

37Signals Doubles Price for Basecamp - jbail
http://www.readwriteweb.com/biz/2010/10/basecamp-experiments-with-pricing-increases-cheapest-option.php

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ukdm
Update: Jason Fried responds

Shortly after our post went live, 37signals founder Jason Fried left a
comment, clarifying that they are toying with the design of the sign-up page,
but that all of the old plans are still available.

"While we used to have four plans on the sign up chart, today we only have
three," said Fried. "Same prices as before, just fewer plans displayed. A
while back we used to have six plans to choose from, but we found that was
ultimately confusing customers. So we went to five. Then we went to four. Now
we're experimenting with three."

Fried echoed Hansson's earlier statement that the changes are purely
experimental and that they may continue to alter the plans listed on their
sign-up page, depending on their findings.

~~~
jbail
Interesting. Thanks for the update. So the news is that they are merely toying
with the idea of making $49/mo the new "cheap" plan. That would eliminate the
free plan (do they still have that?) as well as the $12 and $24 plans.

~~~
gcheong
They don't have the free and $12 and $24 plans listed on the website anymore
as far as I can tell, but perhaps you are able to downgrade to one of those
plans after signing up for one of the other plans.

~~~
cvg
Free plan isn't displayed, but available at
<https://signup.37signals.com/basecamp/Free/signup/new>

~~~
gcheong
How can someone get to this if they don't know the URL?

~~~
cvg
I made a guess at the url based on how they format their live urls. I guess
this could be one negative of having nice urls.

The current signup urls are:

Maximum: <https://signup.37signals.com/basecamp/Max/signup/new>

Premium: <https://signup.37signals.com/basecamp/Premium/signup/new>

Plus: <https://signup.37signals.com/basecamp/Plus/signup/new>

Old Plans:

Basic: <https://signup.37signals.com/basecamp/Basic/signup/new>

Free: <https://signup.37signals.com/basecamp/Free/signup/new>

~~~
gcheong
Oh, of course. I meant people who wouldn't think of hacking the url ;^). So it
looks like the old plans are there but they just don't want to make it easy to
get to them.

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patio11
This is both a) ballsy and b) going to buy DHH another few sportscars.

People should A/B test more, including consequential tests like product mix
and pricing.

~~~
webwright
We (RescueTime) did TONS of A/B testing on pricing/plans, to very good effect.
People seem really hesitant to do this for fear of pissing off customers, but
we didn't get any complaints. A few folks noticed, and we'd always honor the
lowest price they saw if they were part of the experiment.

~~~
dmix
How much of a fluctuation did you test? $9 vs $19? $49 vs $99?

~~~
webwright
We mostly only had enough volume for solo users, where we tested anywhere from
$4-$20/month for an individual account. Found VERY little difference in
conversion anywhere below $10, with a big dropoff thereafter. Pretty
remarkable that conversions change almost not at all between 9.95 and
3.95/month.

Our volume for business signups wasn't super high at the time (that's since
changed-- go RescueTime!), so we didn't fiddle much with that.

~~~
dmix
I also heard from an ex-employee at FreshBooks that there was little
difference between $12.99 and $19.99 in terms of conversion.

It must be a common psychological trait to value things in sequences of $9-10.

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StavrosK
In other, less exciting news, historious did the exact same thing a few hours
before 37signals.

The only logical conclusion is that they are copying us.

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dpcan
I commented on the article too - but, could this just be a customer retention
ploy?

I no longer want to cancel anything because if I need to come back and re-
activate my projects, well, it looks like it may cost me double.

~~~
jasonfried
No ploy. It's straightforward: We're testing the plan mix, the number of plans
on the sign up page, and the design of the sign up chart. All the prices
remain the same.

~~~
marcamillion
Jason, will you be publishing the results of this test?

I would love to know if it makes more sense to start with plans @ $50 rather
than $25 and the impact on new registrations.

Thanks.

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TeHCrAzY
Not sure how you are intended to get to the other plans, but if you remember
the names, you can access their signup forms directly ie:

<https://signup.37signals.com/basecamp/free>

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levigross
I signed up yesterday for a friend of mine and when I saw the cheapest plan at
$49.95 I just grabbed the free one and upgraded to the $24 plan.

