

Ask: Pricing Schemes: Nickel And Dime Vs. Yearly Subscriptions - spoiledtechie

My partner and I are releasing products over the next few months to a large community of people that belong to groups.  There are around 35,000 people and about 1200 groups of those people.<p>Most start ups charge a yearly fee in a freemium model to make their money.  While we like this freemium model, I am no expert on what schemes people or groups of people might pay for.<p>We are debating between two charging models.<p>Asking each person in the group to pay $4 or $5 a year or what we all would think is a fixed price for our services.  This renders about only half of the next idea in profit a year for all the groups if they signed up.<p>Or we would charge per service rendered.  These groups of people have between 7-15 service requests a year.  We would charge $10.00 a service  This would render at minimum 6 figures a year. We would consider this nickel and diming the customer.<p>The customer also makes money doing this service we provide that $10.00 I don't feel would make much of a difference on their end figure.<p>We know start ups like yearly fees, but we think we are both a service company and a software product company.  We also know that through the government, they really enjoy nickel and diming folks.  And people put up with it.  So we think because we are providing a service, we could get away with "nickel and diming" these groups.<p>Please keep in mind, when I use the term Nickel and Diming, I only use it because people understand it.  Its not that I actually feel, we would nickel and dime them.  But we are providing a service.<p>We are also providing a freemium model for our products.  So not only would we be charging for services, we would be charging them for our products as well.<p>I just want advice.  Im not expert at services, nor am I an expert at freemium models and we are just getting started.  So if you have any experience, please provide.
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kappaknight
I think the term you're looking for is "a la carte." Nickel and dime sounds
terrible.

Anyway, I'm personally a fan of subscription based services but monthly, not
annually. People seem to forget annual subscriptions (except for domain names)
and these spikes in the budget often have people canceling. If possible or if
it makes sense, go the monthly subscription route. In a way, it reminds them
to take full advantage of it (so it lets them make it relevant) and you'll
have a more stable income as a result.

The "buying credits" idea is also a good one. It becomes a pain if they have
to pull out their cards too often though.

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caw
I would suggest to charge what you need to cover expenses. Nothing worse than
a freemium service that has to close or everyone starts to hate because they
took away the free.

I think you have to ask these groups how they would rather pay. For the groups
that have a lot of requests, you'll have to cover expenses with other groups.
Are you confident you can do that, or is $10 a fair price for each request?
The more you use, the more you pay.

Instead of "nickel & dime" you could always roll into a package. Bronze
package gets you 4 service requests, Silver gets you 7, etc...

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spoiledtechie
Thank you for the advice.

