
Sorry. We Messed Up. (Zendesk responds to pricing criticism) - mattmaroon
http://www.zendesk.com/2010/05/sorry-we-messed-up.html
======
dangrossman
This is how a startup should handle pricing changes, so long as the old
pricing scheme was viable.

This is the opposite of what Recurly did a month or two ago when they
dramatically raised prices and the same revolt occurred. Their response was a
big "F You", and their latest e-mails finally announcing even more pricing
changes show they lost enough users in the process that it threatened their
viability.

~~~
sachinag
I have to defend the Recurly folks here. They made a bet on flat-rate pricing
over per-use pricing. Turns out that a flat-rate plan hurts you on the low end
(people who won't use you at all, and where the uproar was) and on the high
end (you're leaving money on the table from your potentially most profitable
customers).

Flat-rate pricing works for the vast, vast majority of internet companies
since the day AOL won over CompuServe because they went to the $20 per month
unlimited plan back in 1996.

The lesson _I've_ learned from Recurly is that developers find per-use to be
less risky than flat fees, which is the opposite of normals.

~~~
jacquesm
It may just as well have been that they misjudged the demographic of their
prospective customer base to be mostly the larger accounts, but instead they
found themselves with prospects a lot smaller than the ones they hoped to
target.

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Mark_B
Interesting to see the "too little too late" comments on their comments. Proof
that 1) no matter how hard you try to apologize and make things right, you
can't please everybody and 2) unfortunately, these people are the most vocal.

~~~
gizmo
Well, they didn't try very hard to make things right. Users revolted, so they
caved. That's all there is to it. The "unfortunately these people are most
vocal" misses the mark completely -- had they been NOT vocal they would've
faced enormous bills or they would have to spend 50 hours trying to migrate to
a new system. That's _if_ the data can be exported and imported freely, which
is rarely the case.

So the customers spent hours comparing the offers of the competition, all the
time being frustrated because this jumped on them from nowhere. And then, 2
days later, they hear "Whoops, my bad!". That just doesn't fix the damage, now
does it?

If a thousand customers each spend 3 hours worrying about what to do, and
these numbers are conservative, then you've created 3000 hours of unnecessary
frustration. So the damage will exceed $300.000. Just with one ill considered
move!

Whoops, sorry!

~~~
Mark_B
Before, back when they complained in the first place - that was completely
awesome. But to gripe about having wasted time evaluating other solutions?
This is something everybody should do. No matter how happy you are using any
product, be it software, hardware, utilities, daily transportation, you
consider evaluating costs/benefits of a "Plan B".

~~~
awa
Well, most users would trust the service/company less after such an incidence.
Also, not everybody does a evaluation on every service every day.

I guess most do a analysis when signing up and would either forget about it
until they hear of something cheaper from somebody or do a reevaluation after
a fixed period of time like say every 3-6 months.

This sudden price change made everybody stop what they were doing and look for
an alternative now. And people spent time doing research, brainstorming
alternate ideas and some made the switch already and now they say Oops!. This
is why they are griping.

------
mattmaroon
Reasonably well-handled. I didn't go through the effort of switching our
business away from this because I thought something might happen.

I do have the sneaking suspicion that if we grow a bit the business case for
either switching or rolling an in-house solution ourselves will become much
more compelling though, especially if I'm forced to upgrade from my current
plan to a new one.

------
jimboyoungblood
_When we decided to make a change to the Zendesk pricing structure for our
existing customers, we tried to be as thoughtful, transparent, and
straightforward as possible._

Transparent? Maybe you should've given your customers a warning first..?

While the letter is certainly worded very nicely (and carefully), it reeks
more of damage control than sincerity. The picture with the puppy dog face
puts it way over the top.

~~~
mcantor
How do you get more sincere than, "We failed. We let you down. And we
apologize."?

I'm asking this in all honesty; I don't really understand where you see this
as being insincere. Just curious.

~~~
jimboyoungblood
For the lack of a better answer, it sets off my spidey sense. Everything is
too nicely worded- there is nothing spontaneous or "real" about it. Imagine if
you were hearing those words spoken in person. I don't think they'd ring true.

The photo really is the kicker. _Nobody_ has a photo like that just sitting
around on their computer. Obviously a lot of effort, from a number of people,
went into producing and editing this blog post. Do you believe the same,
obviously skilled, team that produced this finely crafted apology could have
unintentionally introduced a pricing structure that jacked up the bill for
many of their customers?

I'm honestly surprised that so many people fell for it.

