ThoughtStreams Pricing Models

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last posted April 17, 2014, 5:22 p.m.
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Pricing on ThoughtStreams started off unusually (at least for a site built by Eldarion)...

We offered three annual plans ($20/yr, $50/yr, $100/yr) with initially no feature differentiation and with no free trial.

We were honest that, as an early user, you were basically help back the potential of this site.

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Then after a year, we decided to test if switching to a freemium model would better pay for development.

The idea was that the free plan would be sufficient for trying it out but regular usage really needed a paid plan ($3/mo, $6/mo, $9/mo).

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The freemium model has been less than successful so we're thinking about alternatives.

One thing is clear: we're not interested in ad-based revenue. We don't believe in building a great site to advertise on, we believe in building a great site for you to capture and share your thoughts.

I'm not sure I'm that interested in just replacing the freemium model with a free trial on the monthly plans.

There are two ideas I've seen elsewhere that intrigue me more.

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One, which I have known about for a while, but of which I was reminded by early ThoughtStreams user, Joel Dueck, is the one-off charge that increments by number of users.

Pinboard has used this with much success.

Now, Pinboard charges $0.001 per user that preceded you and they're now up to $10.35 at the time I write this.

Some have expressed concerns about the linearity of this so one variant would be to go logarithmic.

Without any multiplicative constant, the natural log actually has some nice characteristics here. The tenth user would pay a one off $2.30, the hundredth $4.60, the thousandth $6.90 and so on.

Of course, this does raise the question of how people who have already paid more than this would feel. This site is what it is because of the great thoughts the early users have posted and I don't want to screw them in any way.

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Another idea is pay what you want (one-off) but if you pay more than the average, you unlock more features.

This approach has always intrigued me and it seems a great way of letting the market set the price.

However, I have concerns as to whether it works on a constantly evolving site. What if you elected not to pay extra because none of the extra features at the time interested you but then we launch an extra feature you'd like.

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Of course, even as I typed the above, I realized one way around that was you can opt-in at any time to pay the difference necessary to take your one-off payment above the average.

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What do you think? What are your thoughts on where the pricing model should go?

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One big downside to monthly/annual plans is the cumulative entanglement factor.

Many of the kinds of people ThoughtStreams is aimed at probably already have several tiny subscriptions. Personally I have annual Flickr Pro membership, several domain name registrations, a VPN service, and monthly subscriptions/fees for Libsyn (podcast hosting), a small public radio membership, Spotify, Feedbin, and whatever else slips my mind at the moment.

After awhile you get wary of adding another little mouth to feed.

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Two services I use all the time but completely avoid the cumulative entanglement are Pinboard and ThoughtStreams.

With ThoughtStreams I paid to be an early user, got lucky and was rewarded with a lifetime account. Pinboard pricing has of course always been this way.

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Several things have contributed to the success of Pinboard's pricing model.

Two of them have to do with the model itself.

  • Because it's a one-time fee, there's no ongoing financial relationship. It's more like buying an app that way. (The pros and cons of app pricing economics have been thoroughly analysed to death by others.)
  • Because the one-time fee increases marginally with each new user, people have a psychological incentive to sign up sooner.
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But there are two other factors that may not apply as much to ThoughtStreams.

  • Pinboard entered a market that was developed and well-understood (bookmarking). Pinboard didn't try to reinvent bookmarking, just to do it better.
  • Pinboard has at times seen an influx of customers fleeing the drastic incompetence of its biggest competitor(s).
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Finally, there's one other aspect of Pinboard's pricing model: they offer a killer add-on feature (archival of bookmarked pages) which does have an annual fee.

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I don't know how much this contributes to the success of Pinboard's one-time fee model.

It's possible Maciej structured it so that the one-time fee users bring in enough income to cover their own infrastructure and that the $25 annual covers just the extra needed to handle web archival.

But I also suspect he may depend on a certain percentage of one-time-fee users converting in order to cover all his infrastructure.

Maciej is very open about his infrastructure costs so perhaps he's already posted the answer to this and I just haven't seen it.

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Another thing about Pinboard's killer feature: it's the kind of thing where, once you sign up for it, it doesn't make any sense to cancel it or restart it. That definitely doesn't hurt the economics any.

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As joeld points out one big difference between ThoughtStreams and Pinboard is that Pinboard was effectively a clone of a site people were familiar with but abandoning. In other words, Pinboard didn't really have to worry about people needing to try it first to "get it".

The same is true of App.net. People knew it was basically a Twitter clone that was subscription-based rather than ad-based so it was an easy sell for people looking for an ad-free alternative to Twitter.

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ThoughtStreams could actually be a great tool for teams to riff on different ideas.

I think we'd certainly pay ~$100/month for our team to have a private version of it.