December 10, 2019

$750 in sales in a few hours (BF experiment)

Bruno Lemos @brunolemos

I started charging $10/mo in October (it was free before), but the growth has been way too slow (or I’m too impatient). The MRR is at only $155/mo.

So at Black Friday I decided to make an experiment: an insane limited-time offer. Instead of $10/mo, I charged a $25 one-time fee for a lifetime license and tweeted about it.

Around 30 people bought it in the first few hours. It was an interesting experiment. I wonder if for some types of product we should stop pursuing the magic recurring model and sell it as one time instead.

Anyway, when seeing the sales incoming, I had two opposing feelings: 1. Getting these sales is so awesome; 2. Am I making a mistake because these people could pay monthly?

So I interrupted the sale after 12h and went back to monthly price. In retrospect, this interruption was a mistake because I lost all the black friday traffic and potential revenue. I could have just tweaked the deal instead.

I will keep making experiments with one-time plans. But the main model will continue to be a subscription for now.

The total revenue for November was $978.

  1. 3

    After a quick look at product and that, I'd say DevHub would probably be better following in pricing model as Sketch.

    Charge $60/yr for a license. You download the app, activate your license, and as long as your license is in it's updates window, they get updates to the app. Once that year is up, their app doesn't stop working, but they don't get anymore updates, in which case if something changes in GitHub's API, could cause their app to break. But just need to make note of that.

    Monthly subscription isn't for every product. Some products just aren't worth the monthly fee, but a yearly license renewal fee is something they'll make the payment for.

    Being as DevHub is an electron app, this model should work well for you, as you don't have the overhead of infrastructure to maintain it. You can theoretically package the whole thing up into Electron, and just have a licensing server that your app pings periodically to say "Hey, is this license still valid for updates? Yes? Ok, is there a update available?" etc.

    1. 3

      Hi! Thanks for checking it out. Until yesterday it had a very similar plan to what you suggested.

      I’m currently making pricing experiments.
      All of these have converted:

      • $10/mo
      • $29/3-mo
      • $60/y
      • $25 on time
      • $99 one time

      I just haven’t decided yet which ones will be chosen for the longer term.

  2. 2

    With your pricing structure its important to keep you objectives in mind:

    1. you need to make enough money to provide the service.
    2. the service needs to provide enough value to justify what your charging.

    Clearly you learned something about changing your pricing structure - that you have elastic demand for your product. Meaning that at $10/month no one wants it, at $25 forever, everyone wants it.

    I would have structured your sale a little differently so that you could be more precise about where exactly is the point of highest marginal utility - meaning the highest price you can get, while still maintaining a high demand for your product.

    I think the logical next step is to try to price at something like $5/month and see what happens to your demand.

    Example: You priced $25 - forever, lets assume like 2 years as the lifespan of "forever". (Assumption is if you sold it instead of "forever" you sold $25 for 2 years your demand would have been the same). So in essense you have a 90% discount over your normal asking price (which you know had low demand.)

    Hypothesis:
    See what the delta is for demand if instead of a 90% discount, you gave a 50% discount - like $5 a month. If the demand remains the same, try raising the price, and see at which point the demand dies.

    you might see from the experiment that you need to do 1 of several things:

    1. price down your product to generate a higher demand.
    2. add value to your product to see if demand will increase with new features.

    Measuring product market fit while your at it by seeing how many users that you have are actively coming back and using the site and their retention (paying the monthly subscription) is also critical to see if you have a sustainable product for which you can try to continue to drive growth and marketing - or if you need to focus on the development first before you try to drive growth. (No point in trying to drive growth if you have no retention - you might get a few users and make a couple bucks at first, but if they wont use the product, they wont be reoccurring customers, and you wont be able to quit your day job).

    My other advice is: find a pricing model in which you offer really valuable features for free - but up to a certain point, and then offer high-end features which also offer really high value for money. This I think is the best best pricing model if executed correctly. You will bait everyone in to try it - seduce them with your functionality - and make an unbeatable value proposition to upgrade - they pay, and once they pay, the retention of these people is insane. This is the golden ticket.

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