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We are in a process of launching a new start-up. It is a web based software application/platform providing business networking services. Although not directly comparable, however for the illustration of this scenario, I use the well know example: linkedin.com .

We plan to launch this application as "freemium" (free to all with payable premium content). Unfortunately, I am not able to give much detail about the business itself at the moment, however we believe that premium content would add enough value for some of the users to be willing to subscribe.

Currently we are in a process of putting together a business plan and realised we didn't really pay much attention to aspect of our start-up. Since it is quite important for us to get the pricing right as well crucial to work out the finance in our business plan, I would kindly like to ask the business community for your valued opinion.

We would like to target small-medium enterprises as our main market and believe our software could help them generate additional leads and help increase their revenue (especially when subscribed as premium user).

  • What do you guys think would the optimal price range for a premium content that an average SME would be willing to pay for a service that would be beneficial to generating additional revenue for their business?

    • What do you think would be most desirable subscription time frame? Wold the standard 1 year be desirable and what do you think are pro's and con's of 1 year subscriptions?

Your opinions or real life examples with setting up the pricing for your web based business are greatly appreciated.

Thank you very much and we are looking forward to your comments.

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3 Answers

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I've seen sites package up content with several tiers, based on the number of distinct pieces of premium content they can access each month.

I think that's quite a nice structure for customers, and gives the provider an easy way both to provide a low cost on-ramp and to up-sell regular users.

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Thank you. What do you think would be an adequate price to ask in $ considering the user can get enough value? I mean off course I understand that is a hard question to ask, however compared to other companies in similar business what do you suggest would be adequate range for a monthly or yearly subscription? 30-50 USD/month/ 100 - 250USD/ month... more or less? Thanks, every opinion is greatly appreciated. – Peter K. Sep 19 '11 at 16:26
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For price testing where there's one or more incumbents / market creators, you can start low (notably lower than the main perceived competitor) or start high (notably higher than...). You'll learn a lot from either starting point! – Jeremy Parsons Sep 28 '11 at 22:28
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It is very hard to give any indication as to an actual pricing number without knowing what the business gets for that price. You mention that it will generate additional revenue for the business, but again without quantifying that, it is hard to put a value on it.

With the limited information, the only advice I could give you is to look at other subscription services that your target audience might be using. Try to gauge which services add a similar level of value to the business as yours does, and evaluate accordingly.

As for subscription periods, I am a big fan of monthly subscriptions. If your product adds value to the user, then they won't be cancelling their subscription so you don't need to worry that it is too short. It also is a lot less barrier of entry for someone to sign up, knowing they are only committing to 1 month at a time, so I expect you would get lots more signups. To me it's a case of let your software be the reason for retention, not an artificial barrier like a 1 year subscription.

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Thanks you for your comment Joel. Yes 1 month subscription is something I considered so I think we will have a look into that for sure.

I tried to look into competition, however couldn't really find any service on the market that would offer same combination of services as we do or at least not on a scale that we intend.

I understand it is difficult to suggest anything without knowing more detail, so I'll try to add a little more info to my previous description, hoping it would be enough for you guys to suggest a level of pricing, that we could consider to start up with.

In the beginning we hope to grow number of subscribers (standard registered users) by starting as a free service with a long to mid-term plan of introducing premium content. Our users could be roughly grouped into solution seekers and solution providers.

Premium content roughly means that if you are a solution provider, you would pay for premium content which will allow you to contact pretty much the whole database of registered users who registered to look for solutions. You would be able to do even as a standard user, however on a more limited scale as compared to premium user. (again for illustration on the similar concept I would use linkedin's direct messages "inmails" etc.)

So to put it simply - premium content would allow you to generate business leads without restriction and more effectively. Premium accounts are pretty much targeted at solution providers audience.

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Can you use LinkedIn as your basis to compare pricing to then? I know you are not offering the same, but if you feel like their service is giving comparable value to businesses, then the pricing model should be close. The only other advice I would give is to start a little high with your pricing if anything, it's much easier to drop your prices and make everyone happy than it is to raise them later. – Joel Friedlaender Sep 19 '11 at 0:06

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