7 ms·

Pricing is hard. We need your help.

54 points by dorkitude 14y ago

JoshTriplett 14y ago
Whether you price by usage or have tiers, always do value pricing, not cost-plus pricing.
- eldavido 14y ago
  Agree; it's most in line with what the customer wants, facilitates segmentation in a way that's fair to both parties involved, and allows upselling when material changes in product or service take place. Even if you use utility pricing, it's still best to frame it in terms of something meaningful to your customers.
le_isms 14y ago
It would be nice to have an explanation of what Keen.io does in the article. Actually, even after browsing your site I still don't have any idea what you guys do, besides collect data and visualize it. There also doesn't seem to be any indication of -how- you guys do visualization. It's hard for me to think about pricing for your service when I have no idea what you offer.
- dorkitude 14y ago
  Good point. We're not released yet, and there are probably < 100 people who have a good enough idea of what we're doing to really dig in and give us feedback We'll edit the blog post to add a bit more background update: here's the working copy: -- We make three kinds of APIs: -data collection APIs -data analysis APIs -data visualization APIs For instance, if you had a social-local-mobile shopping app for the iPhone, you'd probably want to insert a rich event into Keen every time a user does one of the following actions: opens the app, does Facebook connect, likes/comments/shares an item, adds an item to their shopping cart, and completes a checkout. You send us this data using the collection APIs (https://keen.io/static/docs/data_collection/data_collection.html https://keen.io/static/docs/data_collection/data_collection....) Once your app is sending us stuff, your product manager may ask you to make her a little analytics dashboard, so she can agonize over it every morning. For instance, this dashboard could have answers to questions like "How many people opened the app each day over the course of the last week?" That question (and many way more advanced ones) can be answered using one of our analysis APIs (in this case, the Series API https://keen.io/static/docs/data_analysis/series.html https://keen.io/static/docs/data_analysis/series.html) Finally, suppose a few weeks later she's tired of staring at numbers and wants to see this information graphed visually in a line graph. That can be done using our visualization APIs (not yet released).
  - rgraham 14y ago
    I think the what here might be less important than why for pricing. It's easy to get a sense of your platform from your website, but who is your target customer and why are they paying you? Does this save them time? Money? Make them money? Got any scenarios or customer sketches?
    - kirkers 14y ago
      (Disclosure: I wrote the post) These are all great questions. Thinking long-term, the answer should be yes to all of those questions. We should save time (and therefore money) and be a vehicle for increased revenue. And, we intend to do a lot more writing about how folks are using/could use/should use our product. At the same time, in the long run, we’re all dead. So, in the present, we’re looking to work with Series-A type companies who are in the midst of early product development. We want to work alongside them to understand their analytics needs and tweak our roadmap accordingly. Those customer sketches/white papers are extremely important to us. We’re still learning (and probably always will be). It’s my hope that we will be in a position to blog about customer experiences soon. Dominos are certainly lining up for that.
      - michelleclsun 14y ago
        who is your target customer and why are they paying you? Does this save them time? Money? Make them money? Got any scenarios or customer sketches? In addition to these questions, I'd also think about how to reach a point where customer feels a high switching costs. It seems that a service like yours can be offered by many, but the important competitive advantage is that the more customers have stored data on your service, the more 'expensive' for them to switch. What part of your service increases in value the longer someone uses it? Is it the historical data of the customer's own app, or is it the cross-sectional data of apps in other categories? As mentioned above, mixpanel is a good example, so is new relic.
- deleted 14y ago
  [deleted]
ljd 14y ago
Because your customers are going to be more technical I would do the utility pricing. Pay per unit of usage. If you need help with pricing, email me. Our company does algorithmic pricing via a REST API, I'll give Keen access for free. To address your listed cons to utility style pricing: 1) Products aren't turned into a commodity because of how they are priced. They are commoditized when many perfect substitutions exist in the market. 2) I'm not sure if "not predictable" will go over well with your audience. Maybe you could use your own product to help people predict their bill with you. It would be a neat application of your software.
