Skedsheet Blog

Where we talk about the product, calendars, organization, and business

How do you price an online service?

with 2 comments

Look K-mart is having a sale by cosmic kitty - http://www.flickr.com/photos/cosmickitty/26455651/ Although we’re still deep in the development phase of skedsheet, we need to start thinking about how pricing should work.  We can’t blindly spend money on building a product if there’s no hope we’ll ever get it back

We’ve got lots of choices to make, all with pros and cons.

Free

It would be great to make an awesome product that provides lots of value to tons of people and give it away for free.  We discussed this option  – to use skedsheet as a marketing strategy to get the word out about JobTracker. 

Once we started flushing out skedsheet, it looked like by going downmarket, we could actually appeal to a much wider audience than our existing job management software – which has been construction subcontractors.  And it would be great to have a product that appeals to a broader market.

Since we’re a business, we also need to make money in order to pay for ongoing development, infrastructure, marketing, and support – everything that it takes to make valuable scheduling software rather than just a marketing gimmick.

I guess we could have free ad-supported skedsheet, but I’m not sure if that’s appropriate.  Even though it works for some people, I think that’s the minority… and I don’t understand how we’d do it, either.

pro: As a consumer, I love free stuff.
con: Love won’t pay the bills.

Subscription service

A  paid subscription service could be the best way for us to make skedsheet a viable product.  This way we won’t have expenses related to new customers (support, servers, new feature development) until we have the revenue to actually pay for them.  As we’ve seen with JobTracker, which is really “enterprise” software, these costs can be substantial and we shouldn’t underestimate them.

As the internet has gotten more popular and people feel comfortable putting their businesses and personal lives online, the concept of paying for a monthly service that gives you ongoing value happens all of the time.  For example – our phone system is an online monthly service, you can do your accounting as a monthly service, and we use an online service for feedback forms on our website.

The downside of requiring people to pay before they get started is that we need to have a great sales pitch.  This could be as simple as a website with videos that answer every possible question a customer could have.   But if we’re going to charge upfront for software intended for a non-technical audience, we would have to sell.  And that probably means having a salesperson to answer questions and do demos.

pro: Don’t go into the red more with every new customer.
con: Need to sell, would prefer to avoid that.

Freemium

So maybe the right answer is to have free version of skedsheet that lets people try it, then make it easy and useful to upgrade to a paid version.  I like the try-before-you-buy approach – but if we’re going to provide it, we need to ensure that it’s completely obvious how to get started. 

This means that when you first log in, you know where to click if you want to import a spreadsheet, create your own, or maybe even use a template of some popular calendars or spreadsheets from other people (is that enough?).  There’s a lot of work to be done here before we know if it’s possible to make easy enough.

Once you’ve tried it out for free – and maybe even used the free version for a while, there will be a compelling reason to pay – maybe having multiple skedsheets, more users, or some extra features.  You won’t give us money until you know it’s the right thing for you.

pro: There’s a path to revenue.
con: Needs to be drop-dead simple.

I’m sure there are lots of other options (lifetime subscriptions, shrink-wrapped software purchase, user licensing, reseller deals).  The freemium approach seems like it plays to our strengths – product development, listening to users; while minimizing the impact of where we’re not quite as strong – aggressive sales, blanketing the universe with marketing.  It feels like it’d be good to give away something that can ultimately sell itself.

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Written by Harry Hollander

March 9, 2009 at 7:42 am

Posted in Uncategorized

2 Responses

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  1. Hey, Harry, long time, no see!

    What does the competition look like?

    If somebody else is already providing comparable quality to your offering, it seems like you are extremely unlikely to come in afterward and make any money in a more expensive position.

    If you’re the only game in town, and you have a strong product, the subscription route (possibly with a free teaser to hook them) could work great.

    – Tim.

    Tim Broberg

    March 9, 2009 at 11:57 am

  2. Thanks, Tim! While we’re not the only game in town, I think we have a narrowly-defined problem that we can solve really well.

    I’ve got my eye out for competition… but so far it seems that our twist on the solution is just a little different.

    I hope that means that there’s value that folks will pay for.

    Harry Hollander

    March 9, 2009 at 8:39 pm


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