Pricing Your Product, by Sequoia on The Grove -- includes Evernote and Michael Dearing quotes
Adam Rifkin stashed this in Selling!
Evernote is trying to measure that gap. The company’s Premium accounts currently cost $5 a month. Libin recently started testing Evernote’s price in some countries to find out whether that’s cheap or expensive relative to perceived value.
“It’s possible that in some countries, like India or China, $5 a month is too expensive,” Libin says. “For the U.S. or Japan it may be that $10 a month is still cheap.”
You can increase perceived value with better marketing. EBay, for instance, offered a feature from its inception that for 25 cents allowed people who sell products on the site to add a photo next to their listings. It wasn’t used much, Dearing says.
But it turned out that sellers who included the pictures had much higher click rates and tended to command a higher price for their goods. EBay started to market this data along with the feature.
With the benefit of the sales data, eBay’s sellers saw that the pictures helped solve a problem and their perceived value skyrocketed.
Because it didn’t cost eBay 25 cents to host a photograph, the feature, along with other optional upgrades, eventually generated hundreds of millions a year in pure profits, Dearing says.
William Mougayar, creator of the Startup Management community, wrote this in Mattermark Weekly #14:
Byron Deeter says Bessemer has released their Software as a Service Pricing Strategies White Paper, analyzing four of the most common SaaS pricing models: Freemium, Consumption, Tiered, and Perpetual License. It includes case studies from HubSpot, Assistly, ZipCar, Twilio, Oracle and others. Must read. Here’s the pdf download link (20 pages).