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Comment by eoghan | Hacker News Reader

Hey Nathan. CEO of Intercom here. We mailed all our customers this morning about a grandfathering deal we're giving you.

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I guess I have 6 months to figure out what to do. This kind of sucks for me.

I really like intercom. But i guess I am not the target customer for my startup because the economics don't make as much sense unless I can change my conversion dynamics before January.

The new pricing punishes small, bootstrapped businesses who have a free tier in their product, because of how they've defined an "active" user.

"An active user is defined as having used your product in the last 30 days"

https://www.intercom.io/pricing

Let's say you have 1% conversion from free to paid. Some larger percent use your free tier.

Because these free users are "active users", you have to pay effectively 4.4 cents a month ($11 / 250) per user.

The problem here is that if you got a big push of "free tier" users who may not be qualified, it can cost you a lot of money. Ie, 1000 users signup because of some promotion, but let's say they came from TechCrunch and didn't convert. You still have to pay $40 to intercom for the privilege of hosting these free users.

This also happens with email announcements (new product features, content, etc) that can drive some percentage of users back to the site. So, if I activate a few hundred dormant users with an email (who use the site, but don't upgrade), it will cost me a lot of money.

So, unless you have a big enough premium user base to subsidize the free users, this is going to be prohibitive.

Totally agree -- my pricing can't sustain the cost per-user in this model. Any my site's usage is very seasonal, easily up to 10x at different times of year, and it isn't clear how dynamic the plans are.

Possibly my pricing is wrong, but simply per-user seems like a very blunt instrument. Not sure what a better way of measuring the 'value' here is though. Ideally % of total hosting bill would seem 'fair', but if a service is going to cost 30-50% of the hosting costs then it needs to provide an awful lot.

Same here. The majority of our SaaS users are non-paying (and will never pay because of their user role). With the new plans, we would immediate go from $50/month to $400+/month. That's a lot for a bootstrapped startup and would be one of our most expenses services we pay for.

We would be happy to pay even $99 or $149 a month, but increasing the price 8-9x is a big jump, as great as the product is.

It's not really a grandfather if it only lasts 6 months.

That's the one issue I had too. I still have early adopter customers of mine who pay me $6 a month (minimum now is 4x that), and I'd never dare to change their original pricing.

I don't know, is it really that much of an issue? I mean, you paid a reduced price for using the service early--albeit it would have been buggier, you're contributing useful feedback, etc., but you obviously were deriving a benefit from the service so it was a fair trade. Fast forward, the product is more mature and "better", is it that unreasonable to ask you to pay more after 6 months of getting to use the better product at the better early adopter rate? And that's the deal killer for you?

[note: I have nothing to do whatsoever with Intercom, just my 2 cents]

I believe in rewarding your earliest supporters.

Case in point, we sell our product for $99/year with a $20/month add-on. Some people got this for $39-$79 for life, and I'll never change that because I wouldn't have a product if not for their early support.

I'll also never ask our current customers to pay more, provided they stay active.

The overhead of keeping early adopters alive at initial prices is not significant, so there is very little risk in grandfathering them in. However, raising the price risks driving brand advocates (like those commenting here) away, or at best, making them disgruntled.

I guess I just don't see the upside.

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