the_bear

I recently started highlighting a demo option next to the sign up button on my site. The total number of people who signed up for a free trial dropped, but that's only because there are a bunch of people who aren't a good fit for the service, and the demo weeded them out. So the total number of signups dropped, but the total number of people that paid at the end of the trial period went up significantly.

It also creates a mess if your other customers find out about it. In general, offering different prices to different customers is playing with fire unless you have a way to justify it when your non-discounted customers call.

Not to mention, shouldn't every Fancy Hands customer that reads this go in and pretend to cancel to get the discount?

Agreed. We just started sending an email to anyone who signs up for a free trial for our software asking when they're free for a one-on-one phone demo. This has increased sales more than anything else we've ever done, and the amount of time it takes is easily worth it.

Sure, it's a bummer that we'll have to hire a few more customer service people as we grow, but it's much better than the alternative. You open up so many opportunities by being willing to do something as simple as talking to someone on the phone.

I completely agree that companies shouldn't do this, but I don't think that most people on HackerNews do. A while back a co-worker of mine wrote a blog post about how a patent troll signed up for our service, and we decided to let them use it even though we really didn't want to. That seems like the same story with the opposite outcome.

Nearly all of the comments on HackerNews said that the decision showed a lack of conviction and that we should have denied service to the patent troll. I don't think that's appropriate for all the reasons you listed, but it would seem that we're in the minority.

Note: I agree with you that companies should not be allowed by their users to get away with this, I don't agree there should be a law prohibiting it.

I could be wrong, but I don't think that the actual ticket sales are the hard part with something like this. I think that building a network of venues, and producing and promoting your own tour are probably much more difficult. I think Louis CK could probably help a lot of people out without ever building any software or even offering a product.

EDIT: I definitely agree that etix gaining traction would be a great step in the right direction.

I guess it depends on how you look at it. I think the Kickstarter has done a lot to facilitate direct-to-consumer business models. Sure, Kickstarter is a tool used by creators to reach their audience, just like Gmail is a tool I use to communicate with my clients. Kickstarter and Gmail are both middle-men in a sense, but they certainly work with the direct-to-consumer model.

Louis CK seems particularly well suited for something like this because he seems to be content with the amount of money he has. He could do a lot to improve the entertainment industry by sharing his knowledge without necessarily building a business around it.

This is obviously great news, but I really hope he has plans to take it to the next step. It's great that an incredibly successful comedian can get away this this, but nothing will really change in the long run unless smaller acts have access to this direct-to-consumer approach as well, and that will only happen if someone like Louis CK goes out of his way to share the network, tools, and process that he's developed. It doesn't sound like that's something he's interested in doing (he wants to be a comedian, not an entrepreneur), but maybe he's just taking baby steps and he hopes to get there eventually.

I agree that this would be a nightmare to build. There are many other problems as well (like how easy it would be to game the system).

However, my comment was directed at the parent who claimed that a business wouldn't want to use it even if the product did exist.

This seems a lot like saying that my business should elect not to show up in Google search results just because we're not the #1 result (or that a product shouldn't be listed on Amazon if it's not the cheapest, etc.).

Pro: You get a free inventory system

Pro: You show up on local search results

Will some (maybe most) people go to Walmart instead? Sure, but those are people already using the app, which means that if you're not listed at all, you have absolutely zero chance of winning the business. Unless I'm missing something, this seems like a no-brainer for vendors.

Another way to look at this is: what if the business could use the inventory system for free, but opt out of showing up in the local listings. Are you saying that you think there's a vendor on this planet that would actually choose not to show up in the search results?

I must be missing something here, because I can't see any reason for a store to turn this down. They're getting a free inventory system, and they're being shown in local search results. The alternative is to pay for an inventory, and never have a chance to win the local search customers at all.

Sure, some customers will go to Walmart instead of a locally owned business, but how does the local business benefit from not being in the search at all?

I think that srunni's answer is probably a good start, but I'd also add another approach. Until recently, the Wash U CS program was run with a heavy focus toward academics rather than industry. As a result, most of the really talented students weren't really going to career fairs, they were instead looking for interesting research positions. It's possible that things have changed since I left (there's a new dean and department head), but I'd guess it's still about the same.

If that's the case, you really need a way to reach those top tier students. Do you have any positions that would seem intellectually rigorous and interesting? If so, I'd find a professor with relevant interests and shoot them an email saying you're looking for a top-tier intern and that you have some really cool problems for them to work on. Some professors are obviously more industry-friendly than others, but in my experience, there are at least a few who would probably be willing to help.

Another option would be to host an event at Wash U. I'm not entirely sure how this works from a logistical standpoint, but it's common at Wash U for companies to reserve rooms for different types of recruiting events. Some companies might host hack-a-thons. Some might do giveaways. EA did a presentation on how video games get made. Those events generally get a lot more attention from the top tier students than the career fair booths, and professors often promote them at the end of class. I'd guess that contacting the Career Center would be your first step if you want to set something like that up.

Hope that helps.

The article touches on this, but the real reason St. Louis could be a great place to start a company is because it has one of the most underrated Universities in the country. Wash U attracts very talented students to St. Louis, but because the school doesn't have much name recognition, very few tech companies recruit there. When I was at Wash U, the best tech jobs at the career fair were (in order): Microsoft, Raytheon, and General Mills. Unless things have changed dramatically in the last five years, I think it's safe to say that there's not much competition if you're trying to hire developers there.

Combine that with the low cost of living, and St. Louis might be the easiest place in the country to hire talented young people.

Google seems to be worst with this. In addition to having confusing icons, they're not even consistent with themselves. The Gmail archive icon on my Android phone is a picture of a filing cabinet. The archive icon on their main web app is a box with an arrow pointing down. They're two completely different icons for the exact same action.

So you're suggesting that because some people are bad at weighing information, anything based on personal experience should be downvoted? Successful entrepreneurs should no longer give advice? Programmers shouldn't weigh in on programming issues unless they're citing third-party research? Marketers can't suggest tips for how to promote a startup because it's possible their methods aren't universally successful?

If a post is about a topic that can and has been thoroughly researched and a reasonable conclusion has been drawn, then sure, a contrarian anecdote should probably be disregarded. But honestly, how often does that apply?

Most of the conversations on HackerNews aren't about things that have right and wrong answers. As a matter of fact, many of the most popular posts are nothing more than anecdotes themselves. So why exactly should an anecdote in the comments be downvoted?

Seems pretty cool, but the main graph at the top doesn't seem like a very helpful way to visualize data. It seems safe to assume that the vast majority of Facebook pages gain likes over time, and the graph has lower and upper bounds that are very close to those of the data which means you'll pretty much always have the same graph on every page. It doesn't really tell me anything.

For example, I just clicked on the first six reports you link to on your landing page, and the graph looks the same for all of them.

Other than that, this looks pretty handy. Thanks.

When I was first getting started, it was common for new users to find little bugs here and there. I'd generally be able to fix them within minutes of the customer contacting me, and that really impressed them. The customers who found bugs were actually happier than the ones that didn't, because the people that didn't find bugs never had an excuse to contact us, so they didn't know we offered great customer service.

I used to joke with my co-founder that we should intentionally add a small bug for all new users so that we could "fix it" immediately after they reported it. We obviously didn't actually do that because it's incredibly shady, but I think it would end up resulting in happier customers in the long run.

I'd add one more item to this list: If you can't give your customer what they're asking for, explain why.

I regularly take calls from people asking for features that we don't offer (and probably never will). They normally start out annoyed that we don't have what they want, but after I explain why we can't offer the feature, they normally understand completely and it doesn't seem to bother them at all.

Most customers don't have much perspective about your business. They know what they want, and they're not really thinking about how it might effect the overall experience. If you just say, "no, we don't have an iPhone app" they'll think you're brushing them off. Instead say, "I totally understand why you want an iPhone app, but if we made an iPhone app we'd also have to make apps for Android and Blackberry which would mean we couldn't spend nearly as much time focusing on making the core product better, which is why we have a mobile website which will work on all platforms". The customer wasn't thinking about that when they requested/demanded the feature. By explaining your reasoning, you're telling them that you really are listening to them and considering their ideas, but there are good reasons why you can't give them exactly what they want.

I don't mean to sound snarky, but it seems like you don't deal with customers very often. You're thinking rationally when you should be thinking emotionally. Customers are hugely inconvenienced by downtime, but there's nothing to be done about it. You just need to get them to calm down and remember that you're someone they like doing business with, and this is just an unfortunate mistake that's outside of your control. Like everyone else has already mentioned, everyone knows that websites go down, so customers can deal with it as long as you give them some peace of mind[1].

