I'm not sure if this helps in your pricing analysis, but personally I'm always looking for a discounted annual rate for services that are around your price range. Thanks for offering one. It's a big plus in my mind.
As I subscribe to more and more web services I frankly get tired of seeing the recurring fee show up either in my inbox, or in PayPal or on my CC statement.
There is definitely value to me as a consumer to pay for a service as I consume it, to spread out cost and risk, but there is a threshold where the convenience of an annual payment outweighs the pay-as-you-go pricing.
I just don't want the monthly reminder that I'm paying for something. Keep in mind, that before SAS, apart from recurring utility bills and rent/mortgage, most people's model of a subscription was a magazine. Most of those are annual payments.
BTW, I think the annual vs. monthly threshold for me is somewhere between $40 and $70 per year. It's dependent on the service itself, but for services in that range I'd opt for annual.
We realise that, and that's exactly why we offered the discounted yearly rate. Another reason is that payment services charge too much for payments of $2-3, so we save more money with an annual rate and can pass the savings to you.
Of course, there's the old "one in the hand, two in the bush" aspect as well, which gives an added reason for a discount.
I'd find the number intersting how many users would pay, if there were no free option available - my take is that it would be much more than the one percent of users that seem to be the rule in the freemium model. Of course a free plan attracts more potential users in the first place, which means the cake is smaller, so it's hard to evaluate what yields more paying users...
The more important factor to me, though, is cost and that usually not only involves storing some data as in the case of historious, but also support requests and scaling costs - when you have a paying user base scaling just won't be that much of pain point.
So, I'll go with a free 30 Day trial period after which the user has to decide, whether he'd like to sign up and pay. That way I can easily handle a couple of thousand users on one server and have more time left to spend on development instead of suporting nonpaying customers.
Free or Freemium only makes sense to me, if the presence of more users provides value to paying users, e.g. okcupid, Skype, and other network-effect businesses.
Our free package is a trial. The 300 free bookmarks either run out quickly, so the user has to select whether to pay or leave, or they last long enough that the user needs no more, at which point we don't mind the cost.
It works out much better than a time-based trial, which I don't think makes very much sense when you can have other factors.
For most consumer-facing sites, I think paid support is a non-option, and might even drive people away. The users tend to treat these services like they would a utility company, albeit, a free one. They just expect it to always work, all the time, and if anything goes wrong it's your responsibility to drop everything you're doing and fix it immediately.
Maybe I misunderstood your initial statement. I thought you were suggested a "paid support" model, where the users pay to get technical or customer support, much like some hosting companies charge.
By "paid support" did you just mean premium accounts? If so, I 100% agree that premium accounts are a great idea.
We consider support to be an integral part of the experience and treat all users the same in this regard. When someone emails us for support, we don't even know if they're subscribers or not. Replying to support emails doesn't usually take more than a minute anyway, so it's the least of our costs and it makes users very happy.
I just filled out your questionnaire but I don't think I'll submit it, my thoughts don't really fit into the few fields provided, if I put that $2 is what I'll pay it won't make sense. I don't know if you remember me, but I asked about subscriptions back before you offered them and signed up once they were live. For me historious is something that's neat but something I can go with out, so sure I can afford the $6/m you're charging now but how little I use it makes it really not worth it for me. I've been a member since you posted about it on reddit and I have 166 historified sites, I use it to bookmark interesting sites that I might need in the future, I don't care for RSS feeds or auto-tweeting.
I'll probably cave and go for the $6/m thing, but I don't need any of the features so it feels like I'm paying for something I'll never use. The free package would be fine for me, all I want to do is use it to historify sites and search them. I think you need to find a balance between the features required for users and pricing. It might sound stupid, but to me if you had 2 feature for $6/m and I used them both I'd be more likely to buy than if you had 10 features and I used 2 for $6/m, because the "smart spender" in me thinks "Why pay for 10 features when I only need 2? That's me wasting $4 a month!".
The price doesn't matter to me, I love your service and I'd pay $20 a month if that's what you requested, but when you're selling 6 features and I need 2 it seems poor value for money, and what matters to most is value for money, however silly that is.
Hey Sam! Of course I remember you, thanks for subscribing (I'm also Poromenos on reddit).
Psychology has a lot to do with pricing, what you say is true, as silly as it sounds. The problem is that someone might find that the two features that work for him are different from the ones that work for you, so it's a hard problem :/ The best solution is to have pricing packages, but we don't have a clear hierarchy of things that are more important than others, so it's not very easy there either.
