A hacker news post got me all wired up about Intercom pricing. While complaining, I realised some of our customers might feel the same way.
Our current pricing model is the same tiered model you see all around the interwebs:
- Professional plan: 90$/user/month
- Expert: 140$/user/month
There is a minimal user count (3 seats) on all subscriptions which ensures a minimal revenue for every customer.
What's the problem?
Although the model has brought us to where we are today, we keep asking ourselves if there is a better way? A list of issues we've encountered in the last four years with our current approach:
No indication of value/usage
Two different customer types would pay the same. Let's take two extreme examples from our customer base:
- 10 person agency with an average session count of 40 sessions/week/user summing up to 622 press releases/year
- 10 person corporate comms department of an S&P500 company publishing 22 press releases/year
Both would pay around 900$/month with a vastly different usage pattern. The value for the agency is much higher than the fortune 500 comms department.
Price objections = lower % close rate
We think we lose deals because of price objections. Sure, what people say when they reject us might not always be the real reason (we didn't convince them well enough that it's worth it).
Personally, I do believe that 270$/month can result in a sticker shock when considering something like Prezly. Does it hurt our business?
Adding users to your account starts at 90$. Yes, that is for any user:
- IT person setting up DNS records
- manager access to overlook PR activity (reporting only)
- a student cleaning up the media list
- a translator in charge of localising your content?
90$ or 140$ depending which plan you're on. And this is precisely the one-size-fits-all approach that bothers me looking at our own intercom bill.
We see that this results in account sharing throughout our customer segments.
We're big believers in the product-first approach where the product does the selling.
Continuously investing in making the product better, faster and easier to use will pay off in the long run.
Looking back a few years, when we last redid our pricing packages, our mindset was: go upstream. Building something that is very niche (CRM for PR professionals) deserves a serious price tag?!
At that time we were handholding every new customer (concierge onboarding). We helped them set-up DNS (email sender records) and imported their contact lists, steering away from any UX/UI quirks one might encounter in a new Prezly account.
Today we have cleaned up and improved much of that initial experience. Non-functioning features got removed; we brought consistency to almost all parts of the application and are more confident in that first-run experience.
So what about Product first? It's hard to convince users that our product will help them if they never get a chance because of the initial sticker shock.
It's not a coincident that our strong markets are Europe and North America. In fact, those two markets account for 78% of our yearly revenue.
We do not have customers in Vietnam, Chile or Africa (excluding South Africa).
I believe that's because we decided, based on where we live (Belgium, Europe), that 90$/month is the right price for our product, not keeping into account what 90$ would get you in that country.
I am fully aware that there is no perfect pricing model that would address all of the above... I do believe the time has come for a model that factors in the value (or usage) of the product.
Let me know what you think!
Interesting reads on the subject: