I understand you’d be worried about a price increase but the email, promotion, two years of lead up time, and now the blog post comes across and a little too apologetic, perhaps. Just stick the prices up by a dollar and give me a quick “sorry guys, we’ve not raised them in a decade - we need to stay competitive” and I wouldn’t have even remembered it.
The truth is we'd never done it before, so we weren't really sure what the reaction would have been - so we erred on the side of caution. Now that we have data points, if we ever need to do this again we'd likely still take an open, honest, but maybe more blunt approach. Tough to say though because I try to default to default to empathy, which means my takes are usually softer. Those conversations are some that didn't quite make it to the blog post, but finding the right balance for us was an interesting process!
But as a customer I can say that you have a really good reliable service, and one that I’ve shopped around for. You’re effectively my only point of failure for personal artefacts and one of only a couple for anything work related. I do implicitly have an immense amount of trust in your product and let’s be honest, you aren’t charging all that much for it.
This is to say if you were to take the more direct and blunt approach next time I absolutely wouldn’t hold it against you - in fact I’d say you don’t need to devote so much sweat into something that is just another fact of life. Costs go up, I’ll get over it, so don’t worry more than you need to.
I can tell your heart is in the right place though which gives me confidence and thanks for your response too!
Please don't apologize (much) or be timid about applying changes that protect the service, customer experience, and business as a whole.
But that means you are an unhip "lifestyle business" and obviously if you're profitable, you must be doing something wrong. How do you ever expect to have an enormous exit and make your investors rich?
But your response was quite informative. Backblaze is one of the few smaller tech companies I admire from a business side along with Fog Creek, JetBrains and Base Camp.
(I only noticed it a few weeks ago when I was surprised to see their address was Austin, TX)
Realistically, a large pool of users don't think about the long-term viability of a business (all they want is the world for $22 per month).
Being confident in the value you offer and raising prices without groveling shows confidence. I stayed with gsuite and disk time think anything of it.
You guys offer a great service. Don’t be afraid to charge fair prices.
But that said, Backblaze clearly has a strong culture of communication and engagement work their customers, and that really is the path to success. So if being overly sensitive about price increases is an unavoidable aspect of that culture - then keep doing what you're doing.
This here is the reason. For you and I, this is not an issue but some people can be extra ordinarily sensitive to the prices. And even if most of the customer base is fine with it, some will be quite vocal on the internet and one media house needs to run with it and Backblaze will find itself in a PR nightmare.
Though I agree that they unnecessarily wore their heart on their sleeves.
A coupe months ago, Basecamp went down and their blog post was profusely apologetic (almost as dramatic as Backblaze's blog here). People pretty much told them to shut up in the comments and carry on with their work.
That's the thing, this price increase flies in the business world. Not necessarily in the consumer world.
Laziness (and liability, to a certain extent) is that I’m responsible for keeping accurate records and invoices for all my business expenses for 6 years and if I’m not in the right mood to take that on sometimes it just doesn’t quite hit the value threshold for me to process
But I appreciate your points and it might factor into my mentality.
I do actually trust them enough to not screw me over, their price increase history alone showed me that.
Sometimes the quick and forgettable slap to the face is more pleasant than the long drawn out apology - although as you mentioned from your experience, maybe I’m in the minority.
Test-driven development of business operations.
I think this will affect how people compare S3 to backblaze in the future.
S3 has gotten a lot cheaper over time; in 2010, it was $0.15 per GB and today it's $0.023 per GB (Standard S3 in US East). Data transfer costs haven't changed as much but have gone down over time. At today's rate, $6 gets you ~260GB of S3 storage but file versioning will cost you more, restores will cost you more, and you'll have to supply your own backup software. Backblaze for desktop backups is not for everyone but I'd say it is for a lot more people than using an S3 bucket for desktop backups.
And if you want to get a copy of your backup shipped to you from AWS, it’s a lot more expensive and convoluted to get a snowball prepared and shipped than the free service that Backblaze offers.
If you need an S3 like service though, Backblaze offers B2 which is much cheaper - and less redundant.