Also, aren't you paying $3/mo? The new prices shouldn't affect you, and we sort of ended that experiment and reverted back to the old prices.
Just a little comment about your "plans and pricing" page: the double negative of a cross next to "no affiliate links" is a bit confusing at first.
I am used to ticks and crosses showing features that either are or are not present, in this case though there is a feature (even though its a negative one) "affiliate links" that is not not present. Kinda obscure.
Perhaps you could just have a smiley or frowning face next to each feature, that way you would see that the paid plans have more "good" things? eg:
:) - tags!
:) - filter by date
:( - no tags when historifying
:( - no rss
:( - affiliate links
Oh, good idea! The double negative is a bit mind-bending, but, as you said, we couldn't say "affiliate links" and put an "X" next to it as that would make it seem like you're missing out on a good thing.
I don't really see much point in filling out that survey, seeing as I don't use bookmarks much anymore (the four sites I go to regularly I can always remember, the rest I just type into google, or even googles search locally feature), the couple I have left is mostly as a scratch pad/reminder or bookmarklets.
But one thing hit me on your pricing page, you highlighted the most expensive plan - sure it is cheaper in the long run, but as consumer 5/6 $ is below my threshold of caring(if I wanted to use your service), whereas spending $40 means I have to consider it to a greater extend (and I am a lot less likely to buy it).
Since you make more money from the $6 plan, I would suggest you highlight that, or spell out how much I will be paying a month if I choose the other deal.
Oh hmm, that's a bit unfortunate, there seems to be some confusion. The plans are both the same, it's just that one is monthly and the other is discounted annual. We will need to restyle the page so it doesn't look like they're two separate packages, thank you for the feedback.
To clarify, the high price is per year, the low is per month.
Excellent analysis here. The cost of the free users really made me cringe. For what I'm doing, cost for free and premium is pretty much the same (a couple database rows), so I can afford to carry a lot of freeloaders. I can't say I planned that, though. I got lucky.
Yep, most services won't have anything approaching our cost. A commenter on the blog offered a good compromise: Send the user an email after, say, two months of them not logging in, saying "click here to keep your account or wait 30 days to have it cleared out".
I'm guessing that would take care of cleanup very very well, while not inconveniencing users in the least. Users who use the service frequently will never even see the email, since only inactive users get it.
One way to deal with the "stale data" problem is to prune old users from the system, but many people will be understandably dissatisfied with this, and it is not recommended.
I don't think you should worry too much about this. Someone who abandons a free service for an inordinate amount of time shouldn't expect to see their data. Especially when the cost of storing such data isn't nominal.
Send them one or two reminders and you should be fine.
Yep, that makes sense. We're actually just implementing this now, hopefully it will solve our problem (it looks very promising, from some initial data crunching we ran), and is very easy to implement.
We plan to send an email one month after the user's last activity, and then delete the documents (just the documents, not the account, just in case) a month after that.
I wish more cloud services realized that they can have a pretty generous policy re: killing user's data.
It's like timeouts in Redis/memcached: doubling the TTL won't generally double memory usage, or anything close to it, for most types of data. The more important issue is having timeouts vs. unbounded waste; the length of the timeout is so much less important that you could afford to be pretty generous.
Alternatively you could make storing a snapshot a premium feature, and only offer it on the paid plans, or do as dropbox does and offer full restore only for paid users (the others gets the newest version, and the ability to restore any version that isn't more than 30 days old).
That would probably cut down on our usage a lot, but we think that that feature is useful enough to everyone that it should be a core feature, and we'd have to index the page anyway so it would consume a bit of data (not as much as storing the entire page, but still).
I think that, by lowering the free limit to 300 and culling inactive users' data, we won't need to worry about cost again. We are already in the green (very much so) from the great support we have gotten from paid users, but this will allow us to focus on improving the service rather than worry how we'll scale all that abandoned user data.
As I subscribe to more and more web services I frankly get tired of seeing the recurring fee show up either in my inbox, or in PayPal or on my CC statement.
There is definitely value to me as a consumer to pay for a service as I consume it, to spread out cost and risk, but there is a threshold where the convenience of an annual payment outweighs the pay-as-you-go pricing.
I just don't want the monthly reminder that I'm paying for something. Keep in mind, that before SAS, apart from recurring utility bills and rent/mortgage, most people's model of a subscription was a magazine. Most of those are annual payments.
BTW, I think the annual vs. monthly threshold for me is somewhere between $40 and $70 per year. It's dependent on the service itself, but for services in that range I'd opt for annual.
Edit: Removed duplicate word.