For those of us who were unable to attend WES, Kevin and the gang did an excellent job of providing in depth coverage; before and after the event. My favourite posts were the BlackBerry Solution Showcases that brought you quick, to-the-point overviews of some really amazing products. The first of the showcase series introduced us to Terry Hughes from Widality; the company behind the call tagging service called Momentem. This service is an excellent way to tag and categorize your phone calls. If you use your BlackBerry for both personal and business calls, this will help you figure out what usage you can get your company to reimburse you for.
Terry contacted us to give us an exclusive look at a secret project they have been working on for the past few months; a Name Your Price approach where their users can decide how much they want to pay for Momentem. It’s a fascinating method to gauge where they stand as far as value. After the jump, you can read what Terry had to say about the Name Your Price line, as well as answer a few questions for us.
I want to give your readers an insight into our innovative “Name Your Price” experiment, but let me start by giving you the background which will help to explain why we did this.
Here at Widality, we have one of the most popular business apps on BlackBerry App World. Busy professionals use Momentem all day every day to categorize and tag their important phone calls, enabling them to account for their time, bill more money, and recover more of their phone bill from others. It’s actually a service rather than an app, because we securely manage all of the user’s valuable information in our system and we deliver customised Excel reports of tagged activity.
We have adopted the “freemium” approach; we offer a free cut-down version on App World and a subscription version on our website. Our power users are happy to pay $8 per month for the premium version because there’s an obvious ROI associated with having all their important call information managed by our service.
However, the app market is changing rapidly and we wanted to find out a few things;
- What is the real sweet spot in terms of pricing for our service?
- How are people using Momentem and what do they love about it?
- For each use case, what are the users prepared to pay?
- What ROI are we actually delivering to our customers?
- What pricing changes would make more people switch from free to premium?
So I came up with a novel way of finding out. I launched a “Name Your Price” campaign. Here’s how it works;
- Every new user of our premium version gets a 14 day free trial and they don’t need to give us any payment information to download the app
- Five days into the trial, we sent the user an email, such that if they were delighted with Momentem they could name their price. If there was no response, they received another email at the end of the free trial period offering them one final chance to name their price
- To name their price, they had to send an email telling me (the President of the company!) why they felt they couldn’t justify the full $8, along with an explanation of how they were using the service and what ROI they were getting. In that email, they had to be bold enough to name their price, anything from $2 to $8 per month
- I then sent them a coupon code so that they could start paying their named price via PayPal or credit card. Although you might think this a manual process which isn’t scalable, it gave me amazing insight into our users and gave me a chance to connect with them in ways I never could in the past. So I was happy to sit there giving out coupon codes!
What kind of traffic did you experience as a result of the Name Your Price campaign?
We experienced a ten-fold increase in sign-ups compared to when the only option was to pay $8 per month
What was the overall impression that this campaign made? What did your clients specifically admire?
Our users simply loved our innovative pricing model and many of them said how they felt more engaged with us as a supplier, they enjoyed interacting with me to agree on a price.
Besides learning how to use the application, how did the customer benefit from this approach?
The campaign forced our users to consider how they were using the app and what ROI they were getting.
As they learned how they used the application, what were you able to achieve?
We have amassed vital information about how people are using our service and we have been able to segment our user base into 6 strong use cases. This will now enable us to segment our product offerings into logical bundles that address each use case, priced appropriately.
Based on the customer determining the ROI of the application, and you asking to choose a value between $2 and $8, I’m sure a few would have stuck with a price of $2.
But here’s the most important stat; the average price per user isn’t $2, it’s $5.50. So, that’s a 1000% increase in sign-ups with a 33% discount per user. Not bad!
What do you think is the reason that the average price was $5.50 instead of $2?
The reason people aren’t coming in at the lowest price point of $2 is that we treat them with respect, because they are busy professionals that rely on our service, and they don’t feel like insulting the President of the company in return. They offer what they think is fair and justifiable
Name Your Price was an experiment, and we can rightfully claim to be the home of Name Your Price pricing in a B2B app environment, with some encouraging results.If any other developers want to try this out, remember you got the idea from nice Uncle Terry at Widality, and do send me an email firstname.lastname@example.org if you have any further questions.
For more information on this promotion, check out www.momentem.net/nameyourprice.asp to get Momentem and to barter with Terry too!