Having said that there are those who are unrealistic at the other end of the scale, charging way to much for way too little functionality. I came across an example of this the other day. Getballpark is a nice little application that, rather than being an accounting application, is all about invoicing. Getballpark was created by MetaLab who seem to have a real pedigree of creating nicely designed, nicely built web sites and web apps – but nicely designed and built does not equate to having a good business model.
Getballpark is entirely built around enabling businesses to estimate and invoice, and to capture the discussions around those functions. It’s got a feature which (curmudgeon that I am) I see as little more than Web 2.0 madness gone to extremes – this feature allows dialogue to be created around invoices. The example Getballpark gave was around a discussion about an invoice that the business had sent out. The discussion was an excellent example of the vacuous Web 2.0 at its worst – providing little value beyond the ability of everyone to say something, whether or not it was of value.
I’ll have to admit I like one feature that Getballpark has, the ability to view notifications of when an emailed invoice has been viewed – kind of useful in some situations.
This post however is not a product review, it is a pricing review. Looking at the Getballpark pricing I see that it costs USD12 for one user to be able to send five invoices per month. What? Compare this to some fully fledged accounting systems. IAC-EZ runs $20 pr month, Clarity account $10 and even Xero, arguably the most fully functional small business offering runs to $29 per month. Bear in mind that we’re comparing accounting with general ledgers, fixed assets, P&L and the full double entry engine with…. invoicing.
Now comparing Getballpark to FreshBooks, arguably it’s most direct competitor, we can see that FreshBooks has a plan that for $14 per month gives a single user the ability to manage 25 clients and send unlimited numbers of invoices. But this is FreshBooks, the king of online invoicing who’s partner page boasts literally dozens of integration partners – from accounting engines to time tracking, from project management to CRM. Getballpark on the other hand is a new app with no integrations thus far.
So I’m a little torn here – while it scares me to see start ups price their applications so low as to ensure there is no chance for their success, so to does it worry many when pricing would seem to destroy an apps chances before it even starts to get tractions.
Bottom line – I really believe that Getballpark has some work to do on their go-to-market strategy. Unless of course there’s enough Web 2.0 evangelists who see immense value from social media-ising invoicing…
I’ve thought about (caveat: this is often as far as my ideas get) developing some apps for Creator or App Engine or some platform, but one thing that’s holding me back is that I might eventually have to pay to run my own app.
At least if I develop a thick/local app I only “pay” when I bought my computer. And anyone I share my application with would similarly already have “paid” for the resources to run the app.
I like the idea of running in the cloud though. I’ve left something at home often enough, or had a storage device fail one time too many, etc.
But, on the question of pricing, how do I price my offering?
I’d like to see platform providers offer a tool to suggest pricing. Hopefully based on historical usage during testing, but at least on something easy to evaluate (I have no idea what to put into Amazon’s AWS calculator).
Ben,
here’s my take. Pricing is one of the most complicated components of marketing and usually the area where startups have the least experience and typically no historical data.
So how do you decide on pricing? Easy, what are your objectives? I’m guessing here, but ballpark are probably aiming at building a fully featured app that will eventually justify the asking price. In the meantime, they are skimming the top of the pyramid. Thats to say, they are getting a few people (early adopters) to cover their bills while they get to the point where lots of people will pay for the product.
As you know, we’re building a new type of product. The best way to understand how it should work and what features it would have, was to use penetration pricing for the first generation of the product. In our case, we set the price = 0, with the objective of getting lots of feedback.
Now users have spec’d our new product for us and we have some pricing data. We’ll combine that info with a new set of objectives which will inform our pricing decisions going forward.
A great book around this subject is “The strategy and tactics of pricing” by Nagle and Hogan. It is well worth reading if you need to price something.
Ian
Hi Ben,
Great post… and an interesting angle to approach the comparison.
For what it’s worth – in FreshBooks you can also see when an emailed invoice has been viewed by a client. 😉
Cheers. Keep up the great work.
Hi,
I agree with you: when you create a product, getting the pricing right is the other half of the story, and you need to get it right. Charge too little, and you will get the wrong audience and an unsustainable business model. Charge too much, and you end up with few, not-so-loyal users.
Pricing Apollo for us was tricky http://www.apollohq.com We include project management _and_ CRM. Plus a calendar, timers, cases&deals, Basecamp/Highrise import… We could have decided to charge a lot more, but decided to stay real and stay humble. So, now Apollo offers more than Basecamp, and costs less.
Well, that’s my take. Thanks for listening 😀
Merc.