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The Gumption To Charge: How To Set A Fair Price For Your App

Are users getting accustomed to the idea of paying up? Obsurvey creator Allan Ebdrup posts about converting his software tool to paid–ostensibly without backlash. “One thing that has surprised me is that with over a thousand likes on the Obsurvey Facebook page, I was expecting a lot of people to unlike Obsurvey when it turned paid,” he writes. “This hasn’t happened.”

The Gumption To Charge: How To Set A Fair Price For Your App

One thing that has surprised me is that with over a thousand likes on the Obsurvey Facebook page, I was expecting a lot of people to unlike obsurvey when it turned paid. This hasn’t happened. In fact since converting to a paid service, the number of likes has continued to increase.

It’s axiomatic that Internet users prefer free services. As Obsurvey creator Allan Ebdrup points out here, the flaws of free products are becoming increasingly apparent–witness the Google Reader debacle–and users may acculturate themselves to the idea that paid software is software they can rely on. Via the Obsurvey company blog:

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I did see some numbers fall. Right before converting to a paid service, Obsurvey was getting 2,000 signups a month. This number has dropped to 800 signups for a trial a month. The number of survey responses has dropped from 200,000 a month to 80,000 a month.

Developers have been conditioned to maximize user base and TAM (Total Addressable Market) to impress investors, but when you’re running your own software product, the real metric is revenue, assuming your costs can be controlled and your margin scales. Smaller numbers can equal more money, as counterintuitive as it seems to the state of business on the web today, where much of the money made is based on advertising.

What now? I do not intend to focus on conversion rates, optimizing payment tiers, marketing, SEO, partnerships or anything like that. I will instead be focusing on one thing and one thing only–the thing that made obsurvey grow in the first place–building an even better survey application.

That’s a great instinct, but the underlying reasons are worth recognizing, too. If you’re a developer, prioritize what you do best, and surprisingly enough, everything else will seem less important.

I’ve tried, but never even been able to muster enough interest in SEO, to graph the basics. I love the excitement of building a feature and testing it on real people with usertesting.com. The feeling of having built something awesome, that users are going to love, can’t be beaten. I have limited time to spend, might as well spend it on something I’m good at and love to do–things that make me a better developer. When Obsurvey users write me emails saying how much they love Obsurvey, it’s because the product is great. Nobody writes me thank you notes, because my marketing or SEO is great.

Amen, brotha! Perhaps feeling emboldened, Ebdrup makes this final note–we think all developers should have this kind of gumption:

Having a small userbase, allows me to spend more time on innovation, when the userbase gets large, change comes slower. You spend more time on support, and you get the dreaded “but what are the users going to say” fear of change. I’ve seen first hand how damaging this fear can be at large SaaS companies. I intend to take full advantage of my small size.


Backtrack: To learn more about how to price your software product, read back: Pricing Your Software Product: What You Need To Know.


[Image: Flickr user Fr1zz]

About the author

I've written about innovation, design, and technology for Fast Company since 2007. I was the co-founding editor of FastCoLabs.

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