37Signals Doubles Price for Basecamp
readwriteweb.com
readwriteweb.com
Shortly after our post went live, 37signals founder Jason Fried left a comment, clarifying that they are toying with the design of the sign-up page, but that all of the old plans are still available.
"While we used to have four plans on the sign up chart, today we only have three," said Fried. "Same prices as before, just fewer plans displayed. A while back we used to have six plans to choose from, but we found that was ultimately confusing customers. So we went to five. Then we went to four. Now we're experimenting with three."
Fried echoed Hansson's earlier statement that the changes are purely experimental and that they may continue to alter the plans listed on their sign-up page, depending on their findings.
The current signup urls are:
Maximum: https://signup.37signals.com/basecamp/Max/signup/new
Premium: https://signup.37signals.com/basecamp/Premium/signup/new
Plus: https://signup.37signals.com/basecamp/Plus/signup/new
Old Plans:
Basic: https://signup.37signals.com/basecamp/Basic/signup/new
The experiment is in design, layout, suggestion, and reducing the number of plans shown at sign up to reduce confusion.
People should A/B test more, including consequential tests like product mix and pricing.
Our volume for business signups wasn't super high at the time (that's since changed-- go RescueTime!), so we didn't fiddle much with that.
It must be a common psychological trait to value things in sequences of $9-10.
The only logical conclusion is that they are copying us.
I no longer want to cancel anything because if I need to come back and re-activate my projects, well, it looks like it may cost me double.
Brilliant!
This is akin to building a wall around your garden after you've invited a bunch of friends over for some tea and cookies. If I thought for a second that some business was trying to lock me in by making it super painful to leave and come back, I'd leave and never come back. It's not like there's any shortage of project management web apps.
However, I highly doubt this is what they're doing.
They aren't building a wall, they are simply sending a signal that the value you are currently taking advantage of is higher than you initially paid for it - and we realize it.
I see nothing wrong with the way they have done it. If they forced you to increase your monthly spend as a current client, then that would be more akin to your scenario. But they aren't doing that.
A better analogy would be, they have a nice lush garden setup with fruit stalls everywhere. As one of the first 100 people into the garden, you get all you can eat for $10. However, for everybody after that you have to pay $20. If you know this, and leave the garden and want to come in later....well, whose fault is that?
I would love to know if it makes more sense to start with plans @ $50 rather than $25 and the impact on new registrations.
Thanks.
I thought it was a glitch in the pricing screen (and my friend still thinks I am seeing things).
Neatly captures the surplus while hiding the $(x/2) price from people willing to pay $x when they sign up.
Absolutely not true. I've experimented with dropping prices by half and got a barely noticable uptick in customers. I've also bumped prices by 20% and had conversion actually increase slightly. Pricing psychology is way more complex than that.
“Basecamp is so simple you can’t do anything wrong. It’s addictively easy-to-use.”
Why bother with the risk of the FTC cracking down for fake testimonials when you can just quote yourself!
With the popularity of Basecamp, I'm sure this is an actual customer quote, but I still think it's humorous. Perhaps I'll go pepper my blog with quotes about how awesome I am :)
Ryan Waggoner is an awesome developer and entrepreneur with a clear passion
for all things geek. Not only is he a great developer but women have
secretly whispered to me how sexually attractive he is. He has the
charisma and wit of fifty men wrapped up in just one sack of skin.
"Like Google's (GOOG ) spartan home page, it's so simple you can't do anything wrong -- and so addictively easy to use that one customer calls it "Basecrack."
That's the peril/blessing of embracing open source—given enough time, no matter how good you are, you will end up competing with free and/or a free clone of yourself!
Then let folks just arrange for their own hosting(Heroku could become perfect for this), or host it locally, and install & run it themselves. What if many, many more companies would use a Basecamp-like app if they could run it inside their corporate firewalls?
Basecamp is not rocket science. Its core is a dozen pages give or take, and a bunch of standard CRUD. It does look polished, very well designed and thought out, and is highly usable. It's a showcase example of what a great web app should be. Yet almost all of these unconventional parts that seem like they would need heavy lifting configuration could be automated away.
Sure it's a bit of a dick move to make a white room clone, even though it happens all the time, and is almost the very definition of the majority of popular open source software. However, after several years, once some innovative software becomes mainstream, can it still claim exclusive right to the ephemeral methods of implementation? Once the knowledge of those methods, and the usage patterns are learned and spread throughout a community, the value of the knowledge plummets. Before it became obvious to everybody, sure, it would have been enormously difficult to create Basecamp from scratch. But after everyone has seen Basecamp and used it, it's funny that it now seems obvious that is how it should be done. It's like the software patent issue essentially.
I'd be curious to know the true cost of each Basecamp user in terms of hardware, network and storage cost. What if it's oh say $1.00 on average? Then it would be profitable for some company like Heroku who specializes only in streamlined, small Rails app hosting to butt in and sell hosting for a cheap price like $5. The software is free, the hardware is not, to steal a page from the Apple play book. That would bleed 37signals' profit margins. Isn't it fun to play race to the bottom pricing of software as it crystalizes into a commodity over a few years? Sure a few years ago, Basecamp would be difficult to make. But 2 years from now? I don't know if the assumption holds that 2 years from now it will still be non-trivial to clone Basecamp in such a way we haven't even thought of nor seen on the web. Markets move quickly, especially in software. Everyone knows competition is a bitch, especially when the goal posts keep moving, and while the technology playing field itself undergoes rapid, constant geologic & volcanic upheaval.
The workflow in Basecamp itself is a great template for creating other kinds of web apps outside of project management and address books. Many other kinds of businesses have similar workflows that could be represented in a souped up Basecamp without too many modifications. An open source clone could also serve as a good boiler-plate starter app for developing more customized Basecamp-like apps. What if the value of that is more profitable than selling Basecamp itself?