

Ask HN: Putting a price on your app? - fjabre

Releasing a web based productivity app in a couple months.<p>I noticed that there is always a lot of talk about product-market fit and general startup tips about finding cofounders and lifestyle changes but I haven't found anything good about pricing.<p>Anyway, our project has one constraint: we're not seeking outside investment so the app has to sustain itself.<p>Server costs per user will probably be hovering around $2-3/month (mostly bandwidth charges).. This is obviously a hosted solution where the kind of pricing that would make the most sense is some kind of monthly charge.<p>Couple of questions:<p>Is it ok to change prices around in the beginning to find where the market price is i.e. what gets us the most customers?<p>What's your take on the 2-tiered Google Apps model (Free ad supported or Premier) vs the 6 tiered Basecamp or Freshbook pricing matrix models (seemingly a more traditional approach)..?<p>My teammates and I do consulting on the side so we're not worried about immediate cashflow. So we're leaning more towards building an audience and breaking even than making substantial profits. Does that sound reasonable?<p>Lastly, anyone know of any resources or books that have helped them get a better feel for pricing strategy?<p>Thanks in advance for any suggestions..<p>ps. Thought this post was pretty good: http://news.ycombinator.com/item?id=910144
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ErrantX
> Is it ok to change prices around in the beginning

Not really... or rather you risk pissing off users. However if you take an
initial 3 or 4 month hit to run a free "beta" of some description that might
help you figure out reasonable pricing. At that point you will be able to

a) confirm the exact cost per user per month

b) ask actual working customers (in a survey) what they would be prepared to
pay

Such data would be invaluable in fixing a final release price.

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fjabre
Sounds reasonable. We may just have to take the hit. It might also be a good
idea to float around a limited number of beta passes.

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ErrantX
Oh yeh; releasing it in a limited way is the best move in my eyes. I mostly
suggested that approach because you said immediate money wasn't a huge concern
(always good!).

The way I see it, if you make a limited initial beta for a reasonable length
of time (say 3 months) and make sure you pick people who will actively use the
service (that's the hard bit) then you:

\- have an active user base who are very highly likely to convert to immediate
paid accounts, especially if you sweeten it just a tad for them as beta users
:D

\- get final stage beta testing while still on limited release

\- get your first real public product feedback; always useful for setting a
price that is fair but not off putting!

(can I ask what it is your putting together? If it's too early just say no :D)

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fjabre
Something along the lines of a highrisehq.com competitor.

We're about a 6 weeks away from a private beta launch.. So pricing is coming
up quite a bit. =)

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ErrantX
sounds interesting; add my email (it's in my profile) to your lists if you
have any - that's something my employer might be interested in in the near
future.

~~~
fjabre
Will do. Thanks ErrantX. You've inspired me to seriously consider putting up a
splash page asking for email addresses - to be notified when it's released.

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Vandy_Travis
Do the Steve Blank price-boxing experiment. "How much would you use this if it
were free? $50 / month? $1 million dollars?"

Your customers will tell you what they're willing to pay. If that number is
below your operating costs, however, be prepared to either drastically change
your model or move into another business.

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HeyLaughingBoy
I love this talk about pricing software:
<http://venturehacks.com/articles/pricing>

I've had it on my MP3 player for about a year and I only just noticed it's by
Steve Blank! Audio's a bit crappy in the beginning, but gets better.

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fjabre
Thanks.. Listening to it now..

EDIT: Quite entertaining and informative.. Only thing I would say is it's more
about enterprise software. He does make some great points about not under-
pricing your app and how engineers tend to do this.

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pclark
great ebook on pricing: <http://www.neildavidson.com/dontjustrollthedice.html>

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fjabre
Half way through it. Great read and the PDF is free.

Thanks!

