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This isn’t a universal truth, but it is HappyLetter’s truth. The product must be marketing. Let me explain.
Jason Lemkin says pricing doesn’t matter as much as the annual deal size:
$60-$1000 Average Annual Deal Size: then you won’t be able to hire any true sales people, or do any 1-1 marketing. Salespeople will either be too expensive, or their comp will consume 100% of the deal. And marketing will be too expensive to do anything 1-on-1, and it’s too early for TV :) Basically, you’ll need either a freemium business model, or a word-of-mouth/viral model, or in any event, a model where you spend almost nothing on marketing, and the website just takes the order, with some human support from product specialists/customer service as necessary. E.g., from inception to 2012/today, Intuit has acquired 80%+ of its customers from word-of-mouth and zero-ish cost marketing. Think about that … that needs to be you here.
If you don’t know who Jason Lemkin is, and you’re the least bit interested in building a SaaS product, then it’s time to spend the next several hours reading everything he’s ever written. He built a freemium e-signature product (EchoSign) from $0 to $50MM in annual recurring revenue. He knows his shit and he shares it willingly.
My pricing for the time being is set. It is $20/mo + $0.25/subscriber/month. That means my average annual deal size is likely to be south of $1000. That also means I must go freemium and/or find a viral/word-of-mouth hook or I’m doomed.
I know I said I was going to be unapologetically sustainable and charge from day 1. Maybe it’s time to revisit what it means to be “unapologetically sustainable”.
You see, I knew I’d have customers waiting for me when I launched and that’s all I focused on. I didn’t think about what I’d do after the initial buzz died down. Is freemium the answer to my current marketing quandries? Maybe. Probably. It’s definitely time to explore this question from all angles.