
Zendesk raises their prices 60%-300%, users predictably revolt - adamhowell
https://support.zendesk.com/entries/174769-introducing-new-features-new-starter-plan-and-new-pricing
======
tyrelb
Alternatives: <http://www.activecampaign.com/help-desk-software/>

<http://www.kayako.com/>

<http://webhelpdesk.com/>

<http://www.atlassian.com/software/jira/default.jsp>

<http://tenderapp.com/>

<http://www.cerberusweb.com/>

<http://www.thevisionworld.com/>

<http://www.autotask.com/software/service_desk.htm>

~~~
koenbok
Anyone tried out <http://www.assistly.com> yet?

~~~
John212
Yup, but it is still very much in its in infancy as far as features are
concerned.

------
ryan-allen
ZenDesk pricing has always confused me. They always pitched themselves as 'for
the small smart guys' with all the 37s type philosophies that were popular at
the time.

And I looked at the product and thought "Wow, this product is actually quite
nice!".

But we had 5 staff and only one full time support person, but everyone needed
an account. The starting price was a bit rich for how small we were and I met
the head evangelist and told him I thought the pricing was a bit off.

I said it was too much for the small guys, and not high enough for the big
businesses who pay ridiculous amounts of money for software services (Joel
Spolsky has a post on this somewhere...).

His response was "Oh, you guys can have it for free for 6 months!", and I said
"But then we'll be locked in, and have to pay heaps in 6 months time."

We ended up using eSupport (which is a complete piece of shit) and now we have
a different set up of support users, we could justify the cost of ZenDesk
given the current size and set up of the company but now we're locked in to
eSupport!

If they just had lower prices for the little guys they'd have got us. They're
bloody mad, I tell you.

~~~
megamark16
"We ended up using eSupport ( _which is a complete piece of shit_ )"

Whenever I read something like this I can't help but think "Here's a potential
customer to whomever can get this right and at the right price". It seems like
there's still a huge opening in this market for someone to come in and take
all of ZenDesk _and_ eSupport's customers.

~~~
ErrantX
Do you really think so?

It always struck me that there was 1001 support desk providers out there... is
there really that much space?

(cos if so it's going on my list of maybe projects :))

~~~
jackowayed
There's always space for someone who does it better and/or cheaper than the
competition.

------
enntwo
Regardless of who's side you fall on, I think this is a pretty good example of
why allowing public comments is a bit of a dangerous move.

(Clearly the more dangerous move here was the price hike, but I do not know
the internals of the company that led to the decision, or the interest that it
was in, so I will not comment on that so much.)

It is tough to imagine them recoverving from the sort of mob-rule that has
formed in that comment thread, even if they restore current pricing plans. So
much doubt was created amongst the users, which of course spread to twitter,
here, and others, and you can see the discussion clearly degrade from concern
to rage.

Public interaction with users can be helpful to show a personal side of the
company and try to show a strong effort for support/interaction, but do not
forget that this risk exists. As with anything, use with caution.

~~~
hga
I'm not sure you're right.

The backlash would be expressed elsewhere, here at least it's in a place they
cannot afford to ignore.

Their actions going forward, e.g. if they purge the posting with the links to
competitors, will tell us a lot about them and how they're going to deal with
this.

Also note this could be part of an internal faction fight, one faction who's
against this move may have wanted this so that they can show this immediate
and detailed feedback from current customers to those in the company who put
this in place.

In general, I find most "supress information and communications" strategies to
not work well, and this is ever more true the more we build our communications
infrastructures.

"The truth is out there" and pretending otherwise is likely to be futile.

~~~
ahoyhere
We allow public comments on our SaaS blog, but we don't use things like
UserVoice for these reasons…

If the issue is a minor annoyance, people will be minorly annoyed. They will
probably write support; we'll handle it; they'll get personal service;
everybody's happy.

Until they see that other people have it too, and have the option to "vote it
up," etc. That way, a minor annoyance a person would live with -- and be happy
that you fixed -- becomes a major gripe.

Basically, your customer's interaction should be with you, not other
customers, unless other customers are part of the "features" of your product.
Because other customers will misrepresent, inflame, etc., meanwhile the
initial irritated customer will have his/her first interaction with a tool,
not a human being.

The moment they interact with a respectful person AT the company, they will
calm down. Not so with a comment form.

Basically, it's an argument that goes both ways :)

~~~
hga
Indeed, it most certainly goes both ways.

But at a certain point in its growth if a company doesn't maintain their own
forums alternative ones that they don't have _any_ control over or maybe even
knowledge of will spring up. And that will happen instantly in the case of an
atrocity like this one.

