Prezi.com—Pricing and Distribution Strategy

 

Prezi is a virtual whiteboard that transforms presentations from monologues into conversations: enabling people to see, understand, and remember ideas. By year-over-year growth, over 250 million Prezis are viewed online, over a million new users a month and more than one prezi created every second.

 Prezi has four product segments:

• Prezi Online—The zooming presentation software that lets presenters choose between the freedom of the cloud, the security of the desktop, or the mobility of the iPad or iPhone.
• Prezi Desktop—Gives presenters all the power of Prezi without needing an Internet connection.
• Prezi Meeting—Brainstorm, create, and present ideas in one shared virtual whiteboard.
• Prezi for iPad/iPhone—Accessible for the world’s most famous mobile electronic devices anywhere.

Prezi made their pricing strategy based on “Freemium” business model. For example, the basic Prezi service plan, “Public”, which is available for free, supports PUBLIC presentations with Core features and 100MB storage space. 

 

While “Freemium” is the most popular pricing strategy among software domain, another special strategy caused my attention. Besides regular license, Prezi has a “Student & Teacher Licenses”, which is not only free for “Public”, but also free for “Enjoy Edu”. Meanwhile, the price for “Pro Edu” discounts to $4.92/month, compared to $13.23/month for regular license.  Furthermore, there is another licenses called “Multiple Licenses”, which enables customer purchase Prezi products for groups of people with a lower rate per person. This strategy should be regarded as “Dynamic Pricing”.

 

From my standpoint of view, the pricing strategy is reasonable. For Prezi, the biggest consumer group should be college students, teachers and white-collar workers. Adjust the price especially for academic users will not only increase more users, but also, will bring reputation among academic groups. Beyond that, once students have got used to this premium presentation tool, it is highly possible to purchasing it for later use. 

CreativeLive–Pricing and Distributing

CreativeLive is live, online worldwide creative classroom offering free education in photography, business, software, design, video & film and more. Users can watch live for free or purchase full access to any their courses. For the free live, to participate, people can just check out the calendar and enroll for free in upcoming live courses. Anyone around the world can watch the lecture, ask questions and collaborate with the instructor through the live interactive workshop. For the past courses, uses are able to buy them with different prices

 

As mentioned above, CreativeLive has pricing strategy divided by two. For the live courses, they are free for all the users. It is an effective way to attract people to participate in the courses. For those who miss a course or want to dig into a course, they can buy the course videos from CreativeLive. Different videos has different price, it depends on the length and quality of the course. The price ranges from $29 to $149. They also provide deals with special discount.

 

As an online classroom, the website platform is the major distribution channel for CreativeLive. Because they will update their course constantly, its distribution strategy majorly depends on social media. They are compatible with Facebook, Twitter and Google+. In addition, they also promote their upcoming live via YouTube and Pinterest.

Trover Pricing Plan and Distribution Model

Trover Pricing Plan and Distribution Model – http://www.trover.com/

· As mentioned in previous posts, Trover has platforms on iOs, Android, and a partially-functioning desktop site. Trover does not have a detailed pricing plan for end users, as the service is free. However, in a recent post on Betakit, Jason Karas, the company founder and CEO, stated the “long-term vision is targeted deals based on both interest and location, however in the interim it’s in talks with several travel partners about leveraging its content.” Also, Karas said “that would most likely entail launching a Trover API in the near future.”

· While Trover is building a large user base, it is likely their monetization will come from sales to business (i.e. b2b) from data compiled from their users and direct interaction between business and Trover’s expanding user base.

· Distribution: How does Trover find users? How do they deliver their service? How do they evolve their service?

· Trover is distributed mostly through user word-of-mouth and sharing with their network. The distribution is direct to users from either the marketplace of iOs and Android, or via trover.com. As mentioned in previous posts, as their users evolve, Trover has continued to change what their product offers, from lists to adventure.

· Trover has about $4.5 million in venture funds, and with a recent pivot on user’s use of the service, their focus is likely on gaining a larger user base.

· Sources:

http://betakit.com/2012/12/07/trover-adds-desktop-uploader-to-move-away-from-being-mobile-first-travel-site

http://skift.com/2012/08/16/instagrams-new-photo-maps-mean-theres-a-time-and-place-for-discovery/

tinypass – pricing analysis

tinypass aims to offer a wide range of self configurable payment options for digital content. Publishers can sell access to an entire site or set prices on individual assets – a video, a downloadable file, or a web page that can be based on time or usage.

tinypass employs a simple per-transaction service fee model in a tiered structure. For first 200$ of the month, it collects 10% of revenue and then takes 5% of revenue for anything above 200$. Inaddition to service fees, customers are charged a flat transaction charge depending on the account payment processing company. (Credit Cards, Paypal, Google wallet etc) tinypass in return provide following pricing tools to manage web assets : Pay-per view, Bundles & issues, Subscriptions, Metered previews, discounts & promotions and split pay.

tinypass can be ideal for online ventures that want to test out various pricing options. The company’s self-service model lets publishers register online to download a plug-in for WordPress, Drupal or Joomla, or access an API for integration into other content management systems.

tinpass should aim to simplify its pricing further. It will be great if it can integrate the transaction processing fees into its pricing plan. Also free service to light content/low volume customers can increase their reach and gain some mass. I would like to visualize tinpass as a creditcard for digital content that is universally acceptable and company can get there only through wide reach and simplified pricing plan.

PicMonkey | Pricing Strategy

PicMonkey is a web-based photo editor that intends to be different, fun and funny, and extremely user friendly. It was founded by the same people of the former Picknik, who have reunited and improved the service. Having given a brief intro, let’s analyze their pricing strategy:

 

PicMonkey has a parallel pricing strategy to companies like Evernote; they offer a free service, with the intention of the users loving the service and upgrading their account to get further features. If they upgrade their account, the extra benefits are:

 

“ 40% more Effects

Twice the Touch-up tools

Gobs of Royale fonts

50% more Frame, Overlay, and Texture options

Extra layouts in Collage

The cherry on top? No Ads! None.”

 

However, this upgrade is deficiently marketed; as soon as you click on “Upgrade”, you are redirected to the page where you have to fill in your personal information, but there are two contradictory messages written together that heavily confuse the user in terms of price:

 

“Upgrade to Royale for as little as $2.75 a month

Royale membership gets you ads-free editing and a kingly hoard of primo effects, fonts, overlays, and textures. Choose the monthly plan, at $4.99 a month, or the annual plan, at $33.00 a year. Learn more.”

 

So, is it $2.75/Month or $4.99/Month? Well, what seems unclear at a first glance is quite logical when you do the math: if you buy the annual plan, then you only pay the equivalent of $2.75… but this is confusing to most of the users, and the first reaction is what matters. You realize that once you choose your plan, but before that if the user doesn’t stop to think, might get the impression of incoherent pricing. (In order to test the assumption I asked two friends of mine to read the page and provide their reaction, and both were confused)

On another note, their pricing model relies on a certain degree of commitment, since revenue is purely based on monthly or yearly plans. In addition, they try to