Finding the right pricing
Published: February 24, 2021
This one is geared towards the entrepreneurs, but I think it has value for the educators as well to see my thought process. One of the difficult parts of shipping a product is finding the right pricing. I listen to a ton of podcasts on Startups, some of my favorites are:
- Gimlet's Startup (follow it up with The Pitch and you will thank me later!)
- Reid Hoffman's Masters of Scale
- How I Built This with Guy Roz (shoutout to Jen Giffen for turning me onto HIBT!)
These are great to give motivation for success and high level topics for starting a tech company and building it. Definitely give them a listen, but the most recent one I have been listening to has great pertinent topics:
- Y Combinator Startup School Podcast and also the videos on Youtube as well. These 2 episodes from Kevin Hale about Conversion and Pricing from was really pertinent to me and impacted how I thought about pricing.
One of the bits that I do is give a free quota of questions created by FormCreator per week and then to get unlimited creations you need to buy a yearly premium license. So there are 2 variables in play here for the pricing, cost and quota. I want to optimize these 2 values to get the most revenue. Essentially I want to get the most conversions to premium. There are a few ways to increase this number, get a higher conversion percentage from my current users or increasing the number of users. I am testing out a new quota level with the update I released today, reducing it from 50 questions per week to 30 questions per week.
So why did I choose this number? I have Google Analytics on the users of FormCreator to know how many questions they insert (the Analytics are anonymized so I don't know who the users are). I had a percentage that were continuing to use the full free quota weekly, reducing this quota will either cause them to convert to premium or change their behavior. This might be that they just leave and never come back. That would be unfortunate and as a former educator I understand the dynamics at play so it wasn't a move I took lightly. Continuing to update the product to make it more compelling to use will help counter them leaving. We will see if the conversion rate increases or if I am saturating my early adopters as per what Kevin was referencing in the Conversion talk.
In a nutshell, I want FormCreator to be compelling for users to continue to come back and find value in using it and eventually buy the license.