I check out a few new products every month that I think may be of use in our practice. The following is a true story of a recent experience I had experimenting with a new B2B oriented one that I will call Hotel California. I have changed the name because I signed a license agreement which said that I would not disclose anything about my evaluation experience.
A Recent Experience As A Beta User
I E-Mailed the support alias the following note because I was in the “free beta” and wanted to know the full price.
So far it’s interesting but not compelling and I am trying to determine whether it’s investing more time. Depending upon your price point it may not be a fit with my needs. Currently I would rate it between $60 and $180 per year. If the cheapest option contemplated is more than the top of my range please let me know now and save my time.
I thought it was an accurate assessment of the likely value of the service if it was deployed in production. I assumed that I would have to pay that per seat for each additional person I extended access to. I got the following answer back from the “Director of Product.” The only thing I have changed is the name of the product.
“We’re glad you’re finding Hotel California interesting. This is just the tip of the iceberg. We have many more features coming soon. You’ll definitely want to stay tuned.
As for cost, our promise to our users is that the functionality you experience today will remain free. Our beta users are an integral part of our development, direction and success. As we collectively grow our product, our intention is to release a premium version at some point in the future – a premium product that will be worth the wait.”
It’s Always a Warning Sign When a Startup Cannot Name a Price
An answer which I did not find particularly illuminating. It’s always a warning sign when a company can’t name a price. So I suggested as much in my reply
We don’t use free tools in our practice that clients may come to rely on. There are a number of startups developing similar applications that we think may be usefully incorporated into our practice. But I have learned through hard experience that an answer like yours means one of three things, none of them indicating that I should continue to invest my time in moving down the learning curve on your application.
- It’s going to be expensive and once you get critical mass of enterprise users you will perhaps leave a free trial period but drop the free and just go premium.
- If you can’t figure out how to take my money today you will run out of money, become fixated on raising another round based on eyeballs or beta users and likely fail.
- If you don’t take my money then I don’t have a service level agreement with you which means that if I use your offering with my clients it puts my brand at risk. The marginal benefits of what you have shown are dwarfed by the risk of introducing a client to your application, asking them to sign your current agreement, and then having you fail to perform. Under your current agreement I have no recourse or expectation of performance. But my clients have an expectation that I won’t waste their time or use “flaky but free” apps that may inadvertently disclose their strategic intent.
Happy to schedule a call if you are serious otherwise I probably need to wait to understand your business model before I spend much more time.
We Still Cannot Tell You the Price But Would You Please Invite Some Coworkers to Join
No reply from the Product Director but about five days later I got a form letter from the Marketing Director asking me to take a survey and invite two co-workers into the application, when two of my invites have signed up I would win a $20 gift card. It seemed to me that they had missed an opportunity to ask what led to my valuation. I wrote back:
I have asked for pricing information. I am not willing to encourage anyone to use your service until the pricing plans are clear.
And I included a copy of my E-Mail to the Product Director. The Marketing Director was polite enough to write back (I have only changed the name of the product):
Hotel California is FREE and always will be. In 2011 we will introduce a premium version that will be priced at $25 – $50 per month. Through surveys like this our users are helping us build our product as well as helping us determine what to include in a premium version. We will continue to maintain and update the FREE version with new content and new features as well.
This at least answered the question I had asked the Product Director. I wrote back:
Thanks for clarifying your pricing, you and the Product Director should compare notes, he never answered my E-Mail below. It sounds like the cheapest option contemplated is $25/month or $300/year which was above the top of my value range of $120-180 a year. Please delete my account.
Which led the Product Director to respond.
Thanks for the email and I’m sorry you’re not comfortable using our free software.
I can understand where you’re coming from and hope you reconsider once we release our premium addition, it’s going to be a real game changer.
Thanks again so much for your support, your account has been deactivated.
The software was not compelling and their target price range was above my valuation. And I am not comfortable using free software with clients. And then I thought “de-activate” not delete, where have I heard of that before? So I wrote back.
Your price point is above my value range. Nothing you have demonstrated to date looks like a game changer. Unlike the Marketing Director you didn’t even have the courtesy to answer my question. Please delete all of the information you have collected on me, don’t Zuck with me by pulling a Facebook and “deactivate” my account. Please delete it.
Two days later I got another E-Mail from the Marketing Director suggesting that I take a survey and invite two co-workers that I could win a $20 gift certificate.
Update Mon-Jun-14: I got another e-mail today that indicated my original profile was still active and used to generate a report. I E-Mailed the Marketing and Product Directors:
I have asked you to delete my account but I continue to get e-mail from you and it does not appear that my account has been deleted because you are updating me on a profile I had entered.
I would appreciate your prompt attention to this matter.
I got the following answer back about six minutes later from the Product Director:
Your account has been physically removed from our database.
You will now longer receive information from us.
Have a fantastic week.
SKMurphy Take: Implement “Delete Account” Early for B2B Offerings
One suggestion if you are developing a new service: implement the “delete account” function sooner rather than later. Also be able to put a price on your offer, even it’s just “pioneer pricing” that will only be honored for early users, so that a business customer can determine what they need to budget.