This week I launched a new site: seeed.org
It’s a place for people to a discuss the business of web applications - their pricing, development, marketing, financing, and so on. If you’re interested in this blog then you’ll likely find Seeed to be a useful resource.
And don’t worry if you’re short on time (aren’t we all!); for Seeed I’m collecting together each week’s best discussions into an email summary, so you’ll never miss the highlights.
Ben Yoskovitz has posted six useful tips on pricing a web application. He also included a link to this site (thanks Ben!).
Here’s the summary, but do check out Ben’s post for more detail.
1. Keep your pricing simple
2. Highlight the best value
3. Show your pricing
4. Compare your pricing to competition
5. Compare pricing to other web apps
6. Test and re-jig over time
The point of any company should be to make customers want to give it money, NOT to get money from customers.
Maybe the reason it seems that price is all your customers care about is that you haven’t given them anything else to care about.
activeCollab had become known as the free, open source, competitor to Basecamp. They’re now about to launch a new version of their product and start charging for it.
The problem with this is that so far they’ve attracted people who are interested in a free product; people who don’t want to spend the money on Basecamp. They’ve built a strong community around that. They have the attention and goodwill of the community, but they’re wasting it by using a bad pricing strategy.
To buy activeColab you pay a one-off fee of ~15x the monthly cost of an equivalent Basecamp price plan, plus ~3x the monthly Basecamp cost per year for updates and support.
Here’s how I’d have tackled it:
- Keep activeCollab free for all non-commercial use, with no limits.
- Offer a support package for non-commercial users at a reasonable price (say $99 one-off). This would be for installation assistance etc.
- Launch a new commercial version of the product under a new name - “ultraCollab” (or similar), using the pricing they’ve recently announced.
This way they would retain the goodwill of the community, and continue growing the community around activeCollab, but still profit from the commercial users who can afford to pay. activeCollab users would hopefully become ambassadors for the “ultraCollab” product, to help sell it into the companies they work for.