~~~
mcantor
I still don't get it, dude. What could they have written in that blog post
which would have rang true to you?

~~~
parfe
>Instead of our intended result, many of you read my Tuesday e-mail and
thought, “You want to send me a big bill for something that I didn’t order and
haven’t agreed to? WTF?”

The above line makes no sense. The apology never actually mentions what the
"intended result" was. The intended change was exactly what the customer
thought it was. Zendesk intended the result to be the customers just shut up
and take it. Zendesk just couldn't cope with the customer reaction.

------
danielnicollet
I get a sort of "spin doctor: feel from this move, with the big glaring eyes
looking at me as I make my way to the message on the zendesk blog post...
Maybe not so well handled since one could think Zendesk is trying to turn a
difficult situation into a PR blitz: why are you posting here, rather than
just emailing your customers?

~~~
verdant
They got some bad press for the pricing move. I don't blame them for trying to
generate some good press out of it.

------
rjurney
This is how you do a public apology. Nicely played.

~~~
DenisM
Joel's school of apology: apologize unreservedly, it buys a lot of goodwill.

My theory is that when there is an unfortunate outcome the righteous sub-
person in us thinks that blame must be assigned before progress can be made.
This is might be true in some cases and not in other cases, but overcoming the
mental habit might be harder than playing into it.

~~~
kpanghmc
And yet, when Joel made the decision to shaft the Stack Exchange 1.0 testers,
they didn't get anything close to an apology. What they got instead was a
pitch about why they should be happy to give up their business model.

~~~
hga
I also don't recall ever getting an apology for his capping CityDesk without
any recourse, open sourcing of the software, whatever.

I suppose in both cases the distinction is that Joel decided _not_ to
apologize. The original point was about how he does that when he actually does
it. And all or nothing is a legit thing to do here.

~~~
DenisM
> he original point was about how he does that when he actually does it. And
> all or nothing is a legit thing to do here.

yes, that's what I meant.

------
bosch
"It’s always easier to apologize for something you’ve already done than to get
approval for it in advance." \- Grace Murray Hopper, quoted in Computerworld,
September 10, 1984.

------
joevandyk
For what it's worth, Zendesk is definitely worth it for the five customer
support people we have. The amount of flexibility they give you and the api
hooks are fantastic.

------
jacquesm
The damage is done though, and zendesks competitors are the ones that gained
the most from this, even those that didn't switch are now more than aware of
who they are and what their offering is.

The last thing you want to do when you have a good thing going is to get your
customers to invest a bunch of time in to researching your competition.

------
bradgessler
Did Zendesk bother to grandfather the pricing on their existing customers and
instead charge more for new customers?

~~~
mikeryan
no originally existing customers would only be grandfathered in for a year and
they had to pay up front.

~~~
bradgessler
Wow, yeah, that's a huge mistake. We always grandfather our customers anytime
we change our prices; however, in our ToS we do reserve the right to change
our prices for existing customers as long as we notify them first.

For other web startups out there who want to change prices, I highly recommend
that you grandfather existing customers so you don't piss them off and because
you don't have to communicate anything about pricing changes to them.

~~~
uptown
"We always grandfather our customers anytime we change our prices; however, in
our ToS we do reserve the right to change our prices for existing customers as
long as we notify them first."

What? You grandfather your customers, but reserve the right to increase your
prices for them as long as you let them know? That doesn't make sense.

~~~
jdeeny
I think he means they have reserved the right to change prices for existing
customers, but choose not to do so as a general rule. If they ever are in a
situation where they need to change pricing for existing customers, the TOS
would allow them to do so.

------
bcardarella
Glad to see they changed course. I was a developer at ZD for a few months when
they were in Boston and I can tell you that they're a great group of people.
Listening to their customers and changing course is evidence of that. Most
other companies would just barrel ahead despite the outcries.

------
ahoyhere
Their customers & readers aren't going to forget the chortling, self-satisfied
tone of their earlier communications.

