If you spent any time on DTC Twitter in the last couple of days, you likely caught a discussion about SaaS pricing.
There was one comment in there that was so disarming in its honesty, and it’s worth just showing the screenshot over trying to summarize it:
My first reaction wasn’t “that’s ridiculous;” it was: “Is MacCoy right?”
The Shopify ecosystem, at this point, is pretty mature in terms of the technology — at least through the eyes of the brand. So mature, in fact, that a healthily 8-figure brand thinks returns software should cost about $25/mo, since they know you can pay $15/mo for reviews.
Email is email. Not much innovation there at this point. SMS is a newer channel, but the feature set really just needed to hit parity with email to appease power users. That’s largely happened. Returns softwares mostly do the same things now. Reviews are table stakes for any brand. The list goes on.
And that’s sort of the point: Every category has reached a level of “good enough” that any improvements make things marginally better than they were before, but not meaningfully better. If I’m a brand, why is any of it worth a premium now?
This is the challenge in any space (not just software): Something new comes along and it’s worth a premium. Eventually, others copy it and it’s worth less—because both competition and time turn a novelty into a commodity. Once the expectations around value are met by multiple players in the same category, the value ends up getting “priced in” to the cost.
And because those premiums are eroded, the market comes to expect this cycle, meaning they just know that the new vendor in the new space is overcharging. Time will prove them right. Just watch!
Vendors, then, have two options:
Get efficient enough to reduce prices
Innovate enough to justify premium prices
There is, though, another way: Innovate and keep prices lower than premium. At Stamped, we think there’s an ability to do that in reviews. Word of Mouth is only increasing in importance, and the fundamental components of that are best seen in reviews.
None of this is that easy to do. But there is a lot of truth in that Twitter exchange, and it’s a net positive for everyone.
