Pricing yourself out of your market
I wish I could understand the way online companies come up with their pricing strategies. I mean, that’s true in general, but in particular today I’ve got on my mind companies that offer a service to everyone online for free and then also have a paid version. I think about this all the time since I’m an online-business-thinking guy, but it was YouSendIt that sent me pondering today, so I’ll use them as the example here.
I love YouSendIt. It is simply the best way to send large files to anybody who does not have their own FTP. YouSendIt is the only service of its kind that I know of where the free version will let you send files to someone without also sending them a bunch of “ambush ads” — ads that are designed to look like the button your supposed to click to begin your download. They’re fast, easy and even have downloadable software so you can send a file without opening email or a browser window.
Did I mention I love YouSendIt? I use it often, and while I could do the same thing other ways, it’s so much easier than the other options and it’s FREE! I love YouSendIt so much that I would pay for it even though 99% of what I will ever do with it can easily be done in the free version. I would pay for it, but because of the previous sentence, I can’t justify their subscription rate of $50 per month.
Let me state that again: my options are to suck the free teat for as long as they offer it, or pay $50 per month.
How about a membership level where I can donate whatever I want through PayPal to thank you for your great service? How about a $5 or $10 per month level that offers me your free service plus a once-per-month sharing of an enormous file or allows me 10 downloads of what I share instead of 5? Why are my choices free and crazy expensive?
I think there is a huge revenue-generating opportunity being missed here and it’s not just YouSendIt, it’s Dropbox, it’s Livestrong, it’s about 90% of listener-supported podcasts, it’s the American Cancer Society (I’m still chapped about that $10 minimum donation), it’s the whole music industry, it’s so many online services that people want to support but who price themselves right out of it.
I know you send out Madison Avenue marketers and research firms to poll people and figure out what the market would bear. I’m sure they do a great job for the insane rates of money they charge you. But let me offer this thought: while they’re polling to find out what people who need your service will pay for it, are they even considering what your non-essential users would consider putting in your hat? I know they’re not your target audience. I know the idea of supporting them is for beta testing and name-recognition so that when their companies need a solution you’re the one they recommend. But I think you’re missing a great opportunity to make a little money and build a community. Don’t want the money? Set it aside and use it to throw a party in as many locations as possible to thank people for their support. Collect it and donate it to a charity. Maybe consider giving it to me — I’m just saying…
The thing is, people want to support you and thank you for your good work. Letting them do so makes them feel included and helps build a community around your product. It’s great PR, it’s great brand-building, it’s a great way to pull recommendations for your advertising, it’s a super way to find beta testers, and it costs you virtually nothing.
Think about it. Think about offering a “Supporter” or “True Believer” level subscription to your service. The ROI may be priceless.