Hi Capiche Community,
We are validating an async video discussion tool in different markets. We have partners from very different geographical regions and industry verticals and their usage of our tool is also very diverse.
What methods in your experience work for pricing an early staged digital product? How does one figure out the right price for their product?
In particular, would you vote for
A) demand-driven pricing (ie. Mailchimp) or
B) monthly recurring subscriptions regardless of actual usage (ie. Spotify)
ps.: What do you think of IFTTT's recent approach to "Set your own price for IFTTT Pro" (Limited only to the though for the first month, when you can choose what you pay).
In many ways, your pricing is anchored by your peers. What products are people most likely to compare your product to? Something like Zoom for live video calls? If so, that anchors your pricing, at least for customers who think of the purchase as either/or. A better positioning is to carve a new category, but even still your pricing would be somewhat anchored to similar categories.
My guess is that a standard subscription not based around usage would be better. I would imagine you need your product to be sticky, to be something people want to use without thinking twice, something where they’d ideally use it more over time (and then taper off to average usage in the long run). And so, if say you charged per minute of recorded video, they’d watch the clock and be conscious of how much they’re using it. Instead, if they feel like they could use it without limit, they’re more likely to find unique use-cases that make your product stick for them.
Now, with that you could have individual per-user pricing or site-wide pricing, where again presumably per-user pricing is easier to adopt basically bottoms-up in a company where one person brings in the product and evangelizes it internally, where site-wide pricing requires a sales team. But not always: Basecamp has done well with a single, site-wide, unlimited plan.
And then, you have the positional software like Superhuman, Hey, Roam Research, and more that can charge more than the competition and still win a loyal following. That’s a tough market to build—requires a unique take on a category, network effects to help the product spread, exclusivity, premium design, and more—but can be a valuable space to play in, depending on your total addressable market goals.
On IFTTT and set-your-own pricing: I think IFTTT’s clever doing that as a limited time option, as they’ve been in the market long enough to have a massive existing free userbase who may be harder to convert to a paid plan. If you have an audience already interested, that or other similar signup discounts could encourage adoption out of the gate. But over time, I would imagine a pay-what-you-want model would be hard to make profitable. I’ve only seen that implemented widely on open source projects where payment is more of a donation—and even still, most of those make their core revenue from services and support.
Is there any way to segment your product by market?
Or, into different levels based on features.
You say video discussion so that immediately makes me think about added value features that some people don't care about.
Do you have metrics that tell you which features people use, that would help you decide how to segment the product?
I recommend listening to one or a few podcast interviews with Rahul Vohra about how to find the pricing of Superhuman.
My personal idea is that pricing shall contribute to lowering the entry barrier, which would give: [by usage volume] is better than [per month] is better than [single-time fee].
Similarly, if there is a time-limited free trial, don't count calender days from first use, count days actively used. Otherwise, lots of users won't start the trial for fear of not being able to have time to evaluate it in the coming 14 or so days and thereby missing the free trial opportunity.
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