Ask HN: Is Optimizely's $50,000/year minimum short-sighted?

[abtester]

We are a small company that is looking to implement an AB testing platform. Since we have experience with Optimizely before, we signed up for a trial and was contacted by a Sales Rep who indicated that Optimizely now has a $50,000/year minimum commitment.

Our budget doesn't support that commitment and so we will go with a competitor instead.

I feel this is short-sighted of Optimizely, not having a lower-priced, lower-featured option as customers will become familiar with competitors and small companies turn into big companies.

Does the HN community feel the same?

[fab1an]

Optimizely is now focusing on the enterprise segment, which requires a different culture and skillset than you'd need when selling to smaller businesses. Doing both at the same time, for most products, will almost always require two separate cultures, which is difficult to maintain (unless you're a giant corporation with different departments). An exception to this rule may be Slack, where price points grow linearly with company size.

In website testing, specifically A/B testing, the enterprise segment is likely more valueable as smaller customers tend to exhibit vastly higher churn rates. Also, a 1% increase in conversions will translate to millions in incremental revenue for established companies, making it much easier to justify higher price points.

As for which pricing strategy works better when working towards an IPO, it seems that the data doesn't favor one approach over another: http://tomtunguz.com/no-mans-land-saas/

[hluska]

I think Optimizely was very smart.

A/B testing is very hard. Designing tests is hard and you need quite a bit of traffic before your results become valid enough to act upon.

For these reasons, many smaller organizations simply don't have much success with A/B testing. And, I'd bet my bottom dollar that the organizations who don't have much success blame Optimizely instead of their own design.

[fenier]

Given the requirements of traffic for effective A/B testing, companies already have to be moderately big to do testing effectively.

That said, it could very well be that Optimizely was dealing with increased support costs as A/B testing is widely misunderstood. This could cause perception to reflect badly on the product, and by adding such a minimum price, they virtually ensure the client has enough traffic to be worth their time.

I am not sure which plan you folks were evaluating, but looking at their offerings, you really need to be at the 'Business' level to get the most out of your reporting, or the 'Enterprise' level to optimize specific customer segments, rather than the entire site.

Those are some complex topics, and by setting such a high minimum, they are very clear that the client company is invested in their testing program, likely willing to have those discussions, and in short, worth Optimizely's time.

[btian]

What features do you need?

Firebase has an A/B testing framework too without the 50k minimum https://firebase.googleblog.com/2017/11/announcing-better-ab...

[abtester → btian]

unfortunately it appears to only be for native mobile firebase SDKs, our app is web-based. Though we do use Firebase

[tedmiston]

There are tons of A/B testing tools on the market — even Google Analytics has one. The price point is just Optimizely's way of saying that the enterprise market is what they care about. In this case, I think you have a customer-product mismatch more than anything else. Sure, I'd love to use their product on a smaller traffic site but web analytics is a crowded crowded space and the companies that carve out a niche they can dominate do best. (Full disclosure: my startup makes an event router that sends data to tons of analytics services.)

[cjhanks]

I do not know Optimizely specifically. But there are many advantages to having fewer large customers than many small customers. Particularly if you are still inventing product.

[BartBoch]

I think Optimizely is burning an important bridge of theirs. But thanks to decisions like this, small companies can raise on the back of SMB market.

Optimizely picked stability over the crazy growth (and fluctuations in revenue).

[abtester → BartBoch]

I agree with this, I think a strong company with a low-touch SaaS model could compete very effectively with Optimizely on the SMB level. VWO is poised to be this competitor _right now_ but it seems like there's an opportunity here.

[dangrossman]

Visual Website Optimizer starts at $49/month: https://vwo.com/pricing/#web-testing

[fenier → dangrossman]

Yes it does - but I still think for an effective program you'd want at least the 'Enterprise' plan, which starts at 12k a year.

If you don't have developer resources dedicated to your team, you may find yourself unable to run some tests, and you'd have to upgrade all the way to 'Enterprise' on the 'Conversion Optimization Platform' to get a Dedicated Account Manager, who would, in theory, help you tackle more advanced topics and test designs.

Any way you slice it - as soon as you hit moderately complex A/B testing the price goes up quite a bit.

[abtester → dangrossman]

That is what we chose

[farnsworthy]

See:

https://news.ycombinator.com/item?id=16476454

[quickthrower2 → farnsworthy]

So the accepted wisdom is "Raise yer prices", regardless of anything else?

[BartBoch → quickthrower2]

I think it is accepted wisdom for small SaaS startups, not a universal knowledge. For a company like Optimizely with the established user base, possibly it is smarter to go after 100 enterprise customers, rather than 10,000 mixed ones.

I personally strongly disagree with such tactics and I think this might lead to the company collapse in far future. By cutting out small users, you are wiping out testers, that pay to use your product and provide a valuable feedback. Instead of cutting out the smallest customers, they should optimize their offering, so that small users are being served completely automatically, hands-off, with only email support provided.

[quickthrower2 → BartBoch]

You have articulated my thoughts about this love of raising prices.

Your second point is spot on. McDonalds is still in business, after all.