"Keep your friends close and your enemies closer." If you pull a move that
turns a lot of the former in to the latter, well, that bit of advice is
probably all the stronger.

Of course, you need to actually respond to them if it's to be of any good and
that doesn't seem to be happening as of yet.

~~~
ahoyhere
I totally see your point.

The other school of thought says, though, that if there's not a single point
for them all to coalesce around, the uproar won't happen.

If you're determined to screw your customers, of course, nothing will stop
them ;)

------
patio11
Do my eyes deceive me or are companies with 20 employees _at their help desk_
complaining that a thousand bucks is a lot of money?

I think we are seeing a later day MMORPG forum. At some point, it is easier to
argue for a patch for your class than get 1 pct more stats, so you stop
playing the game and start playing the boards. ZenDesk is the vendor most
likely to drop prices by 1k for a single fauxraged posting, so start your
keyboards.

~~~
paraschopra
If there is one thing that I have learnt from "Predictably Irrational" book,
it is that humans make their money-related decisions by having a reference
point. Zendesk could have always been priced at thousand bucks and no one
would have complained. But once you set the price, you provide your customers
with a reference point which they are going to use. You can't run away from
that.

For example, even though Microsoft Office probably provides a lot more value
than what it costs, it they doubled their prices overnight, would you not
expect any outrage?

~~~
mikeryan
Its funny as we move to SAAS models this seems to be a bigger issue. With
Desktop apps you could just stick people on a version and let them keep their
existing pricing plan with some sort of dedicated EOL. Anyone wanting a
newer/better/prettier version would need to pay for the upgrade.

This breaks down severely on these web models, where you're more inclined to
start out with a lower price and feature set while you gain customers, but
want to increase the price as you add features (and value)

Its sticky and makes setting your first price point a more critical game.

I wonder if people have thought about "versioning" their SAAS apps. (do they?
I don't have a ton of familiarity here). Personally I think Zendesk has to
reward their early customers by keeping them at their current rate.

~~~
Splines
You could try introducing a tiered pricing model. Allowing users on a lower
tier to trial features on a higher tier (or introducing the higher-tier
features at a limited mode) might help convert users up.

~~~
bdickason
This is what we're looking at with our new startup. We have a core featureset
that will probably carry a subscription but other than scaling with more
'users' (in our case, employees), I'm not sure of other ways to increase the
price without screwing people.

------
kaiuhl
If there's one thing I've learned from Apple, it's that innovation within a
price point makes happy, comfortable customers.

It's a scary precedent to set by saying that every new feature Zendesk adds,
they're going to charge you for. Innovation should be the baseline.

------
robryan
This seems to be a good example for the idea of setting your prices at the
right level from very early on. Much better to err on the expensive side then
drop them later than significant rises like these. Or initially offer a
special deal so people know it will eventually cost more.

Similar thing happens when going from freemium/ indirect revenue to charging.
There was a big backlash when invision board did that, even though they could
say there product was as good as the paid competition (Vbulletin). They had
built a lot of their success on the back of a free product.

~~~
X-Istence
Well, the backslash against Invision Board was mainly because the main guy
that was working on it had promised that the product would stay free forever,
and suddenly he started charging for it.

I have two licenses from 2005 and 2006 respectively and each one of them was
fairly cheap compared to the $149.99 that it costs now, also I've got a
perpetual license meaning I get free support, and free downloads of the
latests versions for life, whereas the new ones are for 6 months of support,
and for 6 months of new downloads, after that you are stuck on whatever
version you happen to have purchased.

$149.99 is pretty expensive for a piece of software, considering I can get an
entire OS upgrade for $129 from Apple, which does MUCH more than a forum. I'll
just keep my luck and my grandfathered accounts alive, knowing I am going to
get the value I want out of those accounts.

~~~
paraschopra
The issue isn't about an OS being much more than a forum (whatever that
means), the issue is actually size of potential market. There are millions of
users who would use an OS, but do you think the size of market is same for
forums as well? Software doesn't cost high because it costs high to make it,
actually it costs higher because the company making it has to survive and make
profit (given the total size of market). (Or, of course, it can start making
OSes).

------
mattmaroon
I don't understand why they're charging more per user as you scale. I don't
know that I've ever seen a service like this.

More typical would be $12 per mo per agent from 1-3. $10 from 4-20, etc.

What's crazy is their service is considerably more expensive than hosted
Exchange servers (which give you volume discounts, not increases) though
Exchange probably costs a lot more to run. We use Zendesk and like it, but if
we ever get to 20 or more support guys the business case for building our own
ticketing system will be a slam dunk.

