Y Combinator Startup Podcast #148 - Startup School Week 7 Recap - Kevin Hale on Conversion Rates and Pricing
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Oct 16, 2019 Kevin Hale, a Partner at Y Combinator and co-founder of Wufoo, shares his expertise on conversion rates and startup pricing. He dives into the importance of understanding user behavior and optimizing the ‘magic moment’ in customer interactions. Hale breaks down common pricing mistakes startups make, like undervaluing their products and focusing on the wrong customers. He also introduces innovative pricing strategies that can yield significant returns. This engaging discussion is packed with practical insights for aspiring entrepreneurs.
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Leaky Bucket Focus
- Focus on improving conversion rates when you have a leaky bucket, not just to increase sign-ups.
- Prioritize working on churn, as it's easier than improving conversions.
Conversion Benchmarks
- Shareware conversion rates are around 0.5%, casual games at 2%, and freemium SaaS between 1.5% and 5%.
- Higher intent products like TurboTax online can achieve up to 70% conversion rates.
Knowledge Spectrum and One-Button Interface
- Use the knowledge spectrum framework to solve UI problems by either increasing user knowledge or decreasing the knowledge needed to use your product.
- Simplify your landing page to a one-button interface and identify the essential information.