Pricing is hard

I’ve been talking to a friend about pricing a new product and figuring out what to charge, especially when you are first launching, is hard. Really hard. It feels like you are just putting out a guess and hoping it works.

As I thought through the pricing I wanted to share some of my thoughts on it, and what I would do if I was launching a new product today. Much of what follows should be looked at through the lens of a brand new product.

Before even thinking about pricing I’d want to have a pretty good idea on what my expenses are. Without that how do you know where your break-even point is? You don’t, and you are just guessing. Watch any business show on TV and the first thing anyone wants to know is what it costs for a single item. It should be the same with your product. How expensive is a single customer.

Once I had this I would try to figure out how I could fairly price my product. If it’s B2B how can I charge a fair price to a small business, and a fair price to a company of 500? Usually this is done with different plan levels, and a good differentiator is the number of users. To take common pricing terms a single user might be $9 a month, 5 users might be $49, 25 users $129, etc.

This is a simple way of segmenting your customers and also easier on your codebase because you aren’t putting feature flags on a million different things. It’s one code base, everyone gets the same features.

Of course, users are just one way of doing it, there are tons of others. Just remember to have your packages on simple things that are easy to understand. As a buyer I want to know instantly what package I would need.

Out of all the pricing models, I think the two I dislike the most are charging for things I can’t control. For instance, if you are a selling a SaaS CMS and billing based on views or podcast hosting charging by downloads. In either case, the actual amount is outside my control, and I don’t want to have to go create a spreadsheet to see if I’ll fit within a specific plan. Plus neither has any bearing on if I’m successful. I feel like the product creators think income is related to these, but I’m not sure that is the case. It’s never been that way for me.

The second model I don’t like is one price for everyone. Basecamp does this and charges $99 a month. I’m a small business and $1,188 a year is substantial. Where a company with 50 employees and 7 figures of revenue this is nothing more than a rounding error. As a true small business, I get screwed every year.

Like I said in the beginning pricing is hard and there is no right or wrong way to do it. In my opinion, when you launch your first product it’s better to undercharge and make just a little profit than to overcharge and not get any customers. It’s always easier to raise prices than to reduce them, and once you’ve turned someone off it’ll be very hard to get them back.

Think of a new launch getting featured on Product Hunt. Thousands of people will be hitting your site finding out about your creation, if the price is too high, in relation to the market, there is a big probability you’ve lost a lot of really good customers, and you’ll probably never get them back to the site again.

I’ll say it again, pricing is hard and I think all we can do is use our best guess and gut instinct to figure out where to start.

Sharing My Illustrations on Dribbble

I’ve been doing a lot of illustrations lately and I’ve been trying to create one a night as practice. Here is tonight’s that I named “Triggered”:

Triggered
Triggered

I’m not sure the best place to share these since it’s not tech stuff I typically share on Twitter, so I figured I’d giver Dribbble a try. If you are interested you can find me at @ericlbarnes and I’m going to continue trying to create a new drawing each day.

I’d eventually like to make some geeky comics with basic drawings but coming up with a funny story is quite difficult. If you have anything you’d like drawn just reply below in the comments. I’d be happy to create you something to the best of my abilities and it’d give me some practice.

Find and Replace Colors in Sketch App

For Laravel News we use a lot of icons for the featured images and these usually come from the Noun Project or Undraw. They are quick to use and work really well. Sometimes I need to change the colors of the icons and a simple method for doing this is with the Sketch App.

Just go to Edit -> Find and Replace Colors, select your colors, and hit replace. It’s instant. Here is a quick animated gif showing it in action:

That’s all it takes to quickly change an icon and it’s a feature I will use a lot in the future.

Netflix Fyre Festival Documentary

I’ve been hearing about this documentary for a while now, and I finally sat down to watch it last night. I can see why this generated so much buzz. Spoilers are ahead.

If you’ve never heard of Fyre Festival, it was going to be a luxury music festival on a private island in the Caribbean. Every step of the way was a disaster and the creator of the event, Billy McFarland, never stopped pushing to make it happen.

I think we all love watching a train wreck and the way the story was told everyone seen it coming except the creator, Billy McFarland.

Of course, we only see the aftermath and stories from the people that were involved and hindsight is always 20/20. What struck me is how they all seemed to know it was never going to work but put their head down and continued working.

The craziest part to me was at the end after everything failed he called a meeting with his full-time employees and said something to the effect of, “No one is fired, and you all have jobs, but we will not be making payroll anymore.”

The whole documentary just reminded me so much of the VC push of growth at all costs and how these entrepreneurs bow to the dollar. They will do anything to enrich themselves.

More than anything you should watch this for the human side of it. How it seems we are all wired to pull for the team and even when we feel something isn’t quite right we push that to the side. People like McFarland know how to prey on this, and as employees, we all need to be on the lookout for hucksters and scammers.

If you go to a job interview and get an uneasy feeling about the company, keep looking. I know this is hard because you need a job, but sometimes you have to say no. The same way if you get multiple job offers really weigh them out. If you want to be happy long term, money should not be the driving force.

F12 Consoles Me

For the past few days I’ve been trying to do one quick drawing a day. Usually over my lunch break. The goal is mainly practice but I like to share even if they are horrible. That is how I improve.

For today’s, I was looking for inspiration and remembered Wes Bos has a dad jokes repo with a bunch of web development jokes. I found about a the Console which lead to the above.

If I can get enough characters one day I hope to be able to easily create a comic strip instead of the one offs like this.

Create a scale model of the room before buying new furniture

When buying furniture it’s sometimes hard to figure how an item is going to fit in a room. How much extra space will be around it, and how cluttered the room will feel.

To answer these questions I’ve started making tiny paper drawings so I can get a birds eye view of the room with different furniture.

If you’d like to do this all you need is a measuring tape, a pencil, some paper, a ruler, and some scissors.

First get the dimensions of the room. Measure each wall and make a quick sketch with the sizes. This is not to scale and just a way to help me remember how each wall measures.

Room Dimensions

Then, take the longest side and divide the number until it’s less than 8, the smallest side of a standard sheet of paper.

For example, the longest wall in my office is 162 inches and when I divide by 25 it gives me 6.48 which will fit neatly on a single piece of paper. Now divide every number by 25 and you’ll have a perfect scale model.

Next, on a new sheet of paper do the same with the dimensions of the furniture and then cut them out. This will allow you to move it around in your model. I was looking at new desks and wanted to get an idea of what size would fit best in my office and here is the diagram with the little desk pieces to move around.

That’s about it. Now you can get a feel for how a piece of furniture will fit and it’s really helpful for sharing your ideas with others, especially if they struggle visualizing it.