[hoka]

I think having to please fewer customers could be great, but you run a greater risk of someone undercutting you and taking them away. Though, if you have 10 customers vs 1000, it's a lot easier to personally try convince those 10 to stay.

[patio11]

Welcome to HN.

In general, people (especially businesses) do not make decisions based on price. This is one of the most common misconceptions of new software/startup founders. Indeed, for higher paying customers, they are often shockingly price insensitive, assuming you are genuinely delivering value to them.

More on this topic in my Microconf speech in, oh, 7 hours or so, but I'll try to hit the highlights in a blog post or something in the coming week.

[jiggy2011]

This depends if you are dealing with public sector organizations or not.

In many cases these organizations have to review their contracts every X years and have to take the cheapest deal (unless they can provide evidence that the supplying cannot produce what they have promised etc).

I have spoken to a few people now who were supplying various government departments and had excellent supplier/client relationships (they were going out of their way on weekends to fix problems etc) where under any ordinary circumstances this would continue. However they got to the end of some review period and another supplier (who is known for providing very mediocre service) undercut them by some small amount that they were unable to match so they were unable to continue the relationship despite every stakeholder being happy.