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Seriously stuck on pricing: should I give it all for free?


#1

Hi guys,

Spent the last few months of my life building the product, nights and days.

And I’m now stuck on pricing!

To be clear, mine is a web service where we sell listing spaes and therefore listing fee really depends on the amount of traffic we have. However, since we are a new website, we do not have great traffic so far: traffic would increase if listings would.

It is a vicious circle!

And I’m now thinking to give out listings for free with no obligations or commitments, until traffic increases. This way I would postpone having to think about pricing now and avoid to disappoint early customers.

Who of you has gone through this? Was it easy afterwards to convert “free-customers” into “paying-customers”?


#2

Sorry this isn’t based on personal experience.

Have you considered making it a ppm structure, the more traffic you get the more money they pay, at least in the beginning?

If it’s a specific market, perhaps talking to a player or two in it to set up a short-term contract (e.g. reëvaluate it in a year)?


#3

Jim, thanks for the advice. However, our traffic is not big enough for a PPM structure (we only get about 1000 pageviews a day. We should reach at least 10x more in order to charge money.

I was thinking to leave it all for free for the next 6 months and then start charging (e.g. Whatsapp-style).

Unless I buy traffic with Adwords or Facebook AD (though, it might be pricey).


#4

If you give away your product for free, people will get used to your product being free.

Paying for something is a commitment on both ends. If you think you can’t charge what you can charge in six months, charge less for the time being, offer a discount to get started, something like that.

But giving your product away for free will hurt your business more than it’ll hurt your customer.


#5

Yes, that’s my fear Roidrage.

I see myself with Linkedin. At the beginning it was all free: no paid memberships. And I’m not starting not liking the company anymore because they introduced the paid plans. They indeed offer good value, but I was used to have it all for free.


#6

Here’s another way to look at it. Some customers will never pay, and others will pay if they find value in a service.

So at this stage of your product’s life, you can offer it for free - with the aim of getting data, feedback, etc. Then, when you have enough data to know how to grow your business (e.g. building more sticky and viral features, providing actual monetary value to your users, etc), when you can start charging. A decent percentage of users who see the monetary value in your service should convert to paying customers. The rest, well, they would have never paid anyways, so at least they provided value in terms of data and feedback.

You can even consider a freemium model (if that’s possible with your service) where some features are free, so you can keep some of your users around. You would have to do some financial modeling to see if this makes sense for you though.

Also, you can indicate somewhere that this will eventually be a paid service, but is free for the first X number of customers. That will set expectations and create a sense of scarcity (“Oh boy, I’d better get an account now while it’s still free!”).

Hope that helps!


#7

Is it just a pricing problem that you have? It sounds like a classic chicken and egg problem, and while pricing can help somewhat it is likely only one of several fixes needed.

Some ways to get around the chicken-and-egg problem:

  • Prime the system manually. Offer to do all the work to get them listed at no cost/no effort to them. (not only free, but zero-work too.)
  • Somehow create a good single-player mode for the consumers of the listing (meaning give them something of value that will get them to come to the site even if you have zero listings).
  • If you can get a few listings but have no eyeballs, somehow make it possible for other site owners to syndicate your listings for free, so long as there is a link to the original listing on your site. If your listings are valuable, other site owners should be interested, and you’ll start to draw some traffic.

#8

You know why I love this forum? Because people here really know what they’re talking about! Ah, and for the UI too :wink:

Thanks Mike, thanks Oliver, your arguments both make great sense and are helping me to clarifying ideas.

@mikeleeorg: Freemium, good idea but I think it might complicate things a bit. There’s a “premium” service we offer: the homepage visibility and featured listing. However, we wanted to keep controlling it for now, for a matter of user experience quality: I wouldn’t want you to post crap content just because you purchased a premium token.
The scarcity concept makes sense too - I considered launching a Kickstarter campaign back then, but then moved away from the idea.

@Oliver: it seems like you would have worked side-by-side with us in the last few months! You couldn’t have better centered the problem! We are adopting strategy no.1 and no.2 for now: we do everything for free at a zero cost for advertisers in order for them to publish. At the same time we have a very informative blog that aims to create a community. Somehow we are adopting strategy no.3 too, though we syndicate content ourselves from other sources and publish on our website.

I guess, it might be time to do some serious Adwords!