- akavi 14y ago
  You vastly underestimate the value of predictability in billing to a business's "Chief Fretting Officer". If you asked companies if they'd rather pay a random amount between 100$ and 500$, or always pay 500$, 9 out of 10 would opt for the latter. And if you don't understand why, then you've never spent any amount of time pondering a business's cash flow.
  - JoshTriplett 14y ago
    If you asked them that way they'd opt for the former. However, most pricing structures don't provide such a clear-cut range; the edges feel quite fuzzy, and that uncertainty does indeed drive customers towards predictable-but-higher pricing.
  - ljd 14y ago
    My above statement is actually aligned with your sentiment. I think people use data analysis to help predict future events like how many customers you'll have or how much an expense will be. I figured, since Keen is in the business of helping people with those predictions it would be a really awesome application of their own API. Customers could see their usage as part of the visualizing product and it would help them predict their bill.
  - codegeek 14y ago
    "pay a random amount between 100$ and 500$, or always pay 500$, 9 out of 10 would opt for the latter" Why so ? You are perhaps referring to a business's ability to project/forecast cashflows which is critical but even then, if the number is always going to be less than or equal to 500, I would rather choose the first option.
jlarocco 14y ago
I think the description of what you do is just too vague to give any feedback on how to price it. "collect, analyze, and visualize" data could mean almost anything. I even browsed through the docs and couldn't figure it out. Do you have a full blown example use case of how a customer would use keen.io? The getting started page shows an example of inserting an "event" and counting it, but I'm not sure what that means, or what the end goal is, exactly.
- dorkitude 14y ago
  We updated our description to make more sense and include an example What do you think of it?
dsolomon 14y ago
Bravo. What a truly amazing BS artist you are. You pulled numbers out of thin air for most everything. A++++ would read again only because 4chan is slow right now.
- vhf 14y ago
  What do you mean ? What numbers ? I bookmarked this link instantly after reading it. I cannot answer the question asked, but I thought it was a really great resource on the different pricing models to consider when trying to monetize any SaaS. Ooh, now I get it. I had to go through some other comments of yours, but now I get your comment.
  - dorkitude 14y ago
    Can you fill the rest of us in on what you learned? I couldn't figure out his/her comment either!
    - vhf 14y ago
      Well, I don't know how to put it. The best could be to browse quickly through this : http://news.ycombinator.com/threads?id=dsolomon http://news.ycombinator.com/threads?id=dsolomon It looks like being rude and/or off-topic and/or not reading posted links is a habit with him.
      - dsolomon 14y ago
        I won't hesitate to call someone out on BS salary/compensation "data".
        kirkers 14y ago
        Is this about my ROI on the carrot juicer? I really tried to avoid fuzzy math in here and stick to concepts. Specific examples would be helpful. I'll get the numbers cleaned-up, if possible. Radical transparency != make shit up.
jcampbell1 14y ago
Keen looks to be another Mixpanel. I looked at mixpanel's pricing, and it sis nicely structured into tiers so one can estimate quickly how much it will cost based on the size of the business. Mixpanel's pricing is utility based under the hood (they automatically pro-rate or upgrade the plan based on what is cheaper), but the marketing copy is tier based. That looks to be a good approach.
waterside81 14y ago
Our pricing at Repustate.com is fixed fee for a fixed quota of API calls. Usage-based billing sucks because of the unpredictability on both sides, plus it makes invoices much easier for us. Like others have mentioned here, predictable costs are good.
reubenswartz 14y ago
I've helped a number of companies put together pricing plans, and the first thing I usually say is "talk to your customers", so it's great that you are already doing that. However, the real question is not "how should I price this?" but "why is this awesome to you? (what is the value?)" You should absolutely price based on value-- if your value is greater than your cost, you can win. If not, you need to fix something. If you don't know what that value is, spend your time there, and the pricing will flow from that. As mentioned by others, you can always grandfather existing customers if you decide to change. (That said, I'm guessing that simple tiers + custom enterprise plans if needed will be the way to go. The trick is figuring out how to set them up.)

