Question

How much should my product cost?

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).

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maguay's avatar
a month ago

Pricing’s tough.

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.

Could be worth digging into content from the Price Intelligently team for more ideas. Their founder @Patticus’s Capiche AMA might also have some inspiration for you!

2 points
david_sarlos's avatar
@david_sarlos (replying to @maguay )
20d

Hey @maguay! Thanks for your ever-insightful response.
We are definitely on the road of carving out the space for a new technology since public many-to-many async discussions are perceived as new and value-added, to most of our clients.

Regarding unlimited usage for per-user pricing, I agree, for the time being, however, we are also looking into some more experimental pricing to find sustainable business models.

We run trials and pilots to maximise learning and usually find it easier to discuss pricing once the clients experienced the results of the tool. Do you think a product-market-fit is needed for a positional software? Maybe refactoring/designing an existing product can reintroduce it to the market as a positional software.

1 point
maguay's avatar
@maguay (replying to @david_sarlos )
20d

@david_sarlos I just checked out your site from your reply to Andy, and that's super interesting—and I might change my recommendation after looking at your site. I was originally thinking of it as an internal-use tool similar to Slack or Zoom, but this is much more public facing along the lines of Intercom where website visitors and general users would use your tool, not just internal team members. Somehow that strikes me as something where site-wide pricing makes more sense, and with that charging per volume makes sense so you get companies to add it to their site then get them to upgrade over time (and experimenting with the levels that prompt upgrades—if you see your average customer uses X minutes of video, then plans just below then above that level would drive upgrades).

The idea around positional software is, in many ways, building software that takes an existing category of software to a higher, more premium level, differentiated by design, price-points, and power-user features. They tend to be individual user-driven—though, for example, Slack in many ways fits (more expensive than other chat tools at its time, strong focus on design and power user features), but often its adoption was driven by individuals who brought Slack into their team, and then saw it adopted across the organization over time.

For your product, I would focus more on finding product/market fit then building the best possible product for those users—and that’s where you can hit the more positional space. Perhaps the “positional” comparison for your product is that this is a more premium way to reach out to support teams than Intercom-style chat, or that it’s an easier way to connect with a production team than sending in a video on a social media platform. Basically if there’s something to anchor your product and position it as a more premium option there, you could boost your pricing power. Superhuman’s article on product/market fit is a great overview of how they both did that and decided what to charge.

It’ll take experimentation and it’s tough—best of luck in finding the right fit!

2 points
AndyDentPerth's avatar
a month ago

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?

2 points
david_sarlos's avatar
@david_sarlos (replying to @AndyDentPerth )
20d

Hi Andy, Thanks for your response and great suggestions regarding segmentation and metrics. 🙌

Vialog is an easy-to-install tool that enables async video dialogue around any website, product, event or topic that matters. The tool increases unique website visitors by 12X and converts up to 3% of website visitors into unique social content creators. I wonder if this clarifies the value proposition for you?

1 point
AndyDentPerth's avatar
@AndyDentPerth (replying to @david_sarlos )
15d

Hi @davidsarlos the term _async video dialogue makes a lot more sense since I heard the Loom founder interviewed https://thisweekinstartups.com/e1113-the-next-unicorns-e19-loom-ceo-joe-thomas-is-building-video-for-work-shares-insights-on-creating-new-behaviors-support-as-a-competitive-advantage-more/

converts up to 3% of website visitors into unique social content creators

Do you mean they go on to publish or link the videos elsewhere or that you just reuse their videos? It's not "Social" unless it's on one of the major services.

2 points
maguay's avatar
@maguay (replying to @AndyDentPerth )
14d

Or, you could always bootstrap a new social network through content creation and sharing to other services. Like Instagram, where people downloaded it to edit photos to share on Facebook and Twitter, and ended up sharing on Instagram at the same time and helped them build a network.

2 points
AndyDentPerth's avatar
@AndyDentPerth (replying to @maguay )
14d

Or, you could always bootstrap a new social network through content creation and sharing to other services.

That's a good point but video has an embedding problem that it's not a native format displayed by other networks. Unless they explicitly allow embedding your content then at best you have to go through their upload and curation. At worst, you just cannot publish.

1 point
carwe's avatar
22h

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.

1 point
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