A price nudge sounds better than an increase, no? I think so. In any event today I’m announcing a small price increase for HelpSpot. The short of it is that HelpSpot is moving from $179 a user to $199 a user as of August 31st. This is about an 11% increase.
Important to note is that the support costs remain unchanged. So it’s still $49 per user per year for ongoing support.
There are a number of factors that went into making this decision. As always I thought it’d be nice to share, so in no particular order here’s some of my thinking:
1 – In September it will be 3 years (Wow!) since the first HelpSpot beta launched. The final release was in late October. During the past three years HelpSpot’s price has remained unchanged, while our competitors continued to increase their prices. Currently HelpSpot is less than half the price of many major competitors and many times less than others.
That said, HelpSpot does have a unique place I think in this market. It’s very accessible price wise and I didn’t want to put it out of reach for smaller companies, departments, and non-profits.
2 – Probably my favorite pricing article is Product Pricing Primer by Eric Sink. One of my favorite lines is “In fact, if nobody is complaining about your price, then it is probably too low. The trick is to tune your pricing until the volume of the whining is just right.”. For the past year or so we pretty much get no feedback on the price being too high and a great deal of “Wow, you’re giving this away, I’d pay $350/user”. Now, I’m not going to jump to charging $350/user, but I think Eric has a great observation here and it’s been a big consideration as to the timing of the increase.
3 – As with most businesses increased growth leads to increased costs. So far I’ve done a pretty good job of keeping those costs down, but I think over the next year we’ll be taking on some new costs and this increase is going to help offset those.
4 – One thing I don’t want to lose is the perception of HelpSpot as a high quality product (which it is). A products price unfortunately does have an impact on that perception. As with most companies I’m trying to find the right balance and I certainly don’t want to fall down into the “cheap” bin. This one is a little more fuzzy I know, but it just felt like time to nudge up a bit.
5 – A price increase helps to bring our support cost percentage inline with customer expectations. Many customers like to see maintenance costs at 20-25% of the license costs. I personally find this a little unfortunate for us as most companies are buying only support for that percentage and are not receiving major versions as part of it. So they’re paying that and then paying more license fees when the next major release comes out, where that’s not the case with our plan. In any event, this will be one positive side effect of the increase.
That’s pretty much all the hard facts. So much of pricing is just feel, so this is my first chance in three years at testing my feel. Given how conservative the increase is I don’t think they’ll be much controversy, it’s probably going to come down to deciding if I’ve left too much on the table. My initial reaction was to go for something like $229, but I’m very hesitant to move over $200 especially given the economy.
Time will tell and I’ll try and report back towards the end of the year when I’ll know a bit about how it’s worked out. If you’re interested you can see the new pricing for the various packs here: http://www.userscape.com/products/helpspot/pricing.php