
Ask HN: What's up with all these services charging $10/$15 a month? - StavrosK
More and more frequently, I notice that online services charge $10/$15 a month. For example. I just saw a service that tracks your laptop/phone, and they want $15/mo to track more than three devices.<p>B2B services are more excusable, but still, the fees are pretty high. It seems to me that you need to spend $150 a month to subscribe to the 10 services you might find useful. $2/$3 a month sounds much better to me, especially for services for which users aren't very expensive.<p>What are your experiences with this (from either standpoint)? How much do you pay a month for various online services?
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patio11
$15 is ridiculously cheap. Don't even get me started for businesses: $15 pays
for a third of the cab fare for your consultant to get from the airport to
your office. For a revenue generating app it is a no brainer.

$150 is not much for a person to be spending on ten identifiable line items,
either. Maybe if you only know poor college studentsr that sounds like a lot
of money. For a middle class family, that sounds like a cable bill. If your
service is in the top five most important things for mom in her life, price in
two digits is irrelevant. She spends more on shampoo, hair care, feminine
hygiene, paper, magazines, romance novels, etc, etc.

~~~
maukdaddy
I was going to make my own reply, but as usual patio has succinctly made the
point. So I'll give some examples of what $15 really means.

\- I spent $18 a month on Netflix without a second thought.

\- $15 is one less meal per month at Chipotle (for 2 people). I'd gladly give
that up for a decent service

\- Average cable bill in the US is probably $80+. Give that up and you not
only waste less time, but can afford at least 6 of these services.

\- Once you're out of college, you will GLADLY give up $15/month to save time.
Time with family is precious and anytime I can spend a small amount of money
to gain more time I consider it a win-win.

\- Most middle class families probably spend more than $15/week at Starbucks
alone.

\- From a business standpoint, $2/user/month is simply not sustainable.

~~~
ja27
I pay $25/year for Flickr Pro, which is almost exactly $2/user/month.

~~~
cullenking
Just because a discounted price for a year up front works out to be a low
amount per month, doesn't mean it's worth little to the business charging it.
Depending on the business, it might actually turn out to be $4 a month if that
user were prone to cancelling after 6 months. Additionally, there is alot to
say about money in the bank now to fund development now.

I would be happy if our 20k users all payed for a year up front discounted by
30%, rather than a full-price for every month. Why? Because we don't have much
income now, and getting the money now would allow us to expand much faster, so
the next 20k users would signup quicker, and would not have the big discount
for an entire year up front.

~~~
nl
Also, the overheads (credit card fees etc) are often lower on $25/year billed
yearly then $2/month billed monthly (once you are at Yahoo's scale this might
not apply, but for a lot of businesses there is a flat fee for processing
credit cards below a certain threshold).

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jacquesm
This is because the psychological upper limit at which people start to take
notice of what appears on their credit card statements when they decide to
decrease their monthly expenses seems to be around the $20 mark.

As long as you're below $20 plenty of people will continue a subscription
until their card expires even if they _don't_ use a service, above that the
cancellations go up, so do the chargebacks and the retention goes down.

This has been researched ad nauseaum by the services you refer to, which is
why they all converge on the same price range.

~~~
StavrosK
Hmm, this makes me think that I'm charging way too little for historious at
$3/mo, but, then again, something tells me that if I charged $15 nobody would
buy...

~~~
jacquesm
I'm going to write a little blog post, just for you (and for everybody else
that earns money through subscriptions). If it works out you owe me a beer.
Stay tuned, back in 45 minutes.

~~~
StavrosK
Thanks, I owe you a beer even if it doesn't work!

~~~
jacquesm
Ok, it's up:

<http://news.ycombinator.com/item?id=1639712>

~~~
StavrosK
Thanks, I'll give it a try! If you're ever in Greece, I'll buy you that beer!

~~~
GFischer
Please tell us if it worked :)

~~~
StavrosK
I will, as soon as sales are stable enough to have statistically significant
changes! There'll be a blog post about it here for sure.

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garrettdimon
It's important to remember that "expensive" is relative. Depending on an
individual's income or company's revenue, $10/$15 can be huge difference or
just a drop in the bucket. When a business is billing out consultants at
$150/hr, spending even $100/mo on something that makes employees more
productive or efficient is generally a good decision.

It's important to not only look at the cost of the product but also the
benefits that it provides. Do the benefits outweigh the costs to the degree
that you're comfortable spending the money?

To put it another way, it's more useful to think about the value of the tool
relative to the price. It's less about whether a given dollar amount is
"expensive", and more about whether the value exceeds the cost.

For example, all told, we gladly pay upwards of $200/mo for hosted services
that are not necessary to run our business. However, the value that we receive
from that money far exceeds the dollar amount that we spend on them. So in
this case, even though $200 isn't insignificant, the dollar amount alone isn't
relevant. We consider the services "inexpensive" because the value relative to
the price is amazing for us.

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maxdemarzi
Phase 1: Collect Underpants

Phase 2: Instead of complaining create a "service bundle" of services you
would use together that add up to $150, contact the service owners and ask
them to get into a bundle agreement for $50 bucks total, you take $5 on each
sale.

Phase 3: Profit

~~~
paraschopra
Sorry, idea taken already :)

<http://www.appsumo.com> does that. And my tool is part of that bundle :)

~~~
wwortiz
Isn't appsumo a temporary deal? At least I took it that way, kind of like
those cable deals where it is 30 dollars a month for 6 months so long as you
sign for 2 years except with this you don't sign a contract you just can't use
them for less than full price anymore (unless I missed that).

------
rarestblog
You could easily pay 2$ per transaction + % of the revenue to credit card
processor. So, 2$ price tag = 0$ profit, or even loss.

Also it's probably about 8 times simpler to get one $15/month subscriber than
eight $2/month subscribers.

It's the market. If it was feasible to sell those services for $2/month -
there would be competitors taking advantage of that fact. Since there's (I
assume) none - that means it's not economically reasonable to sell something
at that price.

