The usual suggestion, often given by HN's patio11, is to charge, and charge more. For some reason free customers are the most demanding, and the more you charge the more people self-select out of the customer base.
The usual way this is presented as a free lunch has become disconnected from reality, IMO.
Free customers are not the most demanding, in my experience, but they are the most plentiful. If you cut them out, you don't lose any income (obviously) but you do cut down on requests by filtering out a lot of your users. A win!
So some people assume this is a monotonic function, where charging more increases their revenue while filtering out bad customers even further. If you press that button too many times, though, you discover that the higher price comes with increased churn, fewer signups, new competitors appearing on the scene, and, surprisingly, more demands from customers.
The last one is confusing because we were all told that "charge more" is a magic button you press to increase revenue and improve customer quality. The problem is that once your product becomes expensive enough, people expect it to perform at a certain level. If your $10/month service breaks one day, the number of people cancelling their subscriptions over it is going to be small. If your $100/month service is down for an entire day, people start asking themselves why they're paying so much for this thing anyway. The higher price gets more scrutiny at businesses looking to cut costs, so churn goes down. The higher price results it in getting recommend less over alternatives. It starts adding up.
Ideally you find the sweet spot where revenue is maximized, but that's hard to do. The feedback loop on price increases can take a very long time to show up in customer churn and reduced signups.
I've signed up for a number of SaaS products over the years that played the "raise prices" card too aggressively and then backtracked and cut prices.
There's this old story about an old farmer and his horse. You see, this old farmer had a horse that he loved dearly; took great care of it and pampered it.
But he was getting old, and wanted to retire to the City, where he could not keep a horse.
So what do I do with this horse, he wondered? He asked a wise friend, who told him: sell the horse for the highest amount of money that you can.
What?!? replied the farmer; I love my horse dearly and would never think of selling it like some goods.
The wise man replied: if you give it away, whoever gets it will abuse the shit out of it, and treat it like a workhorse, whip it every day, etc. because they got it for free, and won't value it. On the other hand, if you sell it for a huge sum, the buyer will pamper it and take good care of it, because it's an investment to them.
Or, give it to someone who can't afford a horse but really needs one, because it will be worth more to them than to someone who can afford to overpay for it.
Would they be able to afford to care for the horse? Do they need it because they need a workhorse? It’s more of a gamble and if you’re trying to get best odds for the horse you’d probably skew towards someone that’s paying a large sum and not based on their human necessity
