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What I Learned From Increasing My Prices (extendslogic.com)
369 points by kanamekun on July 26, 2012 | hide | past | web | favorite | 41 comments



Great post, way to walk the walk about the scary thing called making money with your startup.

An aside, posts like this make me wish hn had a separate section/tag simply called 'results', separate from opinions.

I enjoy the variety of geek-interested content here, but this kind of a post for me is real signal.


Thanks for sharing.

I don't think it was much the raising prices part, but the re-branding your product to resonate with the market. This is something a lot of people out there don't get. That is why you don't purchase used BMWs anymore, but certified pre-owned BMWs. The branding is very important. The awesome thing is that you went and took a structured approach to it, and then used the data to re-focus your brand to the market that will buy your focus. The money will continue to pile on if you keep using such approach. I would suggest looking into offline marketing tools to broaden your horizons.

Good luck.


I tested increasing prices without touching anything else and it resulted in significant revenue increase but I hit a local maximum as the segmenting was off and value communication needed to be improved. The right branding with the wrong pricing can actually hurt so it's extremely important to get both pricing and value messaging (including the qualitative stuff) right.


The brand and the price are not separate entities. The brand is the entity and the price is a property of the brand. If you change the price you modify the brand, but if you change the brand you completely change the price.


Very true. Back when I released InfoCaptor [1] in 2005, I released the product as a Data browser product with Tabbing (remember browser tabbing was just invented by Netcaptor) so I thought it would be cool to have a browser just for database and such. I released it at around $35.

After lot of experimentations and frustrations I finally rebranded it as a "Dashboarding and BI solution" (see it is a solution and not calling it a product) and raised the price 10 fold, yep around $300

Not to mention, it automatically entered the "league of big BI solution providers" and increased revenues (10 times ofcourse). Still my product was considered cheaper.

1. [ http://www.infocaptor.com and https://my.infocaptor.com ]


I cannot find a clickable link to the author's product on the blog post. I think you are leaving money on the table right now!


Author here. Thanks for mentioning that; I've gone ahead and added a link.


Oh also I actually read the whole article, saw your pricing page preview, bookmarked the article and the left.. And only just realized now I still don't actually know what the product does.

I suggest you also include a product summary somewhere on the blog.


You welcome! Hopefully it will lead to more visibility to your product. I really appreciated your blog post!


"Create professional client proposals in minutes" on your front page is very blurry, and detracts from the otherwise nice design.


And that's, ladies and gentlemen, how you brag about having a Retina display, geek style.


I'm not on a Retina display and it is blurry for me as well.


Alas, no Retina here.



I really liked reading this. Giving relevant names/titles to pricing tier can be very effective. I immediately understood the diff. b/w freelancer vs studio instead of saying Basic vs Premium.


I think the naming might have yet another effect: Customers now feel an association to one of the tiers. For a studio customer to buy the 'freelancer' tier might feel unprofessional / dishonoring. I'd like to know how much effect just the naming alone has vs. the price / feature changes.


I had more people signing up for the higher tier plans when I a/b tested the plan names. Don't remember what the numbers were exactly but it was interesting to see behavior change because of the plan names.


Have you watched Dan Ariely's TED talk on irrational decision making? Your revised pricing tiers reminded me of the discussion about tom, jerry, and "slightly ugly" jerry around the 15:00 mark. If you haven't seen it, it's interesting that you've stumbled on the effect independently.

You might find that further tweaks push more people to the agency tier by creating a "slightly ugly" agency instead of a "slightly ugly" studio -- freelancer.

http://www.ted.com/talks/dan_ariely_asks_are_we_in_control_o...


Love that talk, thanks. I do have some ideas for tests I want to run in the future when I get back into optimization mode.


I've wanted to a/b test my plan name but don't know of any good alternatives. I have a free WordPress plugin and have a paid-for version which adds more features so it's called generically 'Premium version'.

The people who buy it come from different backgrounds and I don't want to segment the product.

It's a recipe plugin and the premium version adds a nutrition tab to satisfy the nutritionists and category listing pages for people who want to organise their recipes more than what the free version allows.

Any thoughts on a name?


