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Comment by fookyong | Hacker News Reader

Pricing is something that you're never going to get perfect right off the bat. Start high, then figure things out with your customers. Remember that it's easier to lower prices than it is to raise them.

I will say that it's quite common to have a super-high price tier that hardly anyone buys, that is there to make the other tiers look cheaper by comparison. Not saying that it's a tactic that works 100% of the time, but anecdotally speaking, I see it around on SaaS websites.

e.g.

Basic - $30

Premium - $50 most popular!

Corporate - $200 (comes with super-duper feature that 99% of people don't need)

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Not saying that it's a tactic that works 100% of the time, but anecdotally speaking, I see it around on SaaS websites.

It's proven to work. A couple years back there was an article about how Carl's Jr introduced a new expensive burger. Sales of the second most expensive burger jumped up, yet the expensive burger didn't sell well. They removed the expensive burger from the line up, and the previous best seller's sales fell. Having a highly priced "top" plan/product is a tide that raises all boats, it seems.

I agree with everything you say. It is the usual best practices with this type of pricing model.

Let's just compare these two services and the somewhat different take they have between the tiers of pricing.

http://www.chompstack.com/pricing/

-only differentiation is if you need 11 restaurant. The upsell is only $15.

http://letsfreckle.com/plans/

-Freckle obviously plays better with the "idiot package" by upselling 10 more accounts instead of 1 restaurant like chompstack

They both had different pricing strategies I see when sorting through the tiers: -Chompstack just went up $15 each tier -Freckle doubled each time instead of sticking with a fixed rate

Any feedback on those thoughts?

Yep, hi, I'm the chief everything of Freckle. ;) (Except chief code monkey.)

So, pricing wise, we had a particular strategy and we add very particular, measurable value. The value for a team is honestly more than double the value for an individual because value increases directly with the number of people who track time.

I've actually hired a pricing consultant to talk about whether our pricing strategy (the chunking of user seats, the size of price increases) is the best for us.

Til that process is wrapped up, it's a bit hard to weigh in!

I will say that we priced our base plan higher than our "competitors", based on the difference between Basecamp and Basecamp With Time Tracking, although it looks now like our "competitors" have increased their prices as well.

(I say "competitors" because we really serve different markets.)

Also: we have as many Solo account members as all other paid accounts combined.

We're not hurting for money either ;) and growing about 20% month over month since I've started serious promotion strategies.

Hope this helps!

I noticed that you guys have a free plan. Is that a significant percentage of your user base?

It's a little bit hidden and I didn't see it at first (which I guess is the point).

You're asking the wrong questions :) Is it a significant portion of accounts? Yes. There are thousands of free accounts and about 600 paying. But do people who actually use their free accounts stay free? No, at an overwhelming rate, they upgrade. Something like 30-50% of all free accounts with more than 5 time entries upgrade.

Most free accounts are drive-bys or people who are merely curious. I'm also looking into ways to capture some of them, convince them to get over the hump to actually trying it, but I don't worry about how many accounts are free vs paid any more.

Interesting! I am trying to work out the price plan for my startup as well. Can I ask if you got people signing up for paid accounts directly or they did the free plans first and convert later?

Lots sign up for the paid accounts directly.

We have a standard 3-6% monthly conversion rate from free -> paid. But, if you look at it in detail, the numbers get more interesting:

About 17-25% of those each month have 5 or more time entries, which is our bar for an "active" account. (A low, sorta primitive bar, but still.)

Of those, 35-55% upgrade to paid :)

Thing is, unless you are in a very similar field with a similar interaction design quality / providing similar value, to people who "get" value for money, my experience on these points probably won't help you.

That's why our sign up page de-emphasizes the free plan regardless, it's just an easier route :)

ahoyhere, thanks for the insight. I am working on pricing for our startup right now. We serve different markets, but I found your pricing structure interesting, that is why I used it as an example. Is there something to be said for offering a very cheap package instead of free (similar to the Chompstack pricing)? Have you guys tried that at Freckle?

Hi Matt, you're very welcome :)

Here's how I see the difference between us and Chompstack: there are no for-fun restaurants.

We have a free plan because...

1. some people are just drive-by gawkers, who will rarely sign up at all, and maybe one day if they actually need time tracking they'll come back.

2. some people refuse to give CC details until they've checked it out

3. because of the nature of the app/data, it costs us nothing in terms of resources to have a lot of free users - it's not like social network data or file storage - and we do not offer support to free users

4. for people who use time tracking for their business, the premium features (invoicing, many projects, multiple people) are huge benefits

That was the free part... for the "very cheap package" idea, we're working on a paid version of Freckle that has some premium features (multiple projects, etc) but not the ones to do with earning money (invoicing), that'll offer to non-hourly-billing productivity nuts for a lower price.

That's about as far as we'll go, though, I think :)

Ahoyhere,

I have learned more about pricing stuff from you than I hoped! Thanks for the valuable insight. I have one more question that does not apply to you and Freckle directly now, but I was wondering if you could share some thoughts on it anyway. Before launching a product, how important is it to have a marketing page visible on our website?

Definitely important. You want to start reaching out to your audience well before you launch, and collect their email addresses. That was part of how we got about $1000 of paying business right out of the gate. We're doing it again:

http://charmde.sk

I'm Amy, by the way. And I'm starting to write more about my biz/approach to biz @ http://unicornfree.com if you're interested :)

Love the design of both Freckle and Charde.sk. Thanks for the help. As a young and first time entrepreneur, I like to think I know the answers, but most of the time it is not the case. Finding out what is needed from a strategic standpoint is something that I have found others are willing to share, especially bootstrapped, product based startups. I will definitely be checking out your blog at unicornfree.com! My name is Matt :)

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