I thought it was a glitch in the pricing screen (and my friend still thinks I
am seeing things).

~~~
raganwald
It doesn't sound deliberate, but many pricing discrimination schemes work
exactly like this: For someone who can afford it and is in a hurry, they pay
$x. For people who are unwilling to 'flop' their chequebook, you give them the
free option and offer an upgrade that is $(x/2).

Neatly captures the surplus while hiding the $(x/2) price from people willing
to pay $x when they sign up.

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ComputerGuru
Common enough strategy these days, though not usually from the big players.
Double your price, you'll roughly halve your (new) customers - same revenue,
but more profit because of less overhead.

~~~
webwright
"Double your price, you'll roughly halve your (new) customers"

Absolutely not true. I've experimented with dropping prices by half and got a
barely noticable uptick in customers. I've also bumped prices by 20% and had
conversion actually increase slightly. Pricing psychology is way more complex
than that.

------
ryanwaggoner
I love the unattributed testimonial:

 _“Basecamp is so simple you can’t do anything wrong. It’s addictively easy-
to-use.”_

Why bother with the risk of the FTC cracking down for fake testimonials when
you can just quote yourself!

With the popularity of Basecamp, I'm sure this is an actual customer quote,
but I still think it's humorous. Perhaps I'll go pepper my blog with quotes
about how awesome I am :)

~~~
petercooper
Here's one for you so you don't have to fake it:

    
    
      Ryan Waggoner is an awesome developer and entrepreneur with a clear passion
      for all things geek. Not only is he a great developer but women have
      secretly whispered to me how sexually attractive he is. He has the
      charisma and wit of fifty men wrapped up in just one sack of skin.
    

You know, come to think of it, a system to encourage HNers to give each other
character testimonials would be kinda cool ;-) (that's not LinkedIn..)

------
RoyG
I just found this out when I had an occasion to use PM on a small project. I
found Huddle, which I think is a nice alternative, with a much better price
point.

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korch
I'd like to see a quality open source Basecamp clone put up on Github. Written
in Rails of course, ironically. There certainly are enough Rails devs driving
open source projects to make this happen.

 _That's the peril/blessing of embracing open source—given enough time, no
matter how good you are, you will end up competing with free and/or a free
clone of yourself!_

Then let folks just arrange for their own hosting(Heroku could become perfect
for this), or host it locally, and install & run it themselves. What if many,
many more companies would use a Basecamp-like app if they could run it inside
their corporate firewalls?

Basecamp is not rocket science. Its core is a dozen pages give or take, and a
bunch of standard CRUD. It does look polished, very well designed and thought
out, and is highly usable. It's a showcase example of what a great web app
should be. Yet almost all of these unconventional parts that seem like they
would need heavy lifting configuration could be automated away.

Sure it's a bit of a dick move to make a white room clone, even though it
happens all the time, and is almost the very definition of the majority of
popular open source software. However, after several years, once some
innovative software becomes mainstream, can it still claim exclusive right to
the _ephemeral methods of implementation_? Once the knowledge of those
methods, and the usage patterns are learned and spread throughout a community,
the value of the knowledge plummets. Before it became _obvious to everybody_ ,
sure, it would have been enormously difficult to create Basecamp from scratch.
But after everyone has seen Basecamp and used it, it's funny that it now seems
_obvious_ that is how it should be done. It's like the software patent issue
essentially.

I'd be curious to know the true cost of each Basecamp user in terms of
hardware, network and storage cost. What if it's oh say $1.00 on average? Then
it would be profitable for some company like Heroku who specializes only in
streamlined, small Rails app hosting to butt in and sell hosting for a cheap
price like $5. The software is free, the hardware is not, to steal a page from
the Apple play book. That would bleed 37signals' profit margins. Isn't it fun
to play _race to the bottom_ pricing of software as it crystalizes into a
commodity over a few years? Sure a few years ago, Basecamp would be difficult
to make. But 2 years from now? I don't know if the assumption holds that 2
years from now it will still be non-trivial to clone Basecamp in such a way we
haven't even thought of nor seen on the web. Markets move quickly, especially
in software. Everyone knows _competition is a bitch_ , especially when the
goal posts keep moving, and while the technology playing field itself
undergoes rapid, constant geologic & volcanic upheaval.

The workflow in Basecamp itself is a great template for creating other kinds
of web apps outside of project management and address books. Many other kinds
of businesses have similar workflows that could be represented in a souped up
Basecamp without too many modifications. An open source clone could also serve
as a good boiler-plate _starter_ app for developing more customized Basecamp-
like apps. What if the value of _that_ is more profitable than selling
Basecamp itself?

~~~
tunaslut
I believe Derek Sivers wants to get this developed as well -
<http://thoughts.pro/ampm/>

