Why $3.99, Not Free?

Learn the rationale behind the $3.99 price tag on my whiteboarding Chrome extension. tl;dr - I believe people get genuine value out of it - time saved, producitivity increased, work quality improved.

Many people asked me on Twitter and via Email, “Why did I price OhBoard at $3.99, not free?”

Instead of replying to each individual repetitively with uncompleted thoughts. I decided to write a detailed post about my thought process behind this decision. So everyone will know the answer now and in the future. Enjoy!

The Free Era in Tech, Not for Me

These days in the tech scene, many things are free. Free is great, mostly for customers. They do not have to pay a dime to use a piece of software, get certain amount of storage, or utilize a chunk of resources.

But ironically, they are made free. Customers were not the main force of the making-everything-free transition. The startups are. They want their products to be free. I’ve heard so many “acquire millions of users first, make money later” and “Q: How do you plan to make money? A: Let’s focus on getting tractions first, revenue isn’t our priority right now. We will worry about it a year later.”

Digging down a bit more, you will find out these companies are the ones either trying to become the next Facebook, Twitter; or trying to be acquired by Google, Yahoo, Microsoft. The founders want a giant exit. They will have to get boatloads of users first, because that’s what big companies (which are their potential parent companies) care about.

The founders of these companies are big thinkers. They are extremely enthusiastic, they are amazingly talented, and they are probably well-connected. They are just downright great people.

But that’s not what my ultimate goal is. I don’t want millions next year.

I am not saying I am not enthusiastic, or I never think big. I do. But realistically, my ability isn’t good enough to achieve that level of success yet. Time, resources, connections, money, schedules are all the things stand in the way. They can’t be changed easily. So would it be better to not think about the billion dollars exit, just build something people love using, charge for it, and offer amazing support?

Revenue from Day 1

Having money coming in from day 1 (even hour 1) is great. I am not greedy, but it proves, in truth, that my product are worth paying. Money is the best metric ever to validate ideas. For free stuff, I don’t know what metric is accurate. Pageviews? Unique visitors? I don’t think so. Because many people will still visit your site even if they hate it. But they won’t pay if they do.

Additionally, I don’t think you can get honest feedback from your free users. You will get a lot of feedback, but they will mostly be “very nice” or “it sucks”, the two extreme ends. And apparently, there is nothing you can do to improve your product unless you asked for clarification. But since they never pay for it, they will probably not answer your question.

On the other side, you can get really great feedback from paying customers. Why? Because they pay for it. They want to get the value that they pay for, and they want the app to be the best. They will provide you actionable suggestions, as well as constructive criticism. These kinds of feedback can get you start thinking in the mindset of your customers.

Let’s say you pay $10/month for hosting service, and you feel like something isn’t quite right. Will you provide a list of what’s not right and how you want it to be, or just throw out a 2-word sentence “You suck”? Obviously, the former. That’s the way they can improve the product for you.

Benefit-Pricing, Not Feature-Pricing

I strongly believe in benefit-pricing over feature-pricing. I think pricing should be based on the value customers gain, not the raw material costs. In the tech world, that can be translated into pricing should be based on how much money the product saves you, not how much work the developer puts in the product.

Let’s take a look at some products I’ve paid for: Coda and WooThemes.

Coda is a powerful text editing tool with functionality like direct FTP, terminal, source control, in-app books, etc. I happily paid $99 for it because what Coda offered had saved me more than hundreds of dollars of purchasing other FTP program, SVN app and book. The FTP also saves me a lot of time. If I can get more done in a day, the outcome (in my case, sales) will be more significant.

WooThemes is a WordPress theme development company that makes gorgeous themes target at individual niche markets. After adding your content, themes are ready-to-go. I used Inspire for OhBoard.com. It reduces the traditional landing page development from 1 week to 1 day. Those 6 days saved had allowed me to write more blog posts and have more time to plan my marketing strategy.

Less Customers, Better Support

This is a common theory that many people understand – if you have less people to support, you have more time for each one. But I want to extend it for a little bit.

Support doesn’t necessarily mean answering their emails/replying their tweets. I think support is about the communication process with customers, both directly and indirectly.

When you only have 100 people to support, you will have a great chance to reach out with every individual and find out more about your product in their perspectives. And eventually you will have a better look at your product. But when you have 100000 (not unusual for free service), talking to users is nearly possible. Sometimes, company will throw out a long survey, the numbers of responses are usually pretty low, and the results aren’t reflective.

What Does That Mean For OhBoard?

I charge $3.99 because I have no intention to let OhBoard become the next Google acquisition. I want to take OhBoard low and slow. I will make it something you love, something that can save you a little bit of time and money each day. It does not have to be 10% of everybody in the world. If OhBoard can make one thousand people’s day better and more efficient, I am satisfied.

I believe everyone who purchased OhBoard so far think it deserves $3.99, because the value they get from OhBoard is far more than that figure. It potentially replaces their next physical whiteboard, which costs anywhere from $10 to $100. And it also gets their jobs done faster. A simple example: designing a mockup is more realistic on OhBoard. Because the canvas size is exactly the same as their website, things don’t get proportionated.

With that said, because you pay for it, you deserve great support. I don’t want you to feel frustrated when problems happened. I will fix any bugs you encountered with OhBoard, listen to all feedback you have, and ultimately try my best to improve OhBoard based on your need. If you are happy using OhBoard, I am happy.