We’ve been thinking about pricing at PRIMEr HQ. We (being the co-founders) both began the Startup journey thinking that the Freemium model (note to selves: must blog more about that later) must be part of our strategy. At one stage we thought it could all be free. Then we decided we could do both.
So far, we’ve gone through the following thoughts:
- Which side are we monetising? When you launch a platform you’re essentially entering a two-sided market. We need users, but we also need content providers. But if you charge both will the platform ever be adopted? We’ve essentially swayed to the side of least resistance to payment – that’s the business side. Just like Adobe made Acrobat free and watched business adopt the format, we’re following this thinking for PRIMEr.
- Low (or no) barriers to entry. When you have a new idea barriers to entry need to be low or non-existant. Charge a solo business coach a subscription fee and watch them reject adopting your product. Though obviously we need to monetise our platform so free isn’t going to work.
- Charge for scale. If you’re using a cloud-based server (and we will be) the major expenses will be storage, and calling on, and reporting on that data. If they want to upload some content under a freemium model then hopefully they’ll so enamoured of the service they’ll decide to create more. This is where a subscription for storage comes in. But creating too many subscription packages will be confusing. Find a happy medium between a basic subscription and an unlimited one.
- Find our tertiary markets. When your platform is all about non-disruptive advertising then selling advertising space is a bit questionable. But you can sell search positioning within your platform, perhaps on a payment-per-click (which is difficult to administer) or just charge a subscription for a period of preferential search. Consider using your users’ preferences to create offerings for those catering to their interests and other services you can offer relating to their content.
- Failure. Be prepared to fail with the pricing model. We wish we could remember the name of the company but a particular package postal service found their business was failing largely because the pricing of their service was too complicated. Once they’d found a simple model that worked for them, they made it simple for customers to buy from them.
So, we’re preparing ourselves to change our minds a few times during and after the PoC and early stage commercialisation. But it’ll be interesting to see if things work the way we think they will.