The Data Behind Purchasing Behavior at UserVoice – Part 2

http://500.co/2013/07/19/the-data-behind-purchasing-behavior-at-uservoice-pricing-for-conversion-part-ii/

by philippb • 13 years ago

28 3 13 years ago

Two points stuck out at me here:

We formalized a process to enable our customer team (account reps & support) to give anyone trial extensions if they had a real need... folks that received a trial extension were 2.5X more likely to convert and 5X more likely to upgrade at some future point.

I'm glad there's data (at least for one company) to support what was always my intuition. Many companies are hesitant to offer a trial extension, but the cost of doing so in most cases seems absolutely trivial. Now that at least some data is out there, perhaps more people will adopt this pattern.

Another successful change was to change how we handled existing paid accounts that had a billing issue and were to be downgraded. In the past we would just downgrade those accounts to a Free plan, send an email and that was it. From talking to some customers we realized that some people would get downgraded and not notice that their functionality had changed.

I wonder, isn't there some way you could know ahead of time that the account might experience billing issues and send them a warning email before their account is downgraded? Assuming you have their credit card information, at least one issue you could anticipate is their card's expiration. As a customer, I'd prefer the heads-up notice as opposed to something after-the-fact. My takeway instead of "make it obvious when people are auto-downgraded" would be, "prevent people from being auto-downgraded at all," if you can.

qeorge• 13 years ago

"Many companies are hesitant to offer a trial extension, but the cost of doing so in most cases seems absolutely trivial."

I totally agree with you that this is crazy. Not only is the cost trivial, but you've potentially spent a ton of money to get them using your app! Recovering this sale is unspeakably cheaper than acquiring a totally new customer.

The counterpoint could be that by asking for a trial extension, they've clearly signaled that they value the product. Perhaps with a nudge they will get out their credit cards.

But if the app is doing its job, they'll be more engaged at the end of 2 months, so it should be an easier sale and one month's revenue will come out in the wash. This seems to match UserVoice's experience, where conversions from this group were 2.5x higher.

pbreit• 13 years ago

I feel like almost all SaaS pricing misses the golden rule of pricing: price what the market will bear.

What I believe this implies is roughly 3 tiers: + $0 (maybe up to $10 or $20/month) for bootstrappers & micro businesses + $10-500/month for companies with a little bit of funding or a marginally profitable small business + big bucks for well-funded or highly profitable companies

Then you design the packages based specifically on what those customer types need. Try to avoid stopping out a user based on usage. Keep general features available to all. The obvious features to vary in the tiers are those having to do with administration which are a natural for larger companies.

The Data Behind Purchasing Behavior at UserVoice – Part 2

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