Interesting to think about that perception though, I didn't consider that aspect of it!
My local council did that with parking fees a year ago. They didn’t tell anyone or say sorry and everyone just sucked it up. But then I can’t cancel my local council account.
that's the point.
Disk prices per byte are decreasing. Bulk bandwidth prices are decreasing. Prices should be going down, not up.
This is inaccurate. If you break down inflation into its constituents electronics, storage, transfers and cpu have gone down dramatically. An increase of 5 to 6 is 20%, which is far more than 10 years of inflation, even if you account for it being averaged.
I don't know how I can read this as anything but spin. Good on ya guys for increasing prices but don't give it out as spin.
The amount of storage each customer occupies has probably gone up considerably in the same time frame. I know my HD size (and backup usage) has quadrupled over 10 years.
And don't forget that the cost of salaries, rents, electricity, professional services, marketing and well, pretty much everything aside from bandwidth and hardware have gone up. In some cases rather dramatically.
Most SaaS companies, when they raise prices, will announce that new customers will pay the new price starting in X days, where X is usually 30 or 60. This gives people on the fence a chance to jump on board at the lower price, and lets current customers keep their pricing.
Then they tell their current customers that their existing price will be grandfathered in for X months. If you make X big enough, most people don't really notice, because when you announce it, it seems far away, and when it happens, they probably don't even check their subscriptions that often.
The whole credit thing felt like a ploy to raise some immediate cash and create artificial lock in, and after this post, it seems like it didn't even really help them all that much.
- Announce price increase for new users to existing customers. Allow them to expand or sign longer term contracts to lock in the current price for X days.
- Apply new pricing to new customers & expansions.
- Migrate existing customers closer to new pricing on a timeline. I'm a sucker for heirloom pricing for your oldest customers :)
Understand where you are in the growth curve though; if you're growing 200% YoY and your early customers are thought leaders, then focus on new customer pricing and don't worry about raising prices. Oh, and whenever possible sell differentiated, mission critical products to businesses whenever possible.
They weren't mad, but they were surprised. They said, "Damn, it's about time. I've been wondering for a long time when it was going to up. Good for you."
Yeah, I can understand that not fitting someones use-case. Backblaze on the other hand didn't offer client side encryption when I last checked, so I'll have to stick with the slow one.
The one thing that wasn't spectacular was the signup flow. I found it a bit confusing: IIRC if you subscribe to Backblaze from the prompt in the application, it doesn't automatically configure when that subscription is purchased, so you have to download the custom installer or whatever the normal process is (I don't exactly remember, except that it was a bit less smooth than I wanted).
Nonetheless, once that was out of the way, my brother's two-seat setup works great, and it has given me considerable peace of mind that he will not simply lose all of his audio production files, and be crushed.
B2 is great value and I use it wherever I can.
That said, I generally find it easy to raise prices. Indeed, price discovery is "fun" in my tiny tiny niche. Basically, I just increase the price every time a new customer signs up. I honestly think this is completely fair to both past and new customers. Sign up early and you reap the benefits of lower cost. Sign up for a longer term and you keep those benefits.
It's a struggle with inflation, and I strongly appreciate the argument in accounting for it. It is so obviously real, yet customers seem to have an extremely hard time wrapping their heads around it.
Luckily, was able to restore data by buying identical external drive, resoldering bios and voila - turns out it was just the controller issue.
May I ask (because Babklazers hang around here) why this limiation? Can it be increased? Can it be turned off? I don't have that much data and I feel I'm really overpaying for my gigabytes and better buy some home NAS or whatever. Probably wouldn't feel that way if I would be storing TB's @ Backblaze :)
And before I get comments about B2 and Duplicity, my Linux workstation is also our NAS, so I'd be backing up roughly 4-5TB. I greatly prefer Backblaze, but not enough to pay an extra $200 a year.
They've said in the past that this is an important reason not to release a Linux client. Backblaze backup is meant for backups of personal computers, which generally have relatively limited storage themselves capacity. Add a linux client and many people will start running it on servers with many terabytes of drive capacity.
