Fixed price plans are coming to Assembla

I think the rationale behind this is important for all SAAS (and software) businesses to learn from:

a) Desirable customers really don't care about the difference between $4 and $9.

b) The user experience of consistent and predictable pricing is much more important than getting prices which are "rationally connected with costs" or "as cheap as possible". (Businesses in particular hate microtransactions. OKing a $20 a month transaction is trivial, OKing an ongoing variable cost is not -- I need to attach detailed projections and get the projections vetted by three people.)

c) If you prominently advertise Only Costs $2! and Use Us Because $10 Is Too Much To Pay For This Service! then your customer base is going to be primarily people who are looking to spend no more than $2 and you will have to write blog posts when you plan on doing major, disruptive changes like charging more for a business input than their morning latte costs.

Edit:

Prior blog post on pricing here:

http://blog.assembla.com/assemblablog/tabid/12618/bid/7870/S...

Factoids: Most popular plan costs $2.30. Average ticket size below $10. Company very, very proud that their average customer spends less than the cheapest plan at competitors. (This was, apparently, not a red flag at the time.)

No, Assembla is not proud of having such a low selling price. We have seen that as a problem since the beginning. The original sin is not the current low selling price. The original sin was offering the "private" product for free during a time when it wasn't a serious business for us. We took an enormous amount of abuse when we discontinued this product, and to soften the blow, we worked to keep prices low. We did this even though it's clear that a customer who makes a decision based on a $2 price point isn't going to make much of a contribution to the company. It's now clear that our gesture wasn't fully appreciated, and it's dragging down the pricepoint for our serious customers - startups, corporate product developers, outsourcers, agencies, and consulting companies that need professsional management features.

I have to disagree with the guy that says the service doesn't have value over $20. Even on the face of it, he would replace it with a server costing $50/month, plus install and admin time costing at least that. So, he's already at $100. He's probably only using the subversion repository, which he could easily install on his own. However, if you are serious about getting the most from your team, you would be using the alerts, code browser, the ticketing system, which would cost you substantially more if you bought it from Atlassian or Fogbugz, and be well worth it. If you have a consulting operation, as many Assembla customers do, you will use the time tracking and reporting. In other words, if you manage your team professionally, you will get a lot of value out of this software. And, certainly we will work on charging appropriately.

I think that the reason in "Users were very aggressive in reducing their user counts, and our average selling price became very small - less than $10/month" is that I think their average account (like mine) wouldn't benefit from using the service at any price above ~10-15 dollars. Most of software they provide is free, hosting is cheap, I don't see any value to upgrade/pay more at that point. At a price above 20 bucks with more than 10 users, I would switch to a VPS/dedicated server (30-70 bucks) or a internal server, which is also a good investment.