4 ms·

I can't help but mention... un-unlimit would be better written simply as limit. "It is very hard to go back and limit your plan." That is definitely smart adv

by blaines 16y ago

I can't help but mention... un-unlimit would be better written simply as limit. "It is very hard to go back and limit your plan." That is definitely smart advice though, it's always easier to increase limits than to decrease them. My issue is, how valuable is a web service? How do I determine a reasonable price to charge? Pricing is something I feel is hard to test.

bmelton 16y ago
This is, I think, the number 1 application for A/B testing that makes it worthwhile, despite so many people loudly screaming that it's worthless. The simplest suggestion I can make is to test the living daylights out of pricing. Set your base at something reasonable -- definitely more than your rock bottom price, and should be well above break-even. If you can scale your fixed costs and estimate the average cost per user (bandwidth, disk space, etc.) then you can apply a margin. Make sure you're covering overhead (which is insanely complicated if it's Freemium), and then play around. Offer the 'base' price as a special deal, while testing out prices all over the place. Double that price, and set it as the 'non-discounted' deal to some users. Someone else recommended recently (I can't remember who, sorry) that if you want to be equitable, you can double the price on the sign-in page, then if they bite on that, only CHARGE them what you're charging as the base price -- but if you track the results on that signup page, you'll know how many people were willing to pay double. Lastly, as a piece of obvious advice, if you can at all help it, don't raise the prices on existing users. Grandfather them in unless you absolutely can't, and if you can't, figure out some way to take really good care of them.
- patio11 16y ago
  Why, why, why would you use cost-plus pricing for software as a service? The price of average cost per user is cratering for virtually any input you can measure except cost of customer acquisition.
- DJN 16y ago
  You should set your prices based on the value that you are delivering to your customers and not based on how much it costs you to deliver. To find out the perceived value, you need to get out and talk to customers.
  - bmelton 16y ago
    You're right of course -- I didn't mean to imply that you should use cost-plus pricing as a baseline, rather, that you should definitely not do anything BELOW cost+, regardless of how much (or little) value you might be delivering to your customers. That said, there are numerous examples in which even this rule can be thrown away (Facebook, Twitter, et al.)

by blaines 16y ago

bmelton 16y ago

This is, I think, the number 1 application for A/B testing that makes it worthwhile, despite so many people loudly screaming that it's worthless. The simplest suggestion I can make is to test the living daylights out of pricing. Set your base at something reasonable -- definitely more than your rock bottom price, and should be well above break-even. If you can scale your fixed costs and estimate the average cost per user (bandwidth, disk space, etc.) then you can apply a margin. Make sure you're covering overhead (which is insanely complicated if it's Freemium), and then play around. Offer the 'base' price as a special deal, while testing out prices all over the place. Double that price, and set it as the 'non-discounted' deal to some users. Someone else recommended recently (I can't remember who, sorry) that if you want to be equitable, you can double the price on the sign-in page, then if they bite on that, only CHARGE them what you're charging as the base price -- but if you track the results on that signup page, you'll know how many people were willing to pay double. Lastly, as a piece of obvious advice, if you can at all help it, don't raise the prices on existing users. Grandfather them in unless you absolutely can't, and if you can't, figure out some way to take really good care of them.

patio11 16y ago
Why, why, why would you use cost-plus pricing for software as a service? The price of average cost per user is cratering for virtually any input you can measure except cost of customer acquisition.
DJN 16y ago
You should set your prices based on the value that you are delivering to your customers and not based on how much it costs you to deliver. To find out the perceived value, you need to get out and talk to customers.
- bmelton 16y ago
  You're right of course -- I didn't mean to imply that you should use cost-plus pricing as a baseline, rather, that you should definitely not do anything BELOW cost+, regardless of how much (or little) value you might be delivering to your customers. That said, there are numerous examples in which even this rule can be thrown away (Facebook, Twitter, et al.)