A Tale of Three Pricing Models

Ben Orenstein

Eighteen months ago we launched a product called FormKeep to make it pleasant to add forms to static sites.

Since its launch, FormKeep has had three very different pricing models. We thought it might be useful to others to reflect on our experiences with each.

Our first attempt: pay what you want

Choosing what to charge people is hard, so at first we sidestepped the problem and just asked folks to choose their own price.

We provided a slider from $1/month to $99/month and let people make their own decision.

Pros:

  • Didn’t require us to make any hard decisions.
  • Customers loved it.

Cons:

  • The vast majority of our customers chose the minimum price (duh).

At our lowest price point, a customer would net us about 68 cents after Stripe’s fees. After a year of providing this person with a quality service and customer support, we’d have about 8 dollars in our bank account.

Clearly this was not the way to build a sustainable business.

Next: pay per form

Pricing a product that helps people make forms is a tricky problem. We wanted to price in proportion the value we provide, but how could we tell how much value someone was receiving?

Charging by number of submissions seems sensible, but has issues: imagine a form that gets only 20 submissions a month. That seems like an unimportant form, but what if those submissions are leads for seven-figure consulting projects?

We decided that charging per form made more sense, but clearly some forms are more valuable than others.

To address this, we asked our customers to indicate whether a form was for commercial or personal use. Commercial forms were $25 per month, personal forms were $9.

Pros:

  • Theoretically lets us charge more to businesses.
  • Was easy to implement quickly.

Cons:

  • The plans were poorly differentiated feature-wise. This meant choosing the more-expensive commercial plan was almost an act of charity—paying more for roughly the same plan. This…didn’t work. Some spot checking revealed that lots and lots of “personal use” forms definitely weren’t.
  • Paying per form was an instant deal-breaker for companies with lots of forms. These people should have been our best customers, but the price ballooned far too quickly to be feasible.
  • Almost everyone only used us for just one form. Adding a second came with the instant penalty of a higher monthly cost.

Finally: tiers

Just a month ago, we moved to tiered pricing where the per-form price decreases as you use more:

  • Up to 4 forms: $29 per month ($7.25 per form)
  • Up to 10 forms: $59 per month ($5.90 per form)
  • Up to 30 forms: $99 per month ($3.30 per form)
  • Up to 75 forms: $199 per month ($2.65 per form)

Pros:

  • This makes us attractive to organizations with many forms, who are likely to be our Best Customers.
  • Our average revenue per user has been steadily rising since we rolled out the new pricing, and this last month has been our best ever in terms of new monthly recurring revenue.

Cons:

  • Our lowest price is prohibitive for non-business users.
  • There are now “cliffs” where our prices rise suddenly. This leads to the occasional request for a special plan for exactly their number of forms.

Overall, we’re quite happy with this change.

Next: something new

I don’t think it’ll be long before we try a fourth approach. Or a fifth.

With sensible grandfathering, there’s little downside to frequent pricing tests, and the upside can be substantial. We’ve never had a month as good as the one right after we reworked our prices.

Want more?

If you enjoyed this post, you might want like The Giant Robots Podcast, which I co-host. Each week, I discuss the nitty gritty details of running FormKeep.

Or, if you’re a developer or designer who frequently puts forms on static sites, you should check out FormKeep.