Here's a related anecdote: it's common for potential customers to ask me about security before signing up. I used to actually answer them by explaining the details of our security practices, but no one understood what I was talking about. Now I tell people that the site is hosted on Amazon's servers so we can take advantage of the infrastructure they've built. Obviously this is a non-answer, but it makes people feel a lot better. They knew they wouldn't be able to evaluate our security anyway, they just wanted some sign that they can trust us (and they already trusted us because we're the only company that picks up the phone when they call).

So I guess what I'm saying is that when you're dealing with technology, it's good to be rational. When you're dealing with people, emotions are what matter.

[1] Just so you know, one other thing that I would say during the downtimes was that we were in the process of switching from Rackspace to Amazon precisely because of these problems. We weren't just sitting around accepting them. Since making the switch, the service has been rock solid, so customers know we meant what we said.

In my experience, users actually do care quite a bit. Back when my company was on Rackspace, we had several periods of significant downtime that weren't our fault. Customers who contacted us were very upset, but when we made it clear that it wasn't a bug with our software, but rather a problem with the hosting provider, they all calmed down. I believe there are at least a few key things a customer takes away from a message like that, even if they don't understand anything about website hosting:

1) This isn't a bug with our software. They don't need to worry about the security of their data or anything else like that.

2) There's no point in getting mad at us. Sure we chose our hosting provider, but we're just as upset about the downtime as the customer is.

3) This problem is affecting other websites as well. People seem to be better at handling stress if they think everyone else is stressed out too.

4) There's a team of professionals working on the problem. My customers know I run a small company, and they seem to appreciate knowing that a much larger company handles the hosting.

1) That is even more true for tiered pricing. Is there an alternative you know of that doesn't involve the price going up as your usage goes up?

2) If you expect software pricing to match the marginal cost to the supplier, then I think you're out of luck. All software is this way. There are huge up-front costs to build the software, and the cost of actually selling an individual license is close to zero.

Pricing in general shouldn't be about what a product costs to provide, but rather what it's worth to the customer.

Sure. My company is called "Less Annoying CRM" and one of our main marketing techniques is to identify all the things that annoy people about existing CRMs, and then do something that's not as annoying. Pricing is one of the huge things customers find annoying with business software right now. This is all anecdotal, but here are some things my customers have told me they hate about the pricing practices of other CRM companies:

-Requiring a credit card up front (assuming there's a free trial). Everyone is worried that they won't be able to cancel once they've signed up.

-Listing prices by month, but charging annually, or requiring an annual contract. It's easy to think that an extra hundred dollars up-front isn't a big deal, but it really is for many small businesses. You'd be shocked at how many companies struggle to afford their monthly software licenses.

-Limited free trials. Many people I talk to are shocked when they find out that the free trial works just like the paid version. I didn't realize that some companies offered limited free trials, but apparently they do, and customers hate it.

-Forcing customers to choose how many seats they want in advance, rather than just billing based on how many users there are in a given month. This makes it look like you're hoping a customer will pay for seats they never use, and the customer instantly stops trusting you.

-Having tiered pricing plans, particularly if more than one thing can trigger the next tier. For example, if you look at the Highrise pricing page (http://highrisehq.com/signup) some companies might only have two users, but they might need 20 deals. Or they might have one user and one deal, but more than 5,000 contacts. Tiered plans can make it very difficult to figure out how much you'll actually pay, and it forces the users to constantly be paranoid that they might accidentally trigger the next level without knowing it.

This obviously depends a lot on your specific business, but here's the approach that I like best based on my experience: First, figure out what type of activity has the highest correlation with value added for the client. For example, we decided that each additional user on the system is the most important dimension on which to bill, but a project management product might pick # of projects. Then offer a la carte pricing based on only that one dimension, and make everything else unlimited.

For my company, this means we charge $10/month/user, and everything else is unlimited. You can put some caps in place under the terms of service to prevent people from abusing your unlimited policy, but make them high enough that they won't impact any of your non-abusive users.

