I revamped pricing this morning!
This morning I launched my first (scary!) experiment: a new pricing tier.
Quick background, railsdevs is a reverse job board for Ruby on Rails developers. I charge hiring businesses $99/month for full access to the site.
The goal of the new pricing model is two-fold:
- Better incentive for me to help businesses hire devs fast
- Keep railsdevs accessible to bootstrappers and solopreneurs
Tier 1: Hire freelancers and contractors
- $99/month
This is largely unchanged from the current plan, but you can no longer hire full-time employees (only freelancers and contractors).
Tier 2: Hire full-time employees
* $299/month
* 10% of hired dev's first year salary
This plan will also include a concierge onboarding service, priority video call support, and hand-picked developers from me every month.
Why?
Because there's currently a weird dynamic with a monthly subscription. To increase revenue I'm incentivized to keep you on the platform as long as possible. But I want to help businesses hire devs as fast as possible! Which goes direct against that.
An additional payout on full-time hires realigns our goals: hire their next developer, fast. I'm encouraged to help as much as possible without worrying about cutting into revenue.
I'm still dedicated to being the best place for bootstrappers and solopreneurs find freelance Rails developers. Keeping that plan at $99/month ensures it remains approachable for one-off help and using the service only when needed.
Existing customers will be legacy'd in to the original plan. They can continue to pay $99/mo and hire whoever they want without paying the 10% as long as they keep their subscription active and paid.
This is an experiment. Will it crash and burn? Maybe! But if it works then railsdevs becomes one step closer to becoming a successful open source business. 💪
(Funny running into you in so many different internet places!)
Interesting approach, Joe — assuming US pay rates, you're likely still getting a discount on what a recruiter would cost for the same hire. Some questions on this after spending a very long time in the HR space:
If they're paying such a large amount when they make the hire, what's the reasoning behind keeping the monthly fee in place?
I'm also interested to know how you are holding folks to the 10% fee here — I know recruiters have paperwork in place with employers and hold the keys to the relationships between candidate/employer in most cases so they know that a hire was sourced from them and all the details throughout the process.
For you it feels like it could be a bit more dangerous since you aren't (I think) acting as a traditional recruiter throughout the hiring process — with fees running up towards $20,000 I could see this as a potentially dangerous spot.
(I'm everywhere! 😆)
Great points and questions! You're absolutely right, 10% + a few months at $300 will usually end up being cheaper than a traditional recruiter or firm. The monthly fee should be negligible compared to the 10% after signing a new hire.
Why is it there? To create urgency. If there's a monthly fee then employers are encouraged to hire fast, which means moving fast with communication with candidates. Which means a better experience for developers!
Currently nothing is in place to hold folks to the 10% fee... I'm working entirely off of the honor system right now. I have a lot of ideas on how to track this and better attribute connections, but nothing is built out yet. If it turns out this pricing is a flop then I have to throw all that work away. Once this proves to be worth it I will start building.
When you say "dangerous" do you mean from a legal or moral standpoint? Or that I might never see the 10% because I don't have a contract in place?
Coming from the employer side, my initial reaction is that if I'm paying someone a placement fee, then paying an additional monthly fee is unexpected and feels a little odd.
Recruiters may be more expensive but they are:
That model is very typical and mixing a subscription with a placement fee may cause some confusion.
I get the idea of pushing folks to prioritize moving quickly, but I'm not sure a monthly fee at that price point will add that much urgency — $299 is less than a single job posting on many paid boards, and promoting high-priority jobs on a job aggregator can eat through way more than $299/month.
I also wonder if a company isn't motivated enough to move with some urgency during the hiring process will be willing to pay a five figure placement fee at the end of the process?
In an alternate world, I wonder if there is a model where you only charge a monthly fee but raise it substantially for employers (as you prove the value is there).
You might find that smaller companies and tire kickers are churning out after a month, but if I'm hiring 10 Rails devs/year and railsdevs can get me a couple of strong interviews for every new req, replacing some of my job advertising budget with an annual railsdevs subscription seems like it would be a reasonable investment.
The latter. I suspect that early on when you have personal relationships with folks it won't be a huge problem, but even then, paying out that much is always going to get run up the chain through finance and HR so you'll have to be careful who you are working with.
I think there's risk from very early on that a company might start searching their ATS to turn up a previous application from the new hire to try to dispute where they "found" the person or deciding that because a contract wasn't in place they won't be paying the placement fee.
Some companies have no outside recruiter policies in place specifically to avoid a hiring manager going rogue (without fully understanding how outside recruiters work) and accidentally sticking the company with a huge, unexpected bill.
It sounds like you are aware that you might just have to accept the risk of losing the fee early on to see how the model works so I don't think I'm telling you anything you don't know about the danger, just wanted to stress that it is there. HR budgets tend to be really tight, and a surprise $15k placement fee will definitely cause some stress for everyone involved!
I hope these thoughts with my employer cap on are helpful — I'm excited to see railsdevs continue to grow!