On the other hand you need just one cost-cutting round or one unforgivable support foul-up to lose 10% of your revenue overnight. Model A likely won't see that kind of volatility.
As someone who runs a type A business, gives C+ customer service, and has a significant amount of unplanned downtime (ie. "oh shit, the server is down"), I can back this up 100%. We lose some customers due to my bungling, but it's never enough to shake the foundations of the business.
I disagree. People who are paying $5/month have a much lower threshold before they leave than an enterprise paying $20,000/month. Also larger more expensive services tend to end up with more business integration and the cost of moving to another service is typically substantial.
Also, consider setting a price that cuts out the vast majority of demanding cheapskates but keeps it salient for the rest. $200 is a good starting place. You can also achieve this by charging for the entire year up front instead of monthly billing.
They do, but in $20,000 there are 4,000 individual lower thresholds. It's much, much less likely that any one event will cause all of them to quit - all other things being equal, which they never are, so with a grain of salt and all that.
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On the other hand you need just one cost-cutting round or one unforgivable support foul-up to lose 10% of your revenue overnight. Model A likely won't see that kind of volatility.
As someone who runs a type A business, gives C+ customer service, and has a significant amount of unplanned downtime (ie. "oh shit, the server is down"), I can back this up 100%. We lose some customers due to my bungling, but it's never enough to shake the foundations of the business.
I disagree. People who are paying $5/month have a much lower threshold before they leave than an enterprise paying $20,000/month. Also larger more expensive services tend to end up with more business integration and the cost of moving to another service is typically substantial.
+1.
Also, consider setting a price that cuts out the vast majority of demanding cheapskates but keeps it salient for the rest. $200 is a good starting place. You can also achieve this by charging for the entire year up front instead of monthly billing.
They do, but in $20,000 there are 4,000 individual lower thresholds. It's much, much less likely that any one event will cause all of them to quit - all other things being equal, which they never are, so with a grain of salt and all that.