~~~
petercooper
_If it was feasible to sell those services for $2/month - there would be
competitors taking advantage of that fact._

I think Apple has proven that with the App Store. You couldn't buy many
professionally developed for a few bucks 5 years ago, even those that took as
much development time as the top titles on the iPhone now. Apple has made the
billing and distribution side so simple that development time and expenses are
almost the only variable.

~~~
rarestblog
Yes, but that actually proves the point. I don't mean that it actually costs
banks $2 to handle a transaction. It's what they charge small businesses for a
transaction. If you're Apple and can negotiate a 5cent (or whatever) fee per
transaction and able to sell apps to millions of customers - then $2 apps
would be profitable. For all other approx. 99.999% of companies out there - $2
per app or month is just not feasible.

------
csomar
It depends on the value you get. Some SaaS are free or cheap, they probably
cost little to the company, or the company is running cheap (single founder in
ramen).

Now for how much a single person spends, it's a different story. Let's assume
your target audience is software developers. An average software developer
should net more than $5,000 a month. Spending $150, is like 3% of his salary.
Not a lot, so he could even subscribe to more services and more expensive
services.

If your target audience is Egypt for example, where the developer net
$200-$250/month, subscribing to only one service may cost 10% of his salary.
So it's a luxury he can't afford.

Bottom of the line, your target audience and market readiness is the one that
decide the price tag for your SaaS.

------
jsz0
Really depends on the service. If you think of a laptop/phone tracking service
as a productivity/accountability tool for businesses to keep an eye on their
workers it only has to save 2 hours of productivity in a month to pay for
itself even if you're deploying it for minimum wage workers. (unlikely) If the
service is too inexpensive they have more users to support and many of them
may decide that even $2-$3/month is too expensive if they don't have any good
reason to be using the service in the first place. If they keep the price high
they attract fewer but higher quality customers that are cheaper to support.
I'm guessing many of these services do offer good volume discounts.

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saturdayplace
This discussion reminds me of Joel's fantastic _Camels and Rubber Duckies_
article
([http://www.joelonsoftware.com/articles/CamelsandRubberDuckie...](http://www.joelonsoftware.com/articles/CamelsandRubberDuckies.html)).
It's long and won't lead you to any conclusions, but it's entertaining and
very educational.

------
maguay
When you're aiming at consumers, I think <$5/month or <$50/yr is definitely a
better price point. I think Flickr Pro's ~$25/yr pricing is much more in line
with something most consumers would go for. And that's even at the semi-pro
level. But, when you're aiming your app/service at professionals, freelancers,
or small/medium business, then slightly higher prices might fly. Still,
though, there are so many "must have" apps now, that the subscription fatigue
should start hitting people bad.

What I'd really like to see is more webapp service synergy. Most of us would
be much more likely to pay $10-$15/month for Dropbox + Evernote Pro +
Backpackit.com Personal (substitute your favorite webapps in here) than they
would to pay ~$5/month/service. Something about the bundling would make people
feel like they're getting more for the price, even if the absolute price is
the same.

At least that's my $.02...

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gdltec
$15 dollars for a "useful" service is nothing. The average person spends that
"everyday" for lunch. The companies offering these services have to charge
enough to pay for the servers, developers, tech support, etc.. and yes, also
to make a profit, it is a business after all ;)

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Mistone
here is our pricing page for a Web CMS service targeted to designers. one of
my big concerns is that people correlate a hosted CMS offering to the cost of
standard hosting so our prices seem high, any feedback on your first
impressions of value/price would be appreciated.
<http://www.webvanta.com/pricing>

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brosephius
if you think it's too expensive relative to its operating costs, launch a
cheaper competitor :)

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CaanaCast
Before I read your post and from reading the title I thought you would say why
is it so cheap.

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krschultz
It's easier to start high and lower than start low and raise

~~~
erikpukinskis
Not if you grandfather.

~~~
cullenking
Grandfathering also has the benefit of making people very happy with your
service, and reluctant to ever cancel their account. I keep my usenet provider
account because I am afraid of losing my 25% discount I received when I signed
up two years ago, even though I don't necessarily use the account to it's
"full potential".

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mkramlich
I don't think your basis for deciding those prices are too high is a rational
one. It basically amounts to, "I think those are too high because... I think
they are too high!"

There was often someone slaving away long hours to create and make that
service available to you, all of which cost big bucks or at the very least,
the opportunity cost of their time is big bucks. $15 is nothing in the grand
scheme of things. You are always free to create the service yourself and/or
scratch that itch another way.

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ahoyhere
It's foolish to assume your price sensitivity is the same as your customers'.

Please, stop speculating and read a book or two on pricing. I personally
recommend Pricing With Confidence. They know more about it than you do.

------
jaxtapose
> $2/$3 a month sounds much better to me, especially for services for which
> users aren't very expensive.

How do you know if they are expensive or not?