You wouldn't believe how much it helps to have a simple pricing policy. How much does it cost? $10/user/month. What if I have a lot of contacts? $10/user/month. What if I need access to the API? $10/user/month. What if I need mobile access? $10/user/month. This approach removes a major stress point from the lives of the users because they no longer have to worry about trigger the next billing tier based on normal, everyday usage. It also makes your life easier because you when customers try to negotiate the price with you, you can make it clear that every single customer pays the exact same price no matter what.

I've had customers on the phone tell me that they love me because of this pricing model. Seriously. As I mentioned, this is all anecdotal, and I don't have any hard numbers to back up the efficacy, but it seems like common sense, and my customers validate the approach every day.

If charging per user encourages companies to have fewer user accounts, then certainly charging per project encourages companies to enter fewer projects, which is even worse (given that managing projects is the whole point).

However, I should rephrase my complaint. I'm not opposed to per-project pricing rather than per-user pricing, I'm opposed to tiered pricing in general. It's ridiculous that there's a 150% price increase for adding one project. Then, after adding 29 more projects for free, there's another 100% price increase for adding one additional project. I don't see how that can be considered "charging based on how much people are actually using your product."

Tiered pricing isn't simple (my customers tell me this all the time), it isn't predictable (my costs just increased by 150% because an employee started working on a new project!?), and it incentivizes all the wrong kind of behavior. The only good thing about it is that it's a great way to get some companies to pay for more than what they actually use (why do you think the cable companies don't have a la carte pricing?)

I agree that there are some serious benefits to having many small customers rather than a few big ones, but I strongly disagree with their decision not to charge per user. When you charge per user, the cost of the software increases linearly with the number of people using it, which is generally appropriate. Instead, with Basecamp pricing, the cost is based on the number of projects which seems way more arbitrary, and it incentivizes very strange behavior.

For example, the cost of going from 9 projects to 10 projects is $0. The cost of going from 10 to 11 is $30/month. Tiered plans like that have always seemed confusing and unfriendly to me.

This doesn't have much to do with the core idea you're testing, but I'm not wild about the filtering UI. If I click on "Fashion Sneakers" it filters the results, but there's no clear way to get back. It also seems like once you're viewing fashion sneakers, that shouldn't be a link anymore (I get frustrated when a page links to itself). A normal breadcrumb system should work fine.

I have experience in a couple of industries where investors would never trust anyone under the age of 40 to run a company, even a startup. It's probably true that the tech industry favors young people, but if you've been an entrepreneur your whole professional life, it shouldn't be hard to transition away from this high tech echo chamber when the time comes.

This isn't a hypothetical situation. Google was actively banning accounts for using fake names during the early days of Google+. It was in their terms of service, but that didn't matter. People were outraged. The HackerNews community in particular was outraged. Sure they have the right to do it, but that's no way to treat your customers.

I think one of the questions you have to ask yourself is whether your primary responsibility to protect the interests of your real users (the non-patent trolls) or to take a stand against people you don't like.

This would be a much easier decision if we sold a discrete product. A grocery store or Amazon.com can deny someone service and then they can go shop somewhere else. No big deal. Our users store their most important business data with us for years. How can our legitimate users trust us if they think they might wake up one day and be banned?

Thanks for the comment, this is definitely an interesting discussion.

By the way, I can tell you that I personally wouldn't have a problem with someone using the software for something illegal but not necessarily unethical (like selling drugs). The problem is that as soon as they tell you they're doing that, you're effectively assisting them in the illegal activity which makes me a criminal. That's the main reason why we have to take action when someone tells us they're using the CRM to do something illegal (not that it's ever happened).

I think this is a great summary, but it misses one key point. There's a big difference between refusing to buy a product from someone you find unethical and refusing to sell a product to someone you find unethical. The difference how this impacts all of the other potential buyers/sellers out there who are ethical.

Google and Facebook ban people's accounts all the time for doing things they find disagreeable, and they certainly aren't lauded for it. Instead, we all live in a constant state of fear that Google might ban our accounts because we didn't use our real name, or we're showing a middle finger in our profile picture, etc.

That's actually what we thought at first, but there's a problem. Doesn't that encourage our legitimate customers to not use our customer service? If someone is running a political campaign, they can't risk asking us a question because we might not agree with their beliefs. How can we have that policy without leaving all of our real customers in a constant state of fear that we might ban them because of our own beliefs?