Pablo Fernandez

Month: March 2021

  • When raising prices is easier than lowering them

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    When you are building a B2B SaaS product it’s very hard to know what the appropriate price for your product is. Even if you magically found the correct one, it might not be the correct one next month when you made the product better and you are providing new values. That’s why you need to be constant experimenting with prices on your app.

    When I started my career I was afraid of raising prices, of having to justify why they went up (I wasn’t even aware of grandfathering). When I started to learn that most entrepreneurs set their prices too low, my partner and I decided to set the price too high and then lower it if it was necessary. Without realizing we painted ourselves to a corner.

    We didn’t want to just lower prices, we wanted to experiment with prices (switching from per-user to 3 plans, things like that). The problem was that anything we would come would cost a different amount for each customer. For some customers it would go up, and that wasn’t a problem, because we would grandfather them in. But for some customers it would plummet.

    There were two options for those customers:

    • Lower their prices according to the new plans and lose the revenue.
    • Don’t lower their prices and risk them being very angry about overpaying.

    Because we were a bootstrapped startup living month to month, every time we discussed this we would get stuck in a cycle of what-ifs one or the other situation. Eventually one day we made a rule of forbidding talking about pricing (trying to get some work done, because we would spend days and days discussing pricing).

    Eventually I found myself wishing that instead of starting with a high price and lowering it for experimentation, that we started with a low price and raising it for experimentation. We would have experimented much more. There’s another obvious solution which is not depend on the sweet revenue of those high prices. But even though it’s simple, I don’t think it’s easy… like sitting in front a pizza and not having a slide. Yeah… right!

    Next time I want to increment prices over time and even then try to give myself room for experimentation.

  • Dashman

    Why I think Dashman failed

    Almost every time I tell someone what Dashman, one of my startups, was, their response is: “Oh, I really needed that back in 20somethingteen”. Yet I didn’t manage to make Dashman a commercial success.

    I collected several hundreds of email addresses over years of people interested in Dashman. Yet it failed, nobody bought it.

    How can a product show that much demand and have no sales?

    I’m purposely not telling you what Dashman was, because it doesn’t matter.

    I think the problem is that Dashman had a demand curve with a shape I didn’t predict. People would find themselves needing Dashman to solve a problem and would happy become a subscribing customer if Dashman was right in front of them… but… and this is the important part…. if Dashman wasn’t, they would find a workaround and not need it anymore. If I came a year later with Dashman they would buy because the workaround was working and switching was not worth the effort because their current pain around this issue was 0.

    Dashman solved a pain that generally stayed around for a couple of weeks and then disappeared. It didn’t matter if the pain was intense or not, it went away. You know what market behaves like that? Weddings. If you have a great idea for a product for Weddings and you spend 5 years collecting people that want to use it, once you release it, how many would start using it? Maybe the last couple of months of interested people. Everyone before that is already married and your product is worthless to them.

    I have heard weddings being a bad industry to work at but in all the books about building products in which they tell you to find the customer first I never read “make sure your demand doesn’t dissipate with time“.