Noooo! This makes it sound like you can start with a pricing model that is way off and change it later. When you change it, you better be charging for something different, or customers will be pissed. Netflix is perfect example. Great service, great product, and then they lost a lot of customer when they said, "Instead of paying A and getting X and Y, we're only going to give you X for A, and you can pay B for Y." If you do change pricing, you need to change the product package in a way the customer can justify.
You can. We did. We improved the product and charged new people a higher price while keeping early customers at their old price.
Netflix was way past this point when they changed their pricing model. I believe what they're advocating is to prove people will pay -- doesn't matter how much. Using strategies like grandfathering people into a plan you can avoid making customers upset in the way netflix did.
Curious to hear feedback on how to handle pricing for existing customers as you evolve your pricing model. The KISSmetrics guide recommends grandfathering in existing customers which makes sense. Are there opportunities to allow them to help grow your customer-base by inviting new customers into their discounted pricing tier, and is that generally worth it, or should you avoid the complexity involved with managing such a broad range of price structures?
We have some customers grandfathered in at our earliest pricing tier: $10 per month. When we signed them up at that price, we told them that at some point in the future that would change. I think the important thing early on is to set expectations. Don't pull the rug out from under people, but if your product is 10 days old, tell people that you want the flexibility to change the price in the future.
We're considering adding features not available on prices below X and also offering them a significant discount to switch to annual billing on one of the newer pricing plans.
Some great points. Understanding why your users use your product vs. how they use it will go a long way in determining price. I think the why is much more impoerant than the how.