~~~
patio11
_I don't understand why they're charging more per user as you scale._

Price discrimination between business types. An enterprise is not a collection
of 1,200 one-man companies.

~~~
mattmaroon
I don't know that there's much of a difference between a company with 3
support guys and one with 4. But regardless, like I mentioned, hosted exchange
will service a fortune 500 company at a lower price per inbox than they will
service my little group of 11.

------
danielha
We used Zendesk over a year ago with about 4-5 agent accounts. We cancelled it
because no one wanted to log into it and we were having a lot of support
issues. Fast forward some time and we start up an account again because our
support definitely grew beyond a shared support Gmail interface.

We're still using it now but we're also using Assistly.com in tandem. Assistly
is in beta but there are great guys behind it and they listen very closely to
product feedback. I absolutely expect a full transition from Zendesk in the
near future.

------
nocman
Is it just me, or do they have a terrible home page (as far as telling you
what their products do)? I had never heard of them before this post, and from
the name my first thought was that it was some kind of computer desktop
sharing service. I think I figured out from the HN posts that it is helpdesk
software. I think that's a pretty major failure on their part.

------
Loic
You can also think one step ahead. When you build your business around a SaaS
offer, it is exactly like the old Microsoft way, you depend on the offer and
you can be locked in.

Surprisingly people get all excited by the new services with great API, nice
teams behind them, bootstrapped, etc. but forget that when you do that you
explicitly tell: "Yes provider XYZ, I accept to depend on you and to let you
partially control my business.".

This is why for my small bootstrapped project management/code hosting offer I
propose a full daily backup and the software as GPL at the same time.

That way my customers get the comfort of SaaS and the freedom of the GPL as
they can migrate away without pain. I secured a couple of companies with 10+
active coders this way. They know they can download the software (which has an
active community) and install it on their system if they want, when they want,
for free. Finally a bit like what Wordpress is doing.

------
sjsivak
To be fair, they are allowing customers to grandfather their pricing for a
year: [https://support.zendesk.com/entries/173169-new-
grandfatherin...](https://support.zendesk.com/entries/173169-new-
grandfathering-terms)

However:

> "As a result, the new pricing reflects the added business value of each
> individual plan."

I read that entire post and I was unable to find the added business value,
these features all seem like they should be part of the product not really
premium stuff.

~~~
jfager
That grandfathering requires paying the year upfront, though.

~~~
aarongough
They said later in the comments that it is possible to pay quarterly and still
receive the grandfathering...

~~~
jfager
They said "you can change your billing cycle to a quarterly cycle in order to
extend grandfathering beyond July 1st billing cycle" - so one additional
quarter, if you prepay for that quarter, followed by the increased prices.

The only way you get current prices for another year is by prepaying by July
1.

------
boredguy8
I don't see why changing prices is a big deal. Apparently there's some pent-up
frustration, but there is a real cost to keeping services online. If the price
of electronic books doesn't increase over the next two years, I'll be
astonished.

And in fact, there's real danger to a business in terms of how they price
their product. We were early adopters of RightNow, and we still pay an
absurdly low price for their product (which we host) compared to other people,
all because it's grandfathered in. Now this hurts them less because we host
it, but you can imagine if they had to grandfather us in at the prices they
were charging when they were new, it could really hurt them.

~~~
hga
I don't get the impression that they prepared their customer base for this.
E.g. you know why you're paying "an absurdly low price" for RightNow and you
should't be surprised if things change in an adverse way. E.g. I don't know
anything about your and their situation, but say they grow so big they have to
move to AWS and now providing service to you costs them cash money. You
wouldn't be surprised if at the very least they passed that new cost of
"goods" through to you.

------
uptown
It seems like the are requiring the grandfathered customers to pre-pay a full
year because maintaining two monthly pricing structures is more trouble to
manage.

But I'm curious what kind of blowback a company like this might face if
existing customers were grandfathered into the old pricing plan for life.
Would new customers resent existing customers? Without knowing Zendesk's
financial situation, it's hard to know whether they're doing this out of
necessity ... but it seems like the goodwill to the customers that made them
what they are would be worth the trouble of managing two different pricing
tiers.

~~~
jonknee
It seems like they could just create a new product/sku/whatever for each of
the new pricing points and then stop selling the old products. You can't buy
into the old subscription but it's no biggy to continue to bill it.

The way they're doing it looks like a money grab (pay more now or pay up front
for a year and then more later!).

------
titel
Unfortunately this kind of moves from different companies affect the entire
SaaS space.

