Ouch that’s a longish title. OK, I admit, I am tired, could not decide between two messages and ended up combining them. Well, let’s see the messages.
The Art of Pricing
The other day I got into a tweet convo with a Startup Entrepreneur whose product I found interesting, at least at first glance. But he has a problem: the entry point for one user is $20/month – and then the price scales up. I tried to convince him to drop the entry price point to either free, or $1-$2 – something that allows impulse buy. He defended his pricing on a value basis. In principle he is right – but there’s the small problem that nobody knows about his product. In this case “giving away” value would become his marketing, would allow for growth, and he could scale his pricing as aggressively as he wanted. He badly needs enthusiastic users that become his marketing army.
My friend and fellow Enterprise Irregular Charlie Wood (that was my bias disclosure…) understands this. He just dramatically restructured pricing of Spanning Backup, going from free 30-day trial to a “3 Seats Free” policy per Google Apps domain.
Now this may not be the interpretation Charlie wants to hear. After all, it’s a Freemium (well, sort of) offer meant for Google Apps Admins, hoping that they would upgrade to more users at $30 / year a piece. Guess what: I don’t have more than 3 users, nor do most freelance-types, who will gladly take the free offer without ever upgrading to paid licenses. And Charlie may be OK with that, after all. We’re talking about the most vocal and media-savvy users, who have proven to be enthusiastic marketing army for many good Web services. I guess Charlie understands Startup Econ 101.
Now, why would you want to use an external service to back up your Google data? Sure almighty Google takes care of that.. (?). They do – and when they goof big time, like in the case of 500k “lost” email accounts, they will no doubt fix it. If you are the only one in trouble (in fact it could very well be your own mistake), good luck getting timely support from Google. This is where Spanning comes in, backing up your Docs, Contacts and Calendars.
Finally, a word on why I called it “sort of” Freemium. It really isn’t. With most Freemium services sooner or later you hit a barrier: the amount of data, desirable features, whatnot. Under the “3 Seats Free” program there are no restrictions, you get the full featured service for 3 users free.
So what are you waiting for?