

There is much more stuff to talk about here but word on the street is that my posts are too long. I'll cover this another time.

Now that I know what business model I want to use, how much should I charge?

I have screwed up this part in the past so now it's story time so buckle up.

Most founders including myself are afraid of charging users.

For my previous SaaS, I had this plan:

• provide a free app

• get enough people to use it

• get feedback from them

• started charging once I had enough people telling me they loved it

That was a terrible plan.

There are a million reasons why that plan would never work. The biggest lesson I learned was the concept of value.

For people to pay up, they need to believe that a product solves their problem. Or, in other words, provides them with value.

For users to pay for your product you need to provide them with MORE value than the price you're charging.

This is very important: every person will get different value from your products.

This means that for some people, you charge too much and some will be happy to buy the most expensive plan. If they think your price is a steal then you're providing the right people with lots of value.

You see the problem with the free app, right?

If I give you something that costs you nothing, what would be your first thought?

You'd think that what you received has no value.

If the creator gives stuff away for free it has no value. Why would you use something that has no value?

You don't have time to make a random bloke happy by using his free, worthless stuff.

Being afraid of charging is a common trait among founders. The main reason is that we're afraid people won't see enough value in what we built. So we're tempted to give it away for free to seek validation.

Here's I big lesson I learned:

If I want to validate a product I need to start charging money for it. If people buy it that is enough validation that is worth something.

If nobody buys it it doesn't provide enough value in their eyes.

I wasted 7 months because I didn't know this.

Storytime is over. How much should I charge?

Short answer, don't know. I have a plan.

Here is how I plan to figure out how much I can charge:

• I will find the first 10 people willing to try my product for £10 a month.

• This won't even cover the hosting costs but is fine.

• My first customers deserve the best pricing I'll ever have. I'll also figure out how to keep them at that rate regardless of the price increase.

• I'll find these people manually. Maybe one or two will reach out because they are seeing my posts, that would be super cool!

• I'll work together with these people, providing the most outstanding service I can. Hopefully amazing enough that they will be willing to give me a testimonial.

After this phase I'll have:

• some customers

• a bit of credibility and social proof

At that point, I can think about scaling.

I'll raise the prices. In the beginning, increase to £15 a month and repeat the same process above. Sign up customers with a monetary CAC close to 0. I'll quickly figure out how many customers I can get manually. I hope enough to pay me a salary.

Once the manual road becomes impossible, I'll try other ways like:

• referral

• ads

I've tried both in the past with some success so I'll start there. There are many, many more ways to go.

When ads are in the mix my CAC will jump up. That's not good.

But that is a story for another time. Let me get my first 10 customers. Worry about ads later.

What do you think of my plan?

Do you think is good? Or is it bad?

Let me know in the comments.

Also, let me know if there is anything obvious I'm missing.

I sound confident, but my previous SaaS failed.

Progress update

• it has been 8 days since I started developing my MVP, time flies! I have a goal of making a landing page with my product running in production by tomorrow.

• I'm stoked to say that I'm on track to hit that.

• I had a top-line goal of £100 in profit. I made no progress on that. One day left in the week, anything can happen

• Tomorrow I'll publish the investor update number 3 and we'll finally have a trend line. Can't wait

Celebrations

This party can't stop! And it won't stop thanks to you legends!

• 33 of the most exquisite human beings on the planet subscribed to the newsletter. When I get to 50 I'll do a video doing 50 pushups to celebrate.

• 141 smart, and insanely good-looking people have subscribed to the LinkedIn newsletter. Never seen such a group of hot-looking people hanging out in one place. Wild!

• The party is also expanding to X So many of you joined there, I don't have an actual count. I started that account 10 years ago and I don't know the follower count before last week. About 20 people joined there but not sure. Thank you all so much!

I cannot thank you all enough for your help and support, you're all legends!