The Pricing Dilemma: Balancing Costs and Google Ads as a Young Startup
Hey, it’s Mats, back with another peek behind the curtain of startup life at KfzPortal24.de.
One of the biggest challenges we’ve faced recently is navigating the tricky waters of pricing our product and Google Ads. As a young startup, organic traffic is still growing, which means we’ve had to rely heavily on paid advertising to reach our audience. But as we’ve discovered, this strategy comes with its own set of challenges—especially when it comes to pricing.
The Cost of Conversion
Our initial target price for the services at KfzPortal24.de was around 14,90€. It felt like the right balance—affordable for our users while still covering our costs. However, when we started running Google Ads, we quickly ran into a problem. Due to the high price levels set by our competitors—some charging as much as 34,90€ to 50€—the cost per conversion for us was sky-high. Google charged us about 18€ per conversion, immediately putting us in a tough spot. With a target price of 14,90€, we effectively lost money on every new customer we acquired through ads.
The Need to Raise Prices
To avoid sinking into the red, we had no choice but to raise our prices. After much deliberation, we increased the price for online deregistration to 29,90€. While this is still below many competitors, it’s a far cry from our original 14,90€ target. And honestly, it feels too expensive for what we want to offer our customers. But with Google Ads telling us we need to pay more for conversions, we’re caught in a difficult dilemma—raise prices to cover ad costs or risk losing customers altogether.
Competing in a High-Priced Market
The frustrating part is that many users aren’t doing the research to find the cheapest option; they’re simply choosing the first result they see. This means that the more our competitors charge, the more they can pour into their Google Ads budget, further driving up costs for everyone else. It’s a vicious cycle, and as a startup, it’s tough to keep up.
We want to provide our customers with a service that’s both affordable and high-quality, but the pressure from ad costs is pushing us further away from that goal. It’s a balancing act between staying competitive and staying true to our mission, and honestly, it’s not easy.
The Big Dilemma
So, here we are, stuck in this pricing dilemma. If we keep prices low, we can’t afford the ads to reach new customers. But if we raise prices to cover ad costs, we risk alienating the very users we’re trying to serve. It’s a classic startup challenge, and it’s something we’re still figuring out day by day.
For any fellow founders or entrepreneurs out there, I’d love to hear how you’ve navigated similar challenges. Have you found a way to balance pricing and ad costs? Or is this just one of those inevitable growing pains of startup life?
As always, thanks for following along on our journey. Your support and feedback mean the world to us.
Until next time,
Mats
