It's crazy. Sometimes it feels that 37signals just shouldn't still be in business with how they do things. This makes it sound like they take the Cosmo Kramer school of business management, "this price just FEELS right."<p>But it's been wildly successful for them. I guess the point here is that all the kinds of management training you see in traditional companies pales in comparison to having smart people with great intuition running the show.
The first time I charged for a web service the hard part was getting over the guilty feeling that I was charging for something that cost me almost nothing. That's definitely not the case of course. I had to develop it, support it, pay for hosting, etc. Still, it takes a bit of strength initially to begin charging money for little more than adding a few rows to your database.<p>From the inside it's really easy to undervalue what you're doing. It's a big mistake too, because if you're solving a hard problem for someone they really don't mind trading money for it.<p>I think 37 signals emphasis on creating products you can charge for is their very best advice. Paul Graham didn't go for eyeballs with Viaweb -- he charged something like $300/mo for an online store application.<p>Working on a product that makes money is entirely different from working on a free one. In a thousand little ways. As a business I definitely prefer charging users directly and probably won't ever try to create another free (to users) business again.
I think its just from their experience as customers elsewhere.<p>For me — $10 for a simple service seems a little pricey, $9 is basically $10 still, $8 is still a a tiny bit high — but $7 is the sweet spot! Same goes for higher prices too — I like $37 rather than $40. I'd think less about paying $17 for a service than $20, $19 or even $15!<p>Not sure why, maybe its because the $7 on the end becomes my focus:- its still technically pocket change — but also in the higher end out of 10...and I think about it more than the $30?<p>(plus if your picking smart numbers for prices, check out the "common" exchange rate people think of without checking. For me, I think of a dollar being worth £0.50p, so $37 is around £18.50, when in fact its over £21; for some it may not make a difference, but for others, the extra few pounds to nudge it over £20 may be enough for them to pick a slightly cheaper plan. And I would imagine a similar thing happens with the euro and other popular currencies also.)
37 guys write great fiction but let's look at reality. Their pricing is cost prohibitive for truly small teams. If I were to use them as a "productivity suite" for, say, a one-two person team (the lowest possible pricing combo) it would set me back $804/year.<p>Given that an individual freelancer is the most common scenario as far as their potential users, they are probably severely limiting their sales by setting their pricing the way it currently is. Personally, I subscribe to their backpack service only. I would like to use their other services but the high price tag keeps me from doing so.<p>Or how about this from their Highrise website:<p><i>Basic plan - 6 users - $24</i><p><i>Solo plan - 1 user - $29</i><p>Does that "feel right" to you?
I was a little surprised the article didn't mention any of their competition. One strategy I've always admired is deliberately pricing products slightly above competitors.