5 ms·

Our pricing model was broken. Here's how we fixed it

61 points by drob 13y ago

mgw 13y ago
This change makes your pricing a lot more feasible for the average web app, but I think it is still not perfect for many content sites whose traffic consists mostly of logged out short-term visitors. Do you suggest sampling for those kind of sites?
- drob 13y ago
  The hope is that we can make this work for content sites case-by-case with the enterprise tier. Agreed that this is still not ideal for medium-sized content sites, though a lot better than the old pricing model, which charged by the user (as opposed to the visit) and thus was a total nonstarter for them. We usually don't suggest sampling, because we do think there's value in using Heap for analysis at the top of the funnel.
OoTheNigerian 13y ago
Ha! Interestingly, I just sent you guys a long mail about your pricing. I think per unique visitor is relatively easier than per visit because an additional visit does not even tie to additional value. The fact that you capture a lot of data from so many people (which costs you) does not mean that it brings value to me. It is also important to remember that you are not prison in isolation but in comparison to your competitors. In your case, it is KISSmetrics and Mixpanel. It is not something you can get perfect at one go. It has to keep evolving. You have a great product.
- matm 13y ago
  Interesting. With regards to the unit of pricing, our thinking was quite the opposite. There's a high variance in value across your userbase, but our previous (per-user) model would price them the same. This was an issue. We tried to match a user's value as closely as possible by pricing per visit (instead of per user). This assumes, of course, that the frequency of a user's visits correlates closely with their overall value, which is certainly imperfect in some cases.
- Edmond 13y ago
  Oga thanks for Gbedu! I may have just discovered my new source for workout music...I have been using an app I built to make using youtube mega mixes easy to listen to during workout (http://mobile.holoklip.com http://mobile.holoklip.com) Is there a mobile friendly interface?
thurn 13y ago
Good stuff, I discounted Heap before because of the lack of a free tier and the lack of Android support, but it might be time to take another look.
pbreit 13y ago
This article, like most about pricing, misses the cardinal rule: price what the market will bear. But they actually ended up in roughly the right place: free for unfunded services, a healthy monthly for lightly funded and a large monthly for well-funded. They also get right that all substantive features should be offered in the free/lower-priced tiers. The trick is to put "enterprise-y" features in the more expensive tiers. Best example is multi-user logins. This is not a core feature of the product but is a good proxy for a customer who has ability and desire to pay more.
togasystems 13y ago
A little off topic, but will Heap release an export API?
- matm 13y ago
  We already have one. It's part of our enterprise tier.
  - togasystems 13y ago
    Plans on releasing it for your other tiers?
    - matm 13y ago
      Not currently. But we're eager to learn more about your use case to see if we can figure something out! Care to email team@heapanalytics.com?
wikwocket 13y ago
Man, I hope they only included "pricing based on cost" for completeness. Never price based on cost! I mean, know what your costs are for each level of service, but if you are charging based solely on your cost, you're not really doing "pricing." Setting your prices based on cost is like designing a product with features instead of benefits. Does HP design printers that can fold paper airplanes? No, they design printers that print business documents faster, crisper, and more reliably, because that is of value to businesses with money. In the same way, do they price ink cartridges based on the cost of the pigments? No, they charge by value, and it is worth a lot of value to the average business to get their documents and spreadsheets printed! And don't try to justify cost-based pricing by saying customers can just implement and host their own solution using open source code. Sure... and they can make their own printer ink and load it into recycled cartridges... but effectively zero percent of people will ever do that. :)
- Edmond 13y ago
  While cost+ pricing is frowned upon, it is indeed wildly used...for most small businesses it is the simplest approach, especially for commodity products and services. I do agree though that for a technology startup, cost+ pricing should not even be on your list of options.
dylandrop 13y ago
So if you say you fixed it, do you have any before and after results?
nickconfer 13y ago
I wish there was more information in the article about how it effected conversion rates. They've created an interesting model here though.. Its basically free or one price, unless you're really big. If you're really big, they ask you to talk with a sales person, but clearly state a starting price (which I've seen few sites with a "contact us" do) to get the ball rolling.
- ianstormtaylor 13y ago
  +1 but I assume that one is coming (hint hint).
deleted 13y ago
[deleted]
deleted 13y ago
[deleted]
cplanas 13y ago
Sad. I am the CEO of a social game with pretty big traction but with a pretty low user lifetime value (lower than in your example). With you I thought I could have a good analytics service at last. Not anymore.
nemothekid 13y ago
Are new users (even those with less than 25k monthly) being converted to the new free tier?
- drob 13y ago
  Yup! Customers with <25k monthly visits won't be charged anymore.
trustfundbaby 13y ago
Would be interesting to see the effect of free trial length on their conversions (specifically shortening to 30 or 14 days and measuring the effects). At a company I work for, we found that shorter free trials actually led to more conversions.
- matm 13y ago
  Good point. We'll definitely keep an eye on this. One of Heap's most important value props is retroactive analysis. You forgot to define an event upfront? No problem - it's available for you to analyze across your app's entire history. A 60-day free trial helps our users make better use of retroactive analysis than, say, a 30-day free trial. The longer you accumulate data via Heap, the more viscerally you understand this need.
brianbreslin 13y ago
Dan, you might want to do something about the logo. On the blog I saw it and read CHeap. not a radar + heap. or pie chart + heap. flipping the pie segment to another side would solve this.
coolsunglasses 13y ago
I've been working on an open source alternative to proprietary analytics services, for those that want a middle territory between being a Mixpanel or Heap customer and having to roll their own. Keep an eye out for Simonides if you're interested.