There has always been a degree of uncertainty when committing your business to
one service like this... what if they increase the prices? what if they will
close? what if they turn bad and close my data behind a payed wall? will they
be able to keep the service up most of the time (just think of the time when
Gmail went down..)? And so on...

This is only going to make this worries a bigger issue when choosing to commit
to one of these services.

------
Uchikoma
Most customers won't leave - despite their whining. Customers stay based on
value for them, the do not go based on the percentage of the increase.

------
stumpy124
Useful link for HelpSpot (or other self hosted help desk software) vs Zendesk
<http://www.helpspot.com/helpspot-vs-zendesk/>

------
mhp
Why don't they change the price for new users, and leave the price for
existing customers? Seems like the default way to increase your prices with
minimal friction.

------
Osiris
I had been evaluating using ZenDesk for our new help desk. Does anyone use any
other help desk products that are inexpensive (3 agents) and easy to use?

------
motters
Sounds like the dot com business model all over again.

------
ahoyhere
I think anyone who uses ZenDesk will know that they don't love their users, or
treat their tool like a serious business. (More like a cashcow.) Their
software is horrible.

There are 6 different ways to view the single table of incoming messages, and
it's nondeterministic which one you will come to at any given time. And the
first time you accidentally send an internal message to a customer, instead of
your team - since the form is the same - you will realize that they must know
about that problem, for months even, and have never fixed it.

We were paying $100/mo for ZenDesk around a year ago, and the price was fine.
Theoretically good value for the money. But every one of my team hated it so
much, they would never actually log in.

~~~
jhancock
I need to setup a helpdesk system next week. Any recommendations?

Our key requirement is to be able to reassign incoming tickets and have simple
notification to the person it was reassigned.

~~~
troels
I don't recall if RT from Best Practical has the particular feature, but
otherwise it's a well-rounded and battle proven solution. It's ugly as hell
though.

~~~
ledger123
I love RT. Real solid product with great hackers behind it. And you did not
mention that it is open source and takes hardly 1-2 hours if you know your way
through CPAN and Apache.

The latest 3.8 is not that bad with new theme.

I can even do a free install/setup for any non-profit.

<http://bestpractical.com/rt/>

And don't forget the <http://hiveminder.com/> from same company.

EDIT: Added links.

------
ahoyhere
Anybody here successfully raised prices without a major blowback? I'd love to
hear how you did it (as opposed to these clowns).

~~~
spolsky
Easy: Grandfather every existing customer, permanently.

~~~
ahoyhere
That's not really an answer.

If you're raising prices because of a profit issue, then you are prepared to
lose some customers (the least profitable ones) so you can better serve the
ones that give you a profit.

Which is why I asked for strategies that worked, not "Don't."

~~~
jfager
How is that not an answer? Do you think ZenDesk has anywhere near saturated
their market? Why should a company that's aiming to grow take the marketing
hit that comes from pissing off their current customers? Why turn potential
evangelists into angry detractors?

~~~
ahoyhere
Why would you assume that market saturation is the goal instead of the highest
possible profit margin?

Not everyone thinks saturation is economically viable, or even desirable. And
honestly, in a market like SaaS web apps, it would be very hard to achieve,
even at rock bottom prices. A help desk tool, no matter how crappy, is not a
true commodity. One will serve a given customer better than another.

Also: I wasn't asking about ZenDesk, I was asking for other examples.

In my consulting business, I raised my rates from $75 to $300 in a couple of
years. I wasn't going for saturation, and I didn't grandfather at all. But
that is a 1:1 relationship with clients, and I radically changed my business
over that time. I also raised the price of my ebook package from $24 to $39
but that was not the same customers, being that it was a one-time sale.

I am a big believer in raising prices. I like more money from fewer customers,
which means I can simultaneously work less, and have higher quality
interactions with my customers. It's a win/win/win.

My SaaS is one of the most expensive in our category, and for good reason.
We're growing at a nice pace, too. I want to think about how we might raise
prices, if we decide to, and for future products that I am planning.

And that is why I wanted real examples. Which other people were able to
provide me.

Thanks, other commentors.

~~~
jfager
I didn't say saturation should be a goal, I said that they didn't have
anything like it and therefore had room to grow. When each additional paying
customer over a certain number is almost pure profit, the number of customers
you have is a pretty important factor in determining how to reach the highest
possible profit margin, but you know that.

Nobody in this thread ever said "don't raise prices", so I don't really
understand why you're preaching the price-raising religion so hard. Fine, yes,
raise prices, but grandfathering existing users might be an easy way to do so
without causing a backlash that might hurt your ability to acquire new
customers at the raised prices. It's certainly not such a stupid idea as to be
"not really an answer", like you claim.

