Price Point

I have wanted to write a post for some time complaining both about user expectations for free or very low priced apps/services and provider pricing models. I see these two issues as inter-related so please bear with my effort to argue for a connection between these issues.

The immediate stimulus for this post was a recent Miguel Guhlin comment lamenting the loss of as a free way to offer a web site based in Evernote. Postachio discontinued the free service and moved to a paid service that would cost Guhlin $90 annually in addition to the cost of a Pro Evernote account.

I have written about a similar problem on several occasions (recently concerning Posts).

The challenge here is to encourage both users and providers to make adjustments

Users expect too much without appreciating the demands of creating quality resources. Users expect free without giving thought to why the app/service provider would have developed the necessary skills and made the considerable effort to make the app/service available. This “reason” might be called the business plan. If no business plan is visible as a user I would hesitate to invest much in the service.

Free does not have to mean that no plan exists, but it is important to consider what the future might hold. Perhaps the developers hope to produce a popular service and be acquired. If successful, there is then the concern that the company acquiring the product may discontinue what the user has come to depend on (.e.g., LaLa). Perhaps the developers benefit from a related income stream and do not need to make money on the free service (e.g., many Google services, ed presenters who support themselves through speaking/consulting fees, but offer online tutorials at no cost). Perhaps the developers intend to charge at a later point (the Guhlin experience). If this happens without an indication free was not the long term intent I would regard this as naive or unethical (I do not have the background to evaluate the Guhlin case). I do think developers can be naive. I even distrust products that would seem to have “backend costs” and are free or are sold at a very low price. Once the market for a free or $1 product is saturated, how will the developers continue to cover their own costs? This final issue is the one that keeps biting me. Even services I have paid for have failed on me.

My second “issue” concerns the pricing model some companies offer. My needs frequently seem to fall between the base price (sometimes free and sometimes a few dollars) and the next step up on the price/services model. As an example, Guhlin suggested that he was going to respond to his plight be using Zapier – a flexible system for integrating applications/services (as a simple example detecting a change in one service and updating data in a second service). This service interested me so I investigated the service. While quite powerful, the service makes a good example of the situation I have just described. There is a free version that allows a limited number of tasks/actions to be taken (probably sufficient for Guhlin’s project and most I would consider). The next step on the pricing structure is $240 per year (and it moves up from here).

My sweet spot as a personal user is likely in the <$25 range for annual services and maybe $10 for an app. In some cases I might expect to pay both (the initial purchase and then an on-going payment to support backend requirements).

From my perspectives, these two issues are inter-related. More users should be involved in paying for services they use and providers should be offer reasonable rates suited to the actual levels of benefits users receive.