Do my eyes deceive me or are companies with 20 employees at their help desk complaining that a thousand bucks is a lot of money?
I think we are seeing a later day MMORPG forum. At some point, it is easier to argue for a patch for your class than get 1 pct more stats, so you stop playing the game and start playing the boards. ZenDesk is the vendor most likely to drop prices by 1k for a single fauxraged posting, so start your keyboards.
It could be 20 third-world employees. A client of mine uses ZenDesk and staffs it out of the Philippines. $1,000 is a ton of money in that regard especially when the hefty increase comes out of the blue. It's also straight users so if you have part time people it adds up quickly. Especially so when you factor in management that have accounts just to check up on staff.
However I think the biggest thing is they didn't sign up for $1,000. They signed up for half that. Regardless of the figures no one likes seeing a 74% raise in cost.
And there's nothing wrong with raising your price by a large amount, even if people are locked in with your product - you simply grandfather existing users.
You accomplish what you want, and your existing users win too because all of a sudden they're getting a great deal.
If there is one thing that I have learnt from "Predictably Irrational" book, it is that humans make their money-related decisions by having a reference point. Zendesk could have always been priced at thousand bucks and no one would have complained. But once you set the price, you provide your customers with a reference point which they are going to use. You can't run away from that.
For example, even though Microsoft Office probably provides a lot more value than what it costs, it they doubled their prices overnight, would you not expect any outrage?
Its funny as we move to SAAS models this seems to be a bigger issue. With Desktop apps you could just stick people on a version and let them keep their existing pricing plan with some sort of dedicated EOL. Anyone wanting a newer/better/prettier version would need to pay for the upgrade.
This breaks down severely on these web models, where you're more inclined to start out with a lower price and feature set while you gain customers, but want to increase the price as you add features (and value)
Its sticky and makes setting your first price point a more critical game.
I wonder if people have thought about "versioning" their SAAS apps. (do they? I don't have a ton of familiarity here). Personally I think Zendesk has to reward their early customers by keeping them at their current rate.
You could try introducing a tiered pricing model. Allowing users on a lower tier to trial features on a higher tier (or introducing the higher-tier features at a limited mode) might help convert users up.
This is what we're looking at with our new startup. We have a core featureset that will probably carry a subscription but other than scaling with more 'users' (in our case, employees), I'm not sure of other ways to increase the price without screwing people.
Short summary: anchor points play a great role in setting human expectations. When plaintiffs ask for exorbitant amount of money*, then usually will get more money than they really deserve because jury's anchor point is set high.
Relative to what they were paying, a thousand bucks is a lot of money. It's also a lot of money relative to what other companies are charging for similar services.
The definition of an "agent" is pretty vague for many places too. We, for instance, could probably have 40 "agents" handling help desk duties if we let our volunteer forum moderators help out with user support issues like I'd like to.
It's not just your help desk though. If you want to escalate tickets to other teams or have your whole company be responsible for customer service (like ours) having users for 20 people isn't that extreme. We have <20 people and everyone has a Zendesk account because we all do customer service. Plus we use it to track resumes, sales opportunities, etc. The users add up fast.
Comments
Do my eyes deceive me or are companies with 20 employees at their help desk complaining that a thousand bucks is a lot of money?
I think we are seeing a later day MMORPG forum. At some point, it is easier to argue for a patch for your class than get 1 pct more stats, so you stop playing the game and start playing the boards. ZenDesk is the vendor most likely to drop prices by 1k for a single fauxraged posting, so start your keyboards.
It could be 20 third-world employees. A client of mine uses ZenDesk and staffs it out of the Philippines. $1,000 is a ton of money in that regard especially when the hefty increase comes out of the blue. It's also straight users so if you have part time people it adds up quickly. Especially so when you factor in management that have accounts just to check up on staff.
However I think the biggest thing is they didn't sign up for $1,000. They signed up for half that. Regardless of the figures no one likes seeing a 74% raise in cost.
Right.
And there's nothing wrong with raising your price by a large amount, even if people are locked in with your product - you simply grandfather existing users.
You accomplish what you want, and your existing users win too because all of a sudden they're getting a great deal.
Nobody leaves. Nobody complains. Everyone's happy.
If there is one thing that I have learnt from "Predictably Irrational" book, it is that humans make their money-related decisions by having a reference point. Zendesk could have always been priced at thousand bucks and no one would have complained. But once you set the price, you provide your customers with a reference point which they are going to use. You can't run away from that.
For example, even though Microsoft Office probably provides a lot more value than what it costs, it they doubled their prices overnight, would you not expect any outrage?
Its funny as we move to SAAS models this seems to be a bigger issue. With Desktop apps you could just stick people on a version and let them keep their existing pricing plan with some sort of dedicated EOL. Anyone wanting a newer/better/prettier version would need to pay for the upgrade.
This breaks down severely on these web models, where you're more inclined to start out with a lower price and feature set while you gain customers, but want to increase the price as you add features (and value)
Its sticky and makes setting your first price point a more critical game.
I wonder if people have thought about "versioning" their SAAS apps. (do they? I don't have a ton of familiarity here). Personally I think Zendesk has to reward their early customers by keeping them at their current rate.
You could try introducing a tiered pricing model. Allowing users on a lower tier to trial features on a higher tier (or introducing the higher-tier features at a limited mode) might help convert users up.
This is what we're looking at with our new startup. We have a core featureset that will probably carry a subscription but other than scaling with more 'users' (in our case, employees), I'm not sure of other ways to increase the price without screwing people.
Nice read if you have account. Similar to what you are describing: http://www3.interscience.wiley.com/journal/21451/abstract
Short summary: anchor points play a great role in setting human expectations. When plaintiffs ask for exorbitant amount of money*, then usually will get more money than they really deserve because jury's anchor point is set high.
Relative to what they were paying, a thousand bucks is a lot of money. It's also a lot of money relative to what other companies are charging for similar services.
The definition of an "agent" is pretty vague for many places too. We, for instance, could probably have 40 "agents" handling help desk duties if we let our volunteer forum moderators help out with user support issues like I'd like to.
Do you really expect them not to complain when the month previous their bill was less than half of that?
It's not just your help desk though. If you want to escalate tickets to other teams or have your whole company be responsible for customer service (like ours) having users for 20 people isn't that extreme. We have <20 people and everyone has a Zendesk account because we all do customer service. Plus we use it to track resumes, sales opportunities, etc. The users add up fast.