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#ChargeLess - what services would be ripe for a low cost competitor?


#1

Following on from @ian #ChargeLess Twitter discussion and @SteveMcLeod’s Feature Upvote it got me thinking…

(Background - Steve is implementing a service like UserVoice but without their ‘outrageous’ price tag “UserVoice at a price you can afford” he says.).

What other services are ripe for small Bootstrapped company to come in and compete with them on price (probably with a slightly reduced feature set)?

Or - who has already done this?

(Note - I am not asking if this is a good idea or not. Sometimes it will be, often not - examples of where it might be)


#2

Not exactly answering your question, but I did consider some products before settling on Feature Upvote. For example, I consider writing yet another bug tracker. But Atlassian completely dominates this market, at both the bottom end ($10/month for 10 users) and the top end. I just could not work out how to price and market it. (I was impressed to discover Sifter, a small and successful bug tracker that offers unlimited users for $29/month.)


#3

I think the danger with this is that, like lots of things in life, some people will go too far and build services with cheap price without really considering the real costs for having a customer and the support and maintenance will be difficult.

It’s easy to have 50 users at $6/month, but having 3000 users at $6 will only returns 18k. How much resources (human and technical) is needed to handle the load of 3k paid customers?

For me I prefer having open source projects, like the one I’m slowly building on the side here Parle.io which is an Intercom / Drift open source version.

Revenue model? I will have a commercial license, and just like Ghost I might offer hosting, but I would prefer not. Offering a self-hosted commercial license + the FOSS one kind of sound easier than operating a “cheaper” SaaS where support and quality of services (as in your infrastructure) needs to be up for 99% of time.

Like everything, it depends :). I would not want to see lots of new SaaS emerging with only price as competitive advange. Where’s the creativity in that? What’s the fun part of building XYZ and just making it cheaper?

Also what happen if, for example of @SteveMcLeod UserVoice were to open a free plan [just picking that example because you mentioned it]. We do have a free plan at Roadmap to grab user feedback. But I’ve not designed this based on UserVoice for lots of reasons which are out of scope here :).

Having not done a ripe off if UserVoice were to open a free plan it would not affect us at all, since we did innovate re: capturing user feedback.

I’m not implying that FeatureUpvote did not innovate (I did not looked at your product at all Steve). Just to be clear here.

That’s an interesting subject I think.


#4

I have different thoughts on this. Let’s use uservoice as an example.

There are some customers who buy cheapest. You can get them with a cheaper product.

There are other customers who buy uservoice, because they can tell their boss and colleagues: We use the leading user feedback platform. If it doesn’t work, we get a consultant to help us. It’s just 500/mo, this saves John 1 day/week, sot it pays itself back.

There are even lots of other customers with other stories. Pricing becomes the dominant factor once your offer gets commoditized.


#5

Very interesting discussion.

I guess it comes down to what kind of market you trying to reach. I think you have a great example here. Uservoice would be a great example for a product that will reach many bigger clients, because they don’t care so much about 500$ and for them it’s more important that they can solve their problems with the product fast (through consultants or maybe even 24/7 phone support or whatever). But for bootstrapped businesses the shear amount of 500$ is just too much of an expense for a service like Uservoice/Feature Upvote, so they may be more inclined to go with a cheaper and maybe not so mature product because they simple can’t afford anything else.


#6

The thing to remember is uservoice have that pricing for a reason. They must have decided it is more profitable to go after the higher end of the market.

I have a site https://wordtohtml.net/ it gets 25,000 users a month. We launched a pro version for $25 a year thinking if we got 1% of users to go pro = $$$. But so far less than 10 users a month go pro :frowning:

So the moral of the story is even with good user numbers it can be difficult to make money.


#7

Absolutely - but taking the UserVoice / Feature Upvote as an example its pricing plans are not silly cheap and should support support and all other overheads.

Why do you prefer that model?

Agreed and I wasn’t just suggesting copy cat apps - lets not forget that just about every idea you could come up with has at least one competitor.

I am saying look for undeserved niches - in particular the ‘bottom end’ of a market that want a particular app - but can’t justify big $$$ but thats OK as they don’t need all the same features that a big enterprise customer would (bonus points if the features smaller customers don’t need are also expensive / hard to deliver). Also your method of sales and delivery can be very different too - self service v sales calls etc.


#8

Yes they have moved up-market and presumably they have done that for a good reason. Doesn’t automatically mean that there isn’t a perfectly profitable under-served niche they have left behind though.


#9

Yes I totally agree with the fact that charging less and serving a less demanding audience make total sense. My point was only some word of caution that we have to be careful not to start a trend and that new comers might start with this as business plan (applying iOS pricing and copying an existing SaaS and I’m done) kind of way to success.

re: open source + commercial, my point was only that, for me, this model sound more sustainable than the cheap route for a SaaS. Since you do not have to do hosting and support is disconnected. You don’t have to hunt “cheaper” customers because your commercial license is on the $400-500 range etc.