They have a page on their website about NAS backup, and it points to B2 for a reason.
In practice people with "a lot" of data tend to put it on a NAS.
On the other hand that's only a single hard drive's worth of data. Somehow it's become almost weird to have even one big drive inside your computer. Even though an 8TB drive (the best price per byte) is only $150.
Its absolutely the correct business decision, and as you note, you are more than welcome to use B2 and pay per GB for as much storage as you want.
Although I do use restic on my laptop (backing up to b2) I wish they had a nice official Linux client for desktops
(unless you are talking about non-b2 :) )
> they said the biggest user was storing 430TB on the $5 plan
Here is the histogram of Personal Backup sizes at the end of 2018: https://i.imgur.com/iVEuwUT.jpg
You will need to "zoom in" and then scroll over to the right to see the largest at that time.
> I backed up 11TB. As long as we are outliers I don't think it's an issue.
I work on the backup client, and I like larger customers for the reason that if the client works for the larger customers today, then it will work really really well for average size customers for several years to come. Larger customers help stretch and test the datastructures for me. :-)
We politely ask the larger customers to recommend Backblaze to their friends and family with less data. We live on the averages, so as long as that works out, we're happy to free customers from worrying about exactly how much they store.
And I just double-checked and it looks like I'm only backing up a little less than 2TB in Crashplan after all.
That said, 5TB isn't a huge number. It could be as low as $200 of hardware cost. With them paying $60 a year, they may or may not end up being a drain on the company's resources. Though they're definitely not paying a full share of the fixed costs the company has.
Edit: Though the full scenario is paying for three clients, so $180 for that much data, and that should easily be profitable.
Their blog posts say it's about $3500 without drives.
I didn't pull $200 out of nowhere. If you stuff a $3500 chassis with 60 $325 12TB drives (current amazon price) and you're getting 80% storage efficiency, that's exactly $40 per usable TB.
Add an extra 25% for safety, and then add a big $400 per month for power/data/space and replacing the one-ish drive per year that fails. Assume you throw the entire thing in the garbage after five years. These are pretty pessimistic numbers, but it's still only $92 per TB per 5 years. With three accounts that's $460 dollars of direct costs on a revenue of $900.
To be profitable on 5TB in one account is much trickier. It depends on the hosting costs far more than the hardware costs, and those are hard to guess. If they're over $150, it might be impossible to break even on direct costs, even given more than five years.
B2 is clearly going to be profitable per byte. It would charge $20 for 4TB and $25 for 5TB.
In comparison to that, $18 for 4-5TB is probably not losing money.
They published that they use 17:20 erasure coding. Have they published exactly how much overhead they get from their filesystem? I don't think it's unreasonable to blindly guess 5% for that.
The published drive failure rates are about one drive per year per 60 drive vault, which is exactly what I said. And we can estimate the labor cost of replacing that drive as tiny.
What we don't know is the cost of power, networking, and physical space for the server. So I picked $400 (minus the drive fraction) per month as a nice round "this is double what I can find for many colocation offers, but still avoids losing money" number.
I switched to Arq once I had multiple computers to backup and paying by the GB for me is cheaper than paying per computer.
From a client-side perspective, Arq and Backblaze each have their own pros and cons.
For everyone else, it's probably best to start with high prices.
Jeez, clearly they did not hire patio11
While they technically did _raise_ prices, I'm quite certain they had a lot of leeway to have raised them a lot more
I've been using Tarsnap for a couple years now for our SAAS. After receiving the first month's email receipt for $0.25, I replied: saying something along the lines of "damn this is cheap! you could charge a lot more!". No reply of course. He's probably heard it a million times already.
Having gained a bit more experience with pricing our own product this past year, I think it might not be as simple as "he sucks at business".
Here's some potential (and highly speculative) reasons:
- He may not need the money. He's got a respectable day job that pays well.
- Higher prices mean less value for your users. Less value means less geek cred/love. I'd recommend Tarsnap to a fellow techie in a heartbeat. I probably wouldn't if it started at $100/mo.