54 points by dorkitude 14y ago

JoshTriplett 14y ago

Whether you price by usage or have tiers, always do value pricing, not cost-plus pricing.

eldavido 14y ago
Agree; it's most in line with what the customer wants, facilitates segmentation in a way that's fair to both parties involved, and allows upselling when material changes in product or service take place. Even if you use utility pricing, it's still best to frame it in terms of something meaningful to your customers.

le_isms 14y ago

It would be nice to have an explanation of what Keen.io does in the article. Actually, even after browsing your site I still don't have any idea what you guys do, besides collect data and visualize it. There also doesn't seem to be any indication of -how- you guys do visualization. It's hard for me to think about pricing for your service when I have no idea what you offer.

dorkitude 14y ago
Good point. We're not released yet, and there are probably < 100 people who have a good enough idea of what we're doing to really dig in and give us feedback We'll edit the blog post to add a bit more background update: here's the working copy: -- We make three kinds of APIs: -data collection APIs -data analysis APIs -data visualization APIs For instance, if you had a social-local-mobile shopping app for the iPhone, you'd probably want to insert a rich event into Keen every time a user does one of the following actions: opens the app, does Facebook connect, likes/comments/shares an item, adds an item to their shopping cart, and completes a checkout. You send us this data using the collection APIs (https://keen.io/static/docs/data_collection/data_collection.html https://keen.io/static/docs/data_collection/data_collection....) Once your app is sending us stuff, your product manager may ask you to make her a little analytics dashboard, so she can agonize over it every morning. For instance, this dashboard could have answers to questions like "How many people opened the app each day over the course of the last week?" That question (and many way more advanced ones) can be answered using one of our analysis APIs (in this case, the Series API https://keen.io/static/docs/data_analysis/series.html https://keen.io/static/docs/data_analysis/series.html) Finally, suppose a few weeks later she's tired of staring at numbers and wants to see this information graphed visually in a line graph. That can be done using our visualization APIs (not yet released).
- rgraham 14y ago
  I think the what here might be less important than why for pricing. It's easy to get a sense of your platform from your website, but who is your target customer and why are they paying you? Does this save them time? Money? Make them money? Got any scenarios or customer sketches?
  - kirkers 14y ago
    (Disclosure: I wrote the post) These are all great questions. Thinking long-term, the answer should be yes to all of those questions. We should save time (and therefore money) and be a vehicle for increased revenue. And, we intend to do a lot more writing about how folks are using/could use/should use our product. At the same time, in the long run, we’re all dead. So, in the present, we’re looking to work with Series-A type companies who are in the midst of early product development. We want to work alongside them to understand their analytics needs and tweak our roadmap accordingly. Those customer sketches/white papers are extremely important to us. We’re still learning (and probably always will be). It’s my hope that we will be in a position to blog about customer experiences soon. Dominos are certainly lining up for that.
    - michelleclsun 14y ago
      who is your target customer and why are they paying you? Does this save them time? Money? Make them money? Got any scenarios or customer sketches? In addition to these questions, I'd also think about how to reach a point where customer feels a high switching costs. It seems that a service like yours can be offered by many, but the important competitive advantage is that the more customers have stored data on your service, the more 'expensive' for them to switch. What part of your service increases in value the longer someone uses it? Is it the historical data of the customer's own app, or is it the cross-sectional data of apps in other categories? As mentioned above, mixpanel is a good example, so is new relic.
deleted 14y ago
[deleted]

ljd 14y ago

Because your customers are going to be more technical I would do the utility pricing. Pay per unit of usage. If you need help with pricing, email me. Our company does algorithmic pricing via a REST API, I'll give Keen access for free. To address your listed cons to utility style pricing: 1) Products aren't turned into a commodity because of how they are priced. They are commoditized when many perfect substitutions exist in the market. 2) I'm not sure if "not predictable" will go over well with your audience. Maybe you could use your own product to help people predict their bill with you. It would be a neat application of your software.

