Huh, $10 a month is pretty steep. It's great that they offer a free plan, but that comes with all the misaligned incentives again. Any reason they don't just do pay-per-use (1 cent per query)?
Pay per use is a great model for search and I wish we could use it. But I don”t think the world is ready yet.
In our survey 90% of users told us they preffered fixed fee over pay per use and feedback we got was that pay per use would make them anxious to use search. Also it adds additional friction in the signup flow (where the idea of paid search is already a novelty and then pay per search?) and so we decided to go with a fixed monthly price.
Sweet spot would be $15-$20/month but this way we would not have enough users, and less users equals leas feedback to build product. Our pricing is subject to a change, we had to launch with a price and we’ve chosen one that was good compromise.
We are likely to introduce pay per use first in our enterprise plan. Pricing Kagi is an extremely difficult intelectual challenege. (Kagi founder here)
Maybe you could do something similar to Google Fi's pricing model for data usage. You pick a monthly amount of data, say 2GB, for a monthly price of $40. Any GB you use in excess of that is $10 per GB up to a maximum of $80, and data usage is unlimited after that.
I would bet that my usage most months would not exceed $5, and I think many other prospective users would be willing to gamble on that as well. Food for thought.
I don't think charging per query would work for most folks, for the same reason micropayments to bloggers or what have you won't work: it discourages use. If you know that every time you hit enter on a search query will cost you something, anything, you'll hesitate. You might choose to just use Google and use your data to pay for your search instead.
But that's kind of the point: It always costs Kagi that amount when you do a search (according to their pricing page). If the relationship between user and Kagi is not supposed to be adversarial, then indeed the "price vs value" tradeoff needs to be resolved on the user side.
At the moment, I'm either overpaying (because I perform less than $10 worth of queries per month), or the company is losing money on me. And with the existence of the free tier, the business model can only work if most paying users are effectively overcharged significantly. Right now they are operating at a loss in both tiers, if their pricing page is to be believed.
One would hope that costs amortize better with more users (e.g. scraping is pretty much fixed cost regardless of the number of users, but maybe that's already negligible) to push the price low enough for pay-per-use to not feel spendy. (When did you last think about how much one toilet flush costs you?)
Scraping and building their index probably costs way more than querying it. The way that db would scale is very friendly to replication (read your own writes isn’t anywhere near required for example) so the number of queries (times cost per query) needed to match the indexing costs is probably very, very high. I bet the 10$/month cost is meant to cover scraping and indexing costs, not the queries.
The company is aiming to have many users that everyone is overpaying with their $10, so that they make money, thanks to the reduced marginal cost. And the company hopes that the $10 is low enough that enough everyone knows they are overpaying they are still willing.
Yeah, $10 is steep, but I feel like I'd be happy with a bundle deal. Search, reliable email, a small bit of storage, and other small services for $20 or $30. I'm sure I'm underestimating how much I use search, but it just doesn't feel like an essential part of my life that I'd want to pay that much.
I'd honestly rather see Kagi focus entirely on search and not try to branch out too much. These days, I think startups try to chew up too many markets at once instead of really honing in on one.
The synergy is in the fact that email and storage are high margin products. We are currently basically losing money on search. Cost of providing email per user is negligible (compared to search) but you could double the price and make the economics work.
From their usage panel, I do 50-200 research per day.
In 10 days my usage cost is estimated at 11.69$. It look like each query cost 1.25$ to Kagi.
I don't want to be conscientious of the cost of my search usage, I fear it will inconsciously reduce my search usage and access to knowledge.
Correction: they're saying 80 searches cost them ~1$.
>Why does Kagi cost $10/month?
>Our proposed price is dictated by the fact that search has a non zero cost. With other search engines, advertisers cover this cost. But it costs us about $1 to process 80 searches.
>Someone searching 8 times a day would perform about 240 searches a month, costing us $3. An average Kagi beta user is actually searching about 30 times a day. At $10/month, the price does not even cover our cost for average use, and we are basically betting that average use will go down a bit with time because during beta people may be searching more than normal due to testing etc.
>Our goal is to find the minimum price at which we can sustain the business. If it turns out that we have more room we will decrease it. But it can also be that we may need to increase it.
>The free plan will be limited to 50 searches a month (and this too has to be paid by paying customers which makes the above math even harder).
