Why Real Businesses Don't Charge $5/month

It <i>all</i> depends on your service. I am willing to pay $20 a year for cross-device password management for personal use, not $20 a month. I am willing to pay $$$ for a CRM. For businesses, your product must save me more money than if I do it myself. If it's a mere convenience that can be duplicated by an excel spreadsheet, I'm only willing to spend so much.<p>I suggest looking at what your value proposition is: if you think you can provide $50,000 dollars of value to your customer, you shouldn't be charging $5 a month. If your plan provides only a small amount of value, you better hope it provides that value to a large number of people. :) But you're not going to get away with charging more.

While this is definitely a thought experiment, we found the basic premise to be true when we redesigned our product, pricing plans, and free trial strategy.<p>We went from:<p>Free Forever / $29 / $59 / $149<p>7 Day Trial / $49 / $149 / $249<p>And we have an overall better customer base (they find more value in our app) and relatively the same signup metrics as we had before.

Sure, if your market lets you charge more, go ahead and charge more. But in some markets, real businesses charge $5/mo, because market conditions don't let them charge $10/mo (or at least don't allow them to meet their other goals at that price). Evernote Premium is $5/mo, Google Drive charges $4.99/mo for 100GB of space, etc. Heck, Fastmail charges $1.65/mo for its "Full" plan (billed as $20/yr), or $3.33 for its "Enhanced".

Unless I'm missing a paragraph, this pretends charging 3x as much won't ever reduce the number of people who sign up?

Surely the whole point of lowering prices is to reduce cost of acquisition as well as churn. Where is this in your example?

Beware, you Ingvar Kamprads, Karl Albrechts, and Sam Waltons: only poverty awaits.

this might be the dumbest blog post I've seen posted on HN. why is anyone reading crappy marketing blogs that have no basic understanding of accounting or microeconomics?

Poor backblaze ... they are doomed. Call them and tell them they are not real business.

Is this article about WHAT TYPE OF BUSINESS to run, or HOW TO PRICE IT? I think it's mixing some logic of the two.

google charges $5/yr for their basic data plan.