Product Development January 7, 2021

How do you choose a pricing model?

Žan Anderle @zanderle

I'm in the process of building Let's Play Board Games (a web app for better/easier organizing of game nights) and am struggling with figuring out what the pricing model should be. I want it to be subscription based, but I have no idea how to decide between freemium (and if it's freemium, how to pick which features are premium), 30-day free-trial, or something else?

How do you all usually go about this? Is it just a simple process of trial and error, or do you have any tips?

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    Rob Walling gives great advice that your pricing model should be directly tied to your customer's value metric.

    For an app like yours, I'd say that the value metric is that the more events that the your customer successfully plans using your tool, the more value they are getting out of it.

    So with that, your pricing model should ideally scale with the volume of your pricing tiers with that metric.

    As someone who does plan a lot of board game nights with friends (more casual game nights), I wouldn't personally be willing to pay a subscription fee. I could however see this being valuable to someone who owns a board game store, someone who is running a large event (at a convention), or someone looking to playtest board games.

    With those groups, I think accounting for size of the event (maybe multiple groups of people), might also make sense as a value metric in addition to frequency of events.

    I personally would advise (w/o having full context of your product), that a free tier for personal users would be good (once a week, limited group size). Then having at least two pricing tiers that try to target local game stores (small, weekly events), and large convention type events (massive events with many sub groups).

    Hope that helps!

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      That is super helpful and gives me a lot to think about. Thank you so much!

      I guess my concern is that if I start with a free tier I’m then fully committed to it forever, and if I realize further down the line that subscription based service would make more sense, I can’t make that change anymore because it would be too damaging. Do you think that’s a valid concern?

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        I think your concern is certainly valid. There's nothing wrong with adding a free tier later and using as a potential tool for growth later. Ideally, if you have a target audience/community in mind already that will be your primary paying customer, it makes the most sense to build to their needs and gather their feedback. I think asking some folks on your email list could be pretty helpful (ask more what they want it to support, not really what they would be willing to pay for)

  2. 2

    I didn't choose a pricing model.
    A pricing model chose me.

    1. 1

      That's funny, but there's probably some truth in there too 😄

  3. 2
    • Always provide a way to test your app, even if it's with limited functionalities - there are usually SUPER SLIM reasons not to (one example is data-intensive solutions...but that's probably not what your app does)
    • Decide whether you want to A/B test getting card-details vs no-card-details
    • Use disabled features to hint that by upgrading from FREEMIUM to PAID you can get a ton more
    • What features does your audience most like and want out of the product you’ve built? Make a list and see which ones you can give out for FREE.
    • What price would be too high for them to consider purchasing it? Ask your audience how much they value your product...
    • What price will reflect questionable quality considerations? If it's too low, they might think you're just not worth it, but if you're pricing it too high....no one will want to pay for it. What price would be a good bargain?
    • How would they feel if the solution you sell was to suddenly disappear?
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      These are all great and exactly what I've been looking for! Thank you!

      The last point I'm not exactly sure what you meant. Could you elaborate please?

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        Mmmmh - elaborate on how they'd feel? Heck I don't have a crystal ball to read other people's mind....

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          No, I meant how does thinking about that inform figuring out pricing model

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            Think about competitors, their pricing, their functionalities, their audience... If you disappear today, what will your customers do? They sank resources ($$$$) into your product and now, pooooof gone....

            Probably they could move over to another player in the same space.

            However, sometimes people do these research ahead.

            Sites like g2/alternativeTo etc, give users a heads-up on TRUST, pricing functionality etc etc. You need to keep these competitros n mind when pricing yourself, just like "you're fighting your last fight against them, how do I win them over".

            My point is: you don't exist to them until you can prove that you're here to stay and win, and they should do business with you because you re not a liability.
            Price your product too low, and you re one step from shutting down your business

            1. 1

              Ok I get it now. That's a good point. Thank you for taking the time to explain :)

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    Will it be similar to Doodle or it will actually be a Board Game app?

    Increasingly I think a Free Forever tier is a great way to go.

    You might want to build up a user base with free forever and then based on feedback, build in premium functionality. I know for a lot of the game sites, they have video ads during play (for 15-30 seconds). People could pay to get rid of this.

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      It will have Doodle functionality built in, but it will also have a bunch of features specific to board games (BGG integration, voting on which games to play, etc.).

      Yeah, that's another model I was considering, but I'm just having a hard time making an informed decision between all these options.

      Why do you think free forever is a great way to do it? Because it's easier to build up a user base, or is it something else?

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        Will it be a game itself?

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          No, it won’t be. Might have some elements of it, but that’s it.

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            I would say for a lot of early stage startups that are going after consumers, free forever is a great way to acquire users and start a feedback loop where you can continuously improve your product. Any nominal amount they pay won't really do much for your business but the barrier to using it will lower the number of data points for you to understand what you're building.

            Over time, if you build something that people like and use a lot, there will be ways to think about monetization. But, one step at a time. Your primary concern is building something that people want to use.

            1. 1

              That’s a great way of looking at it. Especially “one step at a time”. Thanks, I appreciate it!

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