Skedsheet Blog

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Archive for the ‘Pricing’ Category

Business plan – show me the money?

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We’ve been putting money into Skedsheet, but haven’t really thought about a business plan much.  Typically you need to think about finances, market, and plan for our products.  Here’s a swag at the finance part for Skedsheet.  Of course, the dirty secret of any business plan is that this is all a guess…

$ pillow by klynslisLet’s say that the cost of doing the beta version of skedsheet is around $100K – that’s development time, graphic design, and the direct costs of setting up a website, getting trademarks, and all of the other administrative parts of setting up a new product.  I think that’s the right ballpark. 

After that, there are the ongoing costs of running skedsheet.  We’ll need servers, which will probably start around $500/month, and grow as we’re successful.  I’m sure we won’t have all of the features right in the first version, so there’s going to be ongoing development, and I’m sure that  we’ll have to spend time on customer support, too.  Let’s say that adds up to $2000/month for each. 

Even if we’re willing to toss out the initial investment, that means around $5000 per month just to break even.   And if we want to recoup the original outlay in the first year, it looks more like trying to get $14000/month.  Zoiks! maybe instead we want to break even on the original investment in 2 years, which makes it closer to $10K/month.

While we haven’t thought about price in detail, there are a couple of strategies we can take.  We’ve ruled out having expensive software.  Even if we choose a number as low as $100/month, chances are that we’ll need a sales process, and a sales guy to convince people to part with their money.

We can’t be totally free either.  That could get lots of users, but there’s not a chance of making money for just giving away our service.  So the answer is Free + Cheap.

Is a $10/month cheap?  $1?  I think that the right model for us is to have a small group of our hardcore users pay for the costs, and allow us to give away our software to 95% of the people who want to use Skedsheet.  So if the numbers I just pulled out of the air would work out, it’d be something like:

(Paid Users) x $10 = $10000, so we’d need a thousand paid users.  And if

(Paid Users) = (All Users) x 5%, we’d need twenty thousand people using Skedsheet before it makes financial sense.

So, the next  question should be “Does Skedsheet solve a problem for tens of thousands of people?”

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Written by Harry Hollander

September 3, 2009 at 7:49 am

Posted in Pricing, Strategy

How do you sell something that’s free?

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We’ll probably have two flavors of Skedsheet – one free, and one paid.  I’ve been thinking about which features should be in each version, but I need to take a step back and ask myself:

“Even if it’s free, how do we sell this puppy?”

I know you don’t need to “sell” free stuff – at least not in the traditional sense.  It’s much more about providing something in exchange for your time.  Since we’re giving something valuable, and making it easy to share…each of our “free” customers should become an advocate for our software.

But, we still need a Unique Selling Proposition:  What’s the reason to even look at us?

I expect people to compare the cost (in time and effort) of Skedsheet to using Outlook and Excel.  I’d argue that Outlook and Excel are both effectively free – I bet you didn’t pay for them and you already know how to use them. 

Here’s what I’d want to say:

With the system you have today, you’re re-typing some details from your spreadsheet onto the calendar, and figuring out how to show it to other people. 

Of course, there’s the chance of making mistakes that cost big bucks, as well as time wasted looking in more than one place for information. 

I think we’ve another unique concept in Skedsheet that I haven’t seen touted other places – the idea of multiple dates being tied together as one “job”.  I don’t know how to describe this well – but that’s what ended up being the defining feature for our JobTracker software, and it seems like it will apply more generally through Skedsheet.

But, because it’s free, there won’t be a salesperson telling you any of this.  Instead, I assume the sales pitch will be:

  1. Right here, with us writing about our software on this blog.
  2. An demo video that will explain everything clearly.
  3. Stories and examples of how other people use Skedsheet.
  4. Skedsheets that you see because a friend shared them with you.

Written by Harry Hollander

August 12, 2009 at 7:01 am

Posted in Pricing, Strategy

Which features are free?

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Skedsheet is starting to come together – there’s some core functionality, a graphic design in the works for the website and application, and daily (well, maybe weekly) progress in both of those areas. 

burning money by purpleslog - http://www.flickr.com/photos/purpleslog/3040508093/

One of the missing ingredients is to figure out how we make money.  I still think we want a freemium model for skedsheet, so the question is

“What’s free and what do you pay for"? 

The dividing line all needs to be about value… what’s valuable enough to pay for?  And, can we build a product that’s free for lots of people, but have a small percentage of users cover the cost of development and infrastructure?

Even the free version needs to be valuable – otherwise nobody will care.  I want the free version to be useful for a single person working on a schedule, and maybe sharing it with a few other people.  But if it’s being used by lots of people at a Fortune 500 company, we should be charging.  The extreme cases are pretty easy to nail down, but we need to figure out where the dividing line should be.

Can we split up the features in a way to distinguish a casual user from a big company?

Feature Free Pay
Create 1 Skedsheet yes yes
Create 1 calendar view yes yes
Share publicly yes yes
See history of changes yes yes
Create more than 1skedsheet maybe yes
Create lots of calendar views maybe yes
Share privately maybe yes
Mobile interface maybe maybe
Large Skedsheet size no maybe
Create lots of Skedsheets no how many?
Multiple editors no how many?
Security no yes

 

Which other features should be on this list?  Are there other dimensions for the free/pay boundary?

If you’re trying to manage a few schedules, but you care deeply about having your data secure, is that a feature worth paying for?  How many editors is “a lot”?  Would we really build a separate mobile version? 

How do we make sharing and using Skedsheet really easy and not have new users worried about paying until they really find value?

Written by Harry Hollander

August 7, 2009 at 8:23 am

Posted in Pricing