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17 Comments

Pricing thoughts

Some words for me (https://somewordsfor.me) has had a decent amount of signups. There has been a good amount of traction in the trial, but with a drop off in users once the trial has ended. I think the issue may be the price ($4 per month) and I would love to hear your opinions.

Here are my thoughts:

  • Change to a yearly price (cause journals are a long-term commitment) of say $39 per year

  • Drop the price to something ridiculously low (focusing on number of users instead), say $12 per year

  • Change to a tiered system, say free if you use just email, with premium features that your pay for like email/sms reminders, and sms submission functionality

Thanks for the advice!

  1. 4

    In my opinion:

    1. You should make the trial longer to help build the habit. If the drop off is really high, even a two months free trial.
    2. Don't try to compete on price. Price-sensitive customers are the worst, in my business experience. They don't value your product, complain a lot, abuse support. Plus, you won't have the resource to advertise, make your product better and you will need 4x more customers to make the same amount of money if you charge just $12.
    3. add a yearly and a lifetime option (2x-2,5x the yearly price). Let people choose between monthly, yearly and lifetime. I usually go for the yearly subscription, but a lot of people want the monthly commitment.
    1. 1

      This reply contains very good points, and I would like to stress the trial length experimentation. Building habit-forming products is a delicate art, and I recommend Nir Eyal's "Hooked" https://www.amazon.com/Hooked-How-Build-Habit-Forming-Products/dp/1591847788 to make sure you actually capture the full cycle. A month or 6 weeks may work best for you.

      Anecdotally, I read (somewhere) that it takes 26-28 days for a habit to truly form. Help with reminders, triggers and actions (as per the Hook Cycle - do you have those in place?) and a 30-day trial will do the trick.

      How did you land on 18 days for the trial, by the way?

      Make the yearly option heavily discounted. Retention will likely be high if you can get people to "invest" by writing a lot, and re-engage them when they drop out. People often don't like losing their discounts once they have them, so renewals will be quite high.

      I also love the lifetime option. This will get you evangelists and public supporters for... well, life :)

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        I was inspired to build this while reading the book Atomic Habits. While the research differs, the general consensus is that it takes between 18 and 28 days to form a habit (good or bad), so I settled on the lower number. Perhaps you're right, I should extend the trial to a full month.
        The only issue with an extended trial is that while emails are cheap for me, if the person selects SMS as their notification option the cost to company for their trial could be up to $0.9. While this doesn't sound like much, at scale that is significant for a free trial. That being said, ~90% of users are using email instead of SMS so this shouldn't be an issue

        1. 1

          Very good point with the cost! Well, the good part: you have a measurable CAC then, so that's great!

          I would certainly implement limits for the trial, once you see some regularity in behavior. But if it's between investing some money in a customer and not leaving them enough time to making it a habit, I would go for investing every time. And I bet you trust your product to achieve that too.

    2. 1

      That's an interesting idea. Tiered prices tend to perform better overall, so maybe that'll be a benefit too.
      Also, yeah. Price sensitive customers are the worst. Even worse are free customers ;)

    3. 1

      +1 for 2nd point

  2. 1

    Hey @HermanMartinus --

    I previously worked on the pricing strategy at Codecademy, which is similar to your business because it requires a minimum of months-long commitment to be successful. We saw success with two changes relating to your first idea, a yearly price:

    1. Make yearly pricing the default option available.
    2. Make the savings of the yearly pricing option very explicit.

    These two changes alone motivated many more people to choose a yearly subscription than we anticipated. You'll likely find that users selecting the yearly price tend to be some of the most sticky users as well. And it will give you more margin to offer discounts.

    I'm also curious: have you considered charging different prices for different customer segments?

    I'm working on a new API, Modern Pricing, that helps businesses earn more revenue by implementing personalized pricing. You could increase both conversion and avg revenue from new subscribers with only a handful of easy changes. Let me know if you're interested to learn more ([email protected]).

    1. 2

      This is fascinating, I'll dig into it @jmarbach! I'm going to spend the day making the yearly price look like the best option :)

  3. 1

    Whatever you do, don’t drop the price. You need to make your software sustainable for the long run.

    The thing is people don’t like to pay for subscriptions unless there’s no other choice. If they already have another choice in desktop or tablet software that they only pay for once, they are not coming back. A yearly price with the option to make it lifetime (as @Luqa suggested) would probably be more fitting to your app.

    1. 1

      I've taken @Luqa's suggestion and have made 3 price tiers, monthly at $4, yearly at $39 and lifetime at $99. Let's see how this experiment goes!

  4. 1

    Have you spoken to the people who are power users during the trial but then drop off?

    Why did they drop off?
    Why did they use it in the trial?
    How have they tried to solve this problem in the past?
    How important is this problem to them?

    1. 1

      I've started sending out a request for feedback email with a similar set of questions to the users who's trials have ended, but very few responses so far. I'm working on getting that feedback from users, but in the meantime I'm just thumb-sucking the issue.

      1. 1

        Haha, what does "thumb-sucking the issue." mean? I've never heard that before

        1. 1

          Haha, I think it's colloquial to South Africa. It means I'm "making something up" or "sucking it out of my thumb". So "thumb-sucking the issue" would me "making up the issue".
          I've never thought about this figure of speech before, but I guess it is a bit obscure. :)

          1. 1

            Ahh interesting, you learn something new everyday!

            @Daolf posted this: https://www.indiehackers.com/product/scrapingninja/-LoJy2TRU8n0ZxugMDM_

            He gave people loads of free API calls if they jumped on a 15-minute call, maybe you could offer an extended trial if a user jumps on a phone call?

            1. 1

              I have just finished building out a promo code system. That may be useful :) Thanks!

  5. 1

    This comment was deleted 7 months ago.

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      I have just finished building out a promo code system, so it may be worth going and distributing some codes ;)

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        This comment was deleted 7 months ago.

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