- Higher prices mean you sell to a different audience with more responsibility. High touch sales, support email threads with 10+ folks all demanding different things, handling exotic types of billing, etc. Many devs don't like dealing with this kind of stuff.
- What if he's doing this as a lead gen for his consulting services?
I do hear that quite a bit, but I also hear a lot of people saying that Tarsnap is too expensive. I figure that as long as I have complaints coming from both directions I'm probably somewhere close to the right price. ;-)
Sorry about not replying -- I usually do reply even to emails like that, but it's possible that I was overwhelmed with email at the time.
This is part of it -- Tarsnap wouldn't get nearly as much free advertising if its prices were higher.
No, I'm not doing that. In fact I do very little consulting these days.
So let's say that you pay your senior engineers $150k, 6 months is $75k per engineer, say 3-5 engineers, that's $225-375k. Plus QA time, etc.
It might have cost the company $500k just to implement a program that would reduce their revenue by letting people by in at a lower price.
I'm not saying this is the case here, but I often see companies I've worked for not do this kind of math, the opportunity cost of implementing a feature or product.
Two things you can improve are (1) more official sdks (2) see if you can simplify your REST APIs.
Other than that, thank you! You are awesome
Personal is cheap but too basic (keeps file versions for 30 days only, no backup on external drive/NAS). B2 is seems to be too expensive for my 1TB of data.
They also lacked a data center in EU, learned my lesson with Crashplan on that one, though I hear that is about to change.
Currently I've settled for Acronis True Image. Not exactly the same, but more options, faster to get things running again after a proper HD crash (tried that a few times already) and they're cheaper than B2.
But yeah, had I been a customer, the price hike would have been totally fine.
The main issue I have with B2 is that I'll be using some client where the API transaction costs are a complete unknown, at least to me. I have no idea how many API calls of the various sorts the different clients will use, and how they scale with my data.
I have a almost two million files, if a client uses one or two B or C API calls per file when processing the backup set, then that's 5-10 bucks right there.
Another thing you can do to protect yourself if that's a big worry is by placing a Cap or an Alert for a transaction type. That way with an alert we'll notify you when you're nearing that cap so you'll have forewarning instead of just being charged (or if you set the cap, we'll stop until it's been lifted or reset).
I'm signing up this weekend for a personal account to backup around 100GB of family photos and videos.
I've been using the HDD reliability data to choose my drives for many years and this looks much cheaper than S3. I was also impressed by being greeted as a linux user and sent to this page when I hit sign up: https://help.backblaze.com/hc/en-us/articles/115001518354-Ho...
I'm bookmarking it, that's for sure.
It seems like I have this discussion at work from time to time. The faster we grow our customer base the harder it is to monetize our improvements, because we have a smaller and smaller pool of new users.
Getting big before you get your feature set and cost structure down means you have to go ask forgiveness from old users.
If instead you launch a big ad campaign after improving functionality and increasing the prices...
However, if the cost of switching is very low, you'll find it's much harder to raise prices. In industries and products where switching costs are low, prices tend to be much much lower anyway, especially if those users are easy to reach.
No, this is GREAT, but you have to do it right! You should have increased dramatically the pricing for new customers to keep the growth at acceptable levels (in terms of absolute numbers). This way you would have had a lot better margins from new customers and could have scaled your business in a more controlled way.
> raising prices on the day when the industry started having fewer options would have been the right financial decision, but not the right Backblaze decision.
It would have been the right Backblaze decision, because you would have secured a decent margin to provide the best service you can to your customers.
> We’ve all been subjected to price increases that were clandestine, then abruptly announced and put into effect the same day, or were not well explained.
Not sure if I use radically different services, but this never happened to me! Usually, you get months of time in advance to get adjusted to the new pricing.
I have had to do it twice so far (my system has 6 drives in it... all included in the standard plan!)
Been super happy with the service.
Large initial backup is a problem indeed but you can split your initial dataset for months.
B2B products often have annual price increases built into contract.