Don't take it the wrong way, but you're trying to squeeze your users into the rigid frame of your preconceived notions about who they are. Changing people is a very difficult job. I understand you put a lot of effort into your product and feel entitled to steer it as you see fit, but it's far more productive to do what the topic post suggests - ask the users who they are and what they care about. In other words, reconsider your decision not to segment.


mmh how about "Hobby" and "Passion"? I got nothing. To be honest I'm not sure whether those features are a good way to diversify, but then again I probably don't know enough about your product.


Yeah, the relevant naming was great. Seeing it go from rough segment clustering to your website design was very neat.


I appreciate the insight about naming the segments. It reflects on "benefits, not features" where you describe what you offer based on the context of the user, not the context of your application.


Great post. One thing that wasn't clear to me - how did your pricing changes affect existing customers?

Did former "basic" accounts get automatically changed to "Freelancer" and start getting billed the extra $10 the next month? If so, how did you handle notifying users and was there much complaint about the change?


I grandfathered existing customers in so they still have their existing plans.


This is not only the right thing to do, but you may notice higher retention rates in the grandfathered group. Now they're getting a great deal and may be reluctant to cancel.

I have a forum membership grandfathered at $8/mo from when I subscribed 7 years ago, which over the years has gone up to $50/mo for new members. Even if a few months go by where I don't visit the forum, I'm not going to let that thing lapse. :)


A very interesting post! Thanks for sharing that!

I have one question though: Did you grandfather your old customers in? So you still charge them the old price and give them all features?


Seems like. From the post:

> All I did was change pricing for new customers in the backend and updated the marketing site to reflect the new pricing tiers.


If you do that I think you should so give an email to those customers let them know that they have been grandfathered in. It will result in happy customers evangelizing your product.


Honest question: Is sending an e-mail just to show a sample somehow more efficient? Why not just provide a link to the sample? I tried 6 times to get an e-mail sent and finally got one on the last try. Almost gave up.

Edit: No, I still don't have an e-mail and no information as to where I can find a sample


Sorry about that. What happened when you submitted the form? Did you receive a confirmation message saying that you'll receive an email? If so, you might want to check your spam folder in case it made its way there for some reason.

Two reasons for the email: 1. Marketing purposes. So I can send additional educational (and hopefully useful) content. 2. I actually take the name and email address then dynamically create a PDF proposal using that information on the cover page.

The execution is a bit sloppy as it was an experiment and quickly put together so I'll need to work on improving that now that I'll be keeping it.


Interestingly, raising or lowering prices for iPhone apps have not changed my revenue in the slightest. I wonder if that tells us anything about the iOS app market?


i think its simple and recurrent:

- have clear names, not stuff that "sound trendy like blehmium"

- price by comparing market prices and the targeted customer (hint: its the basics at business schools). Aka niche market? high prices. Large distribution? Low price. And there's many middles. Just don't start thinking you should "ask zillions" or "make it super cheap".

Think first.


Raising prices a few years ago with my eCommerce site lead to an instant 30% increase in profits, so it really is powerful and is something that has the potential to do amazing things for your business. Great post, and congratulations on all your new dough!


(off topic but thought others might be interested)

What is the difference between BidSketch and Quoteroller?

I ask because i tried a trial of Quoteroller and it didnt work and had never heard of your site before now.


getting a timeout when I try send myself a sample.


Sorry, just restarted the service. Thanks! I need to add monitoring to that service since it's now past the experiment stage (was being tested against a video at one time).


Gateway timeout for me as well, but I love how after hitting the submit button on the form it simply redirects to the page where the samples are at. That way I don't have to wait for a link to be emailed, saving me a couple of taps. (I actually felt a little duped — I was expecting some kind of dynamically created URL; I felt silly for not have simply guessed 'samples.bidsketch.com'.)

The site looks great and the plans are very clear; if the service itself is anywhere as good, I'll be signing up for sure.

EDIT: page loaded. Turns out that I do have to check my email: "Your template is on its way! Please check your email for the proposal in a few minutes." That's too bad.


Seems the sample is timing out- just an fyi.


Should be good now, thanks!




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