akavi 14y ago
You vastly underestimate the value of predictability in billing to a business's "Chief Fretting Officer". If you asked companies if they'd rather pay a random amount between 100$ and 500$, or always pay 500$, 9 out of 10 would opt for the latter. And if you don't understand why, then you've never spent any amount of time pondering a business's cash flow.
- JoshTriplett 14y ago
  If you asked them that way they'd opt for the former. However, most pricing structures don't provide such a clear-cut range; the edges feel quite fuzzy, and that uncertainty does indeed drive customers towards predictable-but-higher pricing.
- ljd 14y ago
  My above statement is actually aligned with your sentiment. I think people use data analysis to help predict future events like how many customers you'll have or how much an expense will be. I figured, since Keen is in the business of helping people with those predictions it would be a really awesome application of their own API. Customers could see their usage as part of the visualizing product and it would help them predict their bill.
- codegeek 14y ago
  "pay a random amount between 100$ and 500$, or always pay 500$, 9 out of 10 would opt for the latter" Why so ? You are perhaps referring to a business's ability to project/forecast cashflows which is critical but even then, if the number is always going to be less than or equal to 500, I would rather choose the first option.

jlarocco 14y ago

I think the description of what you do is just too vague to give any feedback on how to price it. "collect, analyze, and visualize" data could mean almost anything. I even browsed through the docs and couldn't figure it out. Do you have a full blown example use case of how a customer would use keen.io? The getting started page shows an example of inserting an "event" and counting it, but I'm not sure what that means, or what the end goal is, exactly.

dorkitude 14y ago
We updated our description to make more sense and include an example What do you think of it?

dsolomon 14y ago

Bravo. What a truly amazing BS artist you are. You pulled numbers out of thin air for most everything. A++++ would read again only because 4chan is slow right now.

vhf 14y ago
What do you mean ? What numbers ? I bookmarked this link instantly after reading it. I cannot answer the question asked, but I thought it was a really great resource on the different pricing models to consider when trying to monetize any SaaS. Ooh, now I get it. I had to go through some other comments of yours, but now I get your comment.
- dorkitude 14y ago
  Can you fill the rest of us in on what you learned? I couldn't figure out his/her comment either!
  - vhf 14y ago
    Well, I don't know how to put it. The best could be to browse quickly through this : http://news.ycombinator.com/threads?id=dsolomon http://news.ycombinator.com/threads?id=dsolomon It looks like being rude and/or off-topic and/or not reading posted links is a habit with him.
    - dsolomon 14y ago
      I won't hesitate to call someone out on BS salary/compensation "data".
      - kirkers 14y ago
        Is this about my ROI on the carrot juicer? I really tried to avoid fuzzy math in here and stick to concepts. Specific examples would be helpful. I'll get the numbers cleaned-up, if possible. Radical transparency != make shit up.

jcampbell1 14y ago

Keen looks to be another Mixpanel. I looked at mixpanel's pricing, and it sis nicely structured into tiers so one can estimate quickly how much it will cost based on the size of the business. Mixpanel's pricing is utility based under the hood (they automatically pro-rate or upgrade the plan based on what is cheaper), but the marketing copy is tier based. That looks to be a good approach.

waterside81 14y ago

Our pricing at Repustate.com is fixed fee for a fixed quota of API calls. Usage-based billing sucks because of the unpredictability on both sides, plus it makes invoices much easier for us. Like others have mentioned here, predictable costs are good.

reubenswartz 14y ago

I've helped a number of companies put together pricing plans, and the first thing I usually say is "talk to your customers", so it's great that you are already doing that. However, the real question is not "how should I price this?" but "why is this awesome to you? (what is the value?)" You should absolutely price based on value-- if your value is greater than your cost, you can win. If not, you need to fix something. If you don't know what that value is, spend your time there, and the pricing will flow from that. As mentioned by others, you can always grandfather existing customers if you decide to change. (That said, I'm guessing that simple tiers + custom enterprise plans if needed will be the way to go. The trick is figuring out how to set them up.)