61 points by drob 13y ago

mgw 13y ago

This change makes your pricing a lot more feasible for the average web app, but I think it is still not perfect for many content sites whose traffic consists mostly of logged out short-term visitors. Do you suggest sampling for those kind of sites?

drob 13y ago
The hope is that we can make this work for content sites case-by-case with the enterprise tier. Agreed that this is still not ideal for medium-sized content sites, though a lot better than the old pricing model, which charged by the user (as opposed to the visit) and thus was a total nonstarter for them. We usually don't suggest sampling, because we do think there's value in using Heap for analysis at the top of the funnel.

OoTheNigerian 13y ago

Ha! Interestingly, I just sent you guys a long mail about your pricing. I think per unique visitor is relatively easier than per visit because an additional visit does not even tie to additional value. The fact that you capture a lot of data from so many people (which costs you) does not mean that it brings value to me. It is also important to remember that you are not prison in isolation but in comparison to your competitors. In your case, it is KISSmetrics and Mixpanel. It is not something you can get perfect at one go. It has to keep evolving. You have a great product.

matm 13y ago
Interesting. With regards to the unit of pricing, our thinking was quite the opposite. There's a high variance in value across your userbase, but our previous (per-user) model would price them the same. This was an issue. We tried to match a user's value as closely as possible by pricing per visit (instead of per user). This assumes, of course, that the frequency of a user's visits correlates closely with their overall value, which is certainly imperfect in some cases.
Edmond 13y ago
Oga thanks for Gbedu! I may have just discovered my new source for workout music...I have been using an app I built to make using youtube mega mixes easy to listen to during workout (http://mobile.holoklip.com http://mobile.holoklip.com) Is there a mobile friendly interface?

thurn 13y ago

Good stuff, I discounted Heap before because of the lack of a free tier and the lack of Android support, but it might be time to take another look.

pbreit 13y ago

This article, like most about pricing, misses the cardinal rule: price what the market will bear. But they actually ended up in roughly the right place: free for unfunded services, a healthy monthly for lightly funded and a large monthly for well-funded. They also get right that all substantive features should be offered in the free/lower-priced tiers. The trick is to put "enterprise-y" features in the more expensive tiers. Best example is multi-user logins. This is not a core feature of the product but is a good proxy for a customer who has ability and desire to pay more.

togasystems 13y ago

A little off topic, but will Heap release an export API?

matm 13y ago
We already have one. It's part of our enterprise tier.
- togasystems 13y ago
  Plans on releasing it for your other tiers?
  - matm 13y ago
    Not currently. But we're eager to learn more about your use case to see if we can figure something out! Care to email team@heapanalytics.com?

wikwocket 13y ago

Man, I hope they only included "pricing based on cost" for completeness. Never price based on cost! I mean, know what your costs are for each level of service, but if you are charging based solely on your cost, you're not really doing "pricing." Setting your prices based on cost is like designing a product with features instead of benefits. Does HP design printers that can fold paper airplanes? No, they design printers that print business documents faster, crisper, and more reliably, because that is of value to businesses with money. In the same way, do they price ink cartridges based on the cost of the pigments? No, they charge by value, and it is worth a lot of value to the average business to get their documents and spreadsheets printed! And don't try to justify cost-based pricing by saying customers can just implement and host their own solution using open source code. Sure... and they can make their own printer ink and load it into recycled cartridges... but effectively zero percent of people will ever do that. :)

Edmond 13y ago
While cost+ pricing is frowned upon, it is indeed wildly used...for most small businesses it is the simplest approach, especially for commodity products and services. I do agree though that for a technology startup, cost+ pricing should not even be on your list of options.

dylandrop 13y ago

So if you say you fixed it, do you have any before and after results?

nickconfer 13y ago

I wish there was more information in the article about how it effected conversion rates. They've created an interesting model here though.. Its basically free or one price, unless you're really big. If you're really big, they ask you to talk with a sales person, but clearly state a starting price (which I've seen few sites with a "contact us" do) to get the ball rolling.

ianstormtaylor 13y ago
+1 but I assume that one is coming (hint hint).

deleted 13y ago

[deleted]

deleted 13y ago

[deleted]

cplanas 13y ago

Sad. I am the CEO of a social game with pretty big traction but with a pretty low user lifetime value (lower than in your example). With you I thought I could have a good analytics service at last. Not anymore.

nemothekid 13y ago

Are new users (even those with less than 25k monthly) being converted to the new free tier?

drob 13y ago
Yup! Customers with <25k monthly visits won't be charged anymore.

trustfundbaby 13y ago

Would be interesting to see the effect of free trial length on their conversions (specifically shortening to 30 or 14 days and measuring the effects). At a company I work for, we found that shorter free trials actually led to more conversions.

matm 13y ago
Good point. We'll definitely keep an eye on this. One of Heap's most important value props is retroactive analysis. You forgot to define an event upfront? No problem - it's available for you to analyze across your app's entire history. A 60-day free trial helps our users make better use of retroactive analysis than, say, a 30-day free trial. The longer you accumulate data via Heap, the more viscerally you understand this need.

brianbreslin 13y ago

Dan, you might want to do something about the logo. On the blog I saw it and read CHeap. not a radar + heap. or pie chart + heap. flipping the pie segment to another side would solve this.

coolsunglasses 13y ago

I've been working on an open source alternative to proprietary analytics services, for those that want a middle territory between being a Mixpanel or Heap customer and having to roll their own. Keep an eye out for Simonides if you're interested.