BLOG. SMART PRACTICAL BUSINESS ADVICE

Draft Pricing – What’s it worth?

As we get closer and closer to launch, there have been daily emails asking us, “when?” and “how much?”, in precisely that order.

With version 1, we followed all the current web 2.0 buzz surrounding the freemium business model and took a punt that this model would work for small business software.

Give your service away for free, possibly ad supported but maybe not, acquire a lot of customers very efficiently through word of mouth, referral networks, organic search marketing, etc, then offer premium priced value added services or an enhanced version of your service to your customer base.
We discovered pretty quickly it wasn’t going to work for us. Sure, it works for social networks such as Facebook and consumer tools such as Flickr, but didn’t work for us. We couldn’t get the initial scale to drive enough advertising revenue to fund more marketing which in turn drives more scale.

And we were doing it the hard way to boot. No angel investment, no VC investment. [Note: Existing users never need worry about Veetro closing down and losing your online business data because a) it costs us maybe $200/month to host Veetro v1, the software is so robust we haven’t had to fix a bug in version 1 since its release 18 months ago and at any time you can download all your data.]

So, even with 1733 active Veetro accounts, we made barely $100/month in Google adwords revenue. The positive side of this is that we accumulated an enormous amount of feedback and invaluable insight into how our (future) customer use the current Veetro and how to make it better in version 2.

With the positivity of hindsight, we couldn’t have afforded to pay expert UI groups or even a handful of focus groups to give us such detailed and varied feedback. All of this was boiled down and planned into into version 2.

To be profitable, to better support the product, to pay ourselves some wages and keep all the servers humming, we’re going to be charging a monthly subscription for Veetro 2.0.

The subscription is simple. All the tools you can use for 2 users for $44.95/month and then $10/month per each additional user. At least this is what we’re thinking for the moment.

Why $44.95 month?:

  • Feedback from non-paying customers seemed to suggest $20 per user figure was a fair amount to pay.
  • This is less than the cost of a cell phone account for your business. Cheaper than a cell phone account and it runs your entire business online? Sounds like a great sales pitch to me!
  • Veetro does everything that darlings of the web 2.0 crowd does, except it does it all in the one place. Although it might be more expensive than Freshbooks or anything from 37Signals, it does it all in the one place. Plus, it has been designed by a veteran small business owner for small businesses. The efficiency savings and productivity benefits for your business will be many, many times monthly subscription.

So there you have it. We’d love to hear what you think about our planned pricing.

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