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.
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.
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.
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 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?
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?
- 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".
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!
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).
[+] [-] j45|13 years ago|reply
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.
[+] [-] orangethirty|13 years ago|reply
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.
[+] [-] rubeng|13 years ago|reply
[+] [-] njx|13 years ago|reply
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 ]
[+] [-] thibaut_barrere|13 years ago|reply
[+] [-] rubeng|13 years ago|reply
[+] [-] codegeek|13 years ago|reply
[+] [-] codegeek|13 years ago|reply
[+] [-] DeepDuh|13 years ago|reply
[+] [-] jmccaffrey|13 years ago|reply
[+] [-] hrabago|13 years ago|reply
[+] [-] ARobotics|13 years ago|reply
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?
[+] [-] rubeng|13 years ago|reply
[+] [-] zumda|13 years ago|reply
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?
[+] [-] abhaga|13 years ago|reply
> All I did was change pricing for new customers in the backend and updated the marketing site to reflect the new pricing tiers.
[+] [-] bostonvaulter2|13 years ago|reply
[+] [-] haydin|13 years ago|reply
Edit: No, I still don't have an e-mail and no information as to where I can find a sample
[+] [-] rubeng|13 years ago|reply
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.
[+] [-] DenisM|13 years ago|reply
[+] [-] zobzu|13 years ago|reply
- 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.
[+] [-] spiredigital|13 years ago|reply
[+] [-] djt|13 years ago|reply
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.
[+] [-] unknown|13 years ago|reply
[deleted]
[+] [-] wesbos|13 years ago|reply
[+] [-] rubeng|13 years ago|reply
[+] [-] bm1362|13 years ago|reply
[+] [-] rubeng|13 years ago|reply