How... do 80 searches cost them a dollar? That seems insanely high unless they're counting fixed costs that'll go down fast (on a per-search basis) as they get more subscribers.
8,000 searches costing a dollar, in actual resource use? OK, maybe. Still seems a little high, but maybe. 80? Are they paying someone to manually look things up for you?
I think I remember somewhere that they said a very high percentage of searches are totally unique i.e. never queried before thus not served from cache. I don't think they reword searches like Google does for a higher cache hit rate.
I never thought about that. That could explain a lot. Although I also recall Google themselves saying a lot of their queries are totally unique anyway.
> Although I also recall Google themselves saying a lot of their queries are totally unique anyway.
Which is probably why search quality is going down. They're rewriting your query to a more common way of saying the same thing, at least according to Google.
Kagi is completely bootstrapped. It has basically 10 developers and me doing everything else. No managers. The expense is low as humanely possible as still coming out of my own pocket.
It is the cost of commercial APIs that we use. We can't get volume discounts because we dont have volume, not are ever likely to have volume similar to free search engines.
I'd challenge that the cost per search is actually very low. For just 1.25 cents, you can search the entire world wide web with any query, find what you need with no distractions and all that in just 500ms. The value of that search outcome for you can be $10 or even $100. It is probably the most amazing return on investment existing in the world today. Imagine for a second that Google and other search engine didn't exist, and someone offered you this deal today. I'd be you'd take it in a hearbeat. Heck you may even consider paying $1 per search or even $5. So the value is there.
But today this value is anchored in the price of 'free' search. So instead $1 per search sounding like a good deal, we struggle to accept that 1.25 cents is.
We hope that for a portion of people that 1.25 cents per search is going to sound like an amazing deal, especially as this is the only search relationship where the incentives of the information provider are aligned with the incentives of the information consumer.
While I agree that it probably have a lot of value, the issues is human brains.
I don't feel 1 cents per search is a good deal at all, while -logically- it probably will give me more than 1 cent of value out of it.
People never thought about how much the knowledge they acquired is worth, most of the time they share it free of charge, people like to share, somes will even pay hosting to share knowledge !
That's why I don't believe in the pay-as-you-go I'm fine with a subscription, I don't pay to have more value out of my search, but because:
1. I dont like ads, I want to support an ad free alternative.
2. I pay for my privacy.
3. Better results will mean less time lost on searching, less frustration.
I never accounted the value I will get out of better search, I looked at the price and felt that I was a bit overpriced for my taste, but I want an ad-free, pro privacy internet.
I didn’t know Kagi was bootstrapped. As a fellow bootstrapper, it makes me like Kagi even more. Good luck in the future. I think you really have something here so I hope the monetization strategy works.
> I don't want to be conscientious of the cost of my search usage, I fear it will inconsciously reduce my search usage and access to knowledge.
Sure, but this whole adventure won't last very long if the company loses money even on paying customers. If your usage costs them about $30 a month but you only pay $10, who will pay the remaining $20? Someone has to finance your access to knowledge in the end...
Correct, we are betting that avg user will cost us less than $10 in the future. Our current userbase is skewing towards HN - heavy usage. If that does not happen, we will have to change the price. Cost per search is unlikely to (significantly) change without (significantly) jeopardizing the quality of results we are known for.
Most of my queries through the day aim a few hundred of website - programming docs- I wouldn't mind if Kagi automatically chose my lenses(current one are too limited) if it reduce research cost.
No, it's industry standard to operate at a deficit to gain userbase and subscriptions. They're certainly prioritizing shipping product right now over reducing COGS, but you can bet that if they're successful in the short-term that in a couple years they'll be able to significantly reduce cost per search.
A lot of services operate like that.
France ISP offer unlimited data with very low price, because they know the average usage, and I'm perfectly fine with that.
You'll get used to it. Of course you won't limit your access to knowledge just to save $20 monthly.
How much does it cost to have a suboptimal search experience 50-200 times every day? Saving 5 seconds (on average) per search, that's something like $10 per day in savings (provided you search during work hours).
As someone who prefers to search in private tabs, I was wondering why do I need to create an account, until I saw the pricing. It's an interesting conundrum, either you search anonymously with bloat and ads, or have your activity pinned to your account maybe with ads, or guaranteed without ads for $10/month.
As much as it bothers me, I'd prefer to work around the first option.
