
Our pricing model was broken. Here's how we fixed it - drob
http://blog.heapanalytics.com/our-pricing-model-was-broken-heres-how-we-fixed-it-2/
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pbreit
This article, like most about pricing, misses the cardinal rule: price what
the market will bear.

But they actually ended up in roughly the right place: free for unfunded
services, a healthy monthly for lightly funded and a large monthly for well-
funded.

They also get right that all substantive features should be offered in the
free/lower-priced tiers. The trick is to put "enterprise-y" features in the
more expensive tiers. Best example is multi-user logins. This is not a core
feature of the product but is a good proxy for a customer who has ability and
desire to pay more.

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wikwocket
Man, I hope they only included "pricing based on cost" for completeness.
_Never_ price based on cost! I mean, know what your costs are for each level
of service, but if you are charging based solely on your cost, you're not
really doing "pricing."

Setting your prices based on cost is like designing a product with features
instead of benefits. Does HP design printers that can fold paper airplanes?
No, they design printers that print business documents faster, crisper, and
more reliably, because that is of value to businesses with money. In the same
way, do they price ink cartridges based on the cost of the pigments? No, they
charge by value, and it is worth a lot of value to the average business to get
their documents and spreadsheets printed!

And don't try to justify cost-based pricing by saying customers can just
implement and host their own solution using open source code. Sure... and they
can make their own printer ink and load it into recycled cartridges... but
effectively zero percent of people will ever do that. :)

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Edmond
While cost+ pricing is frowned upon, it is indeed wildly used...for most small
businesses it is the simplest approach, especially for commodity products and
services.

I do agree though that for a technology startup, cost+ pricing should not even
be on your list of options.

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OoTheNigerian
Ha! Interestingly, I just sent you guys a long mail about your pricing.

I think per unique visitor is relatively easier than per visit because an
additional visit does not even tie to additional value.

The fact that you capture a lot of data from so many people (which costs you)
does not mean that it brings value to me.

It is also important to remember that you are not prison in isolation but in
comparison to your competitors. In your case, it is KISSmetrics and Mixpanel.

It is not something you can get perfect at one go. It has to keep evolving.
You have a great product.

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matm
Interesting. With regards to the unit of pricing, our thinking was quite the
opposite. There's a high variance in value across your userbase, but our
previous (per-user) model would price them the same. This was an issue.

We tried to match a user's value as closely as possible by pricing per visit
(instead of per user). This assumes, of course, that the frequency of a user's
visits correlates closely with their overall value, which is certainly
imperfect in some cases.

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trustfundbaby
Would be interesting to see the effect of free trial length on their
conversions (specifically shortening to 30 or 14 days and measuring the
effects). At a company I work for, we found that shorter free trials actually
led to more conversions.

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matm
Good point. We'll definitely keep an eye on this.

One of Heap's most important value props is retroactive analysis. You forgot
to define an event upfront? No problem - it's available for you to analyze
across your app's entire history.

A 60-day free trial helps our users make better use of retroactive analysis
than, say, a 30-day free trial. The longer you accumulate data via Heap, the
more viscerally you understand this need.

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coolsunglasses
I've been working on an open source alternative to proprietary analytics
services, for those that want a middle territory between being a Mixpanel or
Heap customer and having to roll their own.

Keep an eye out for Simonides if you're interested.

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brianbreslin
Dan, you might want to do something about the logo. On the blog I saw it and
read CHeap. not a radar + heap. or pie chart + heap. flipping the pie segment
to another side would solve this.

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nickconfer
I wish there was more information in the article about how it effected
conversion rates.

They've created an interesting model here though.. Its basically free or one
price, unless you're really big. If you're really big, they ask you to talk
with a sales person, but clearly state a starting price (which I've seen few
sites with a "contact us" do) to get the ball rolling.

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ianstormtaylor
+1 but I assume that one is coming (hint hint).

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mgw
This change makes your pricing a lot more feasible for the average web app,
but I think it is still not perfect for many content sites whose traffic
consists mostly of logged out short-term visitors.

Do you suggest sampling for those kind of sites?

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drob
The hope is that we can make this work for content sites case-by-case with the
enterprise tier.

Agreed that this is still not ideal for medium-sized content sites, though a
lot better than the old pricing model, which charged by the user (as opposed
to the visit) and thus was a total nonstarter for them. We usually don't
suggest sampling, because we do think there's value in using Heap for analysis
at the top of the funnel.

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cplanas
Sad. I am the CEO of a social game with pretty big traction but with a pretty
low user lifetime value (lower than in your example). With you I thought I
could have a good analytics service at last. Not anymore.

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thurn
Good stuff, I discounted Heap before because of the lack of a free tier and
the lack of Android support, but it might be time to take another look.

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nemothekid
Are new users (even those with less than 25k monthly) being converted to the
new free tier?

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drob
Yup! Customers with <25k monthly visits won't be charged anymore.

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dylandrop
So if you say you fixed it, do you have any before and after results?

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togasystems
A little off topic, but will Heap release an export API?

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matm
We already have one. It's part of our enterprise tier.

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togasystems
Plans on releasing it for your other tiers?

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matm
Not currently. But we're eager to learn more about your use case to see if we
can figure something out! Care to email team@heapanalytics.com?

