The Right Price

As Oliver Reichenstein so astutely wrote about in his article about iA Writer, pricing is very hard work.

The right price for a product is the highest price you can ask for, but with one condition: that your customers remain happy after they buy it.

I’m reminded of something Marco Arment wrote about last month regarding why he will never put a “rate this” dialog in Instapaper:

To me, once you’ve paid that $4.99, you get a first-class, luxury experience. I want you to feel great about having bought the app. […]

People who feel that great about having bought the app are the ones who tell their friends, or the internet public, to go buy it for themselves. And that’s far better for my sales than any App Store review will ever be. If you’re searching for the app by name because you heard it was great, you’re probably already going to buy it, and it doesn’t really matter what someone says below the screenshots.

Here, Marco divulges his business model for Instapaper: treat his customers as well as he possibly can. Marco is trusting that his customers will spread the word about his app so that he doesn’t have to worry about cheap and rude marketing tactics. Instead he worries about making Instapaper really, really great.
This is the pricing and business model as well.

The months before I announced the membership to this site, by far and away the thing I spent the most time thinking about and researching was the price. There are many other websites which offer subscription models and I looked into every one I could find. I asked questions from many readers, friends, and even business owners / entrepreneurs who were not very familiar with my site at all.

I landed at $3/month for two primary reasons:

  • I had a very strong gut feeling at just how many readers would would sign up and become members. The membership price was set so that if the amount of members I was expecting to sign up did, then I would be at a break-even point. And that is almost exactly what happened.

  • Secondly, 3 bucks a month is low enough that the vast majority of members feel like they are the ones getting a deal. They feel privileged, not duped. Which is great because never once have I felt pressure from members to create anything more extraordinary than there already is.

My “business model” for this site is to give current readers — you guys — a first-class site that you want to read every day. Thus, everything I write and everything I link to is for the sake of the current reader, not the random googler, and not in hopes of getting onto those traffic-sending aggregators like Reddit or Hacker News.

And that affects everything you see and read here — from the topics I write about, to the titles of the articles and the links, to the layout of the page, and all the other little frilly bits that are curiously absent.

My models for membership pricing and advertising are ones that keep the lights on while also keeping readers happy. And as for growth? My idea of “SEO” is to write with mustard, and my idea of “link-bait” is to publish stuff that you guys love.

The Right Price