Pricing is a dark art but essentially tiered pricing is usually about going after different sets of customers who have clearly different needs and clearly different propensity to pay.
For example, you sell premium email accounts which give you a back rub when you send an email. There might be some luxury retail customers who love backrubs and would pay $30 a month for that service, but they're not gonna pay $20.000. But a hedgefund might see this as an essential part of their recruitment and retention strategy. They have very different needs like email audit, but also they might pay $1000 a year for one person. You want to tier those customers out.
Metering works better when the thing you sell has some real cost. An API that sends you a handwritten letter giving you a personalised compliment - that should be metered because of the cost per unit. You are encouraging the user to use your product less which is often not ideal.
>Why don't we see a greater proportion of metered pricing vs plan tiers?
I think it's because most sw companies pay very little on cost of goods so whether you use 10.000 or 10 of their product doesn't cost them more or less. Tiers are a way of offering the 'same' product to two different people who have different budgets and optimising for those budgets - this happens with software quite a bit.
If you have low cost of goods and one type of customer - just charge on price. No need to cargo-cult other start ups.
Yeah, we have perhaps 4 quite different customer types [student, researcher, research group/lab and student classes/lab]. Currently we have a single lab tier which was designed for research groups but it seems a number of universities want to use that tier for their classes. We didn't expect this use-case and the "per seat" pricing in this tier doesn't work for this case.
We've run the numbers and generally the two lab based use-cases look like so:
Accounts used for research contain:
- a low number of experiments
- a high number of participants/results
- long(er) "active" time per experiment
Accounts used for teaching:
- a high number of experiments
- a low number of participants/results
- short(er) "active" time per experiment
The conclusion we've reached is that we need tiers based upon n experiments and n participants/results (with options to increase both). This would allow lab licensees to add/remove/transfer accounts at will.
I'd still be interested to hear from others who've moved from "per seat" to other metrics.
For example, you sell premium email accounts which give you a back rub when you send an email. There might be some luxury retail customers who love backrubs and would pay $30 a month for that service, but they're not gonna pay $20.000. But a hedgefund might see this as an essential part of their recruitment and retention strategy. They have very different needs like email audit, but also they might pay $1000 a year for one person. You want to tier those customers out.
Metering works better when the thing you sell has some real cost. An API that sends you a handwritten letter giving you a personalised compliment - that should be metered because of the cost per unit. You are encouraging the user to use your product less which is often not ideal.
>Why don't we see a greater proportion of metered pricing vs plan tiers?
I think it's because most sw companies pay very little on cost of goods so whether you use 10.000 or 10 of their product doesn't cost them more or less. Tiers are a way of offering the 'same' product to two different people who have different budgets and optimising for those budgets - this happens with software quite a bit.
If you have low cost of goods and one type of customer - just charge on price. No need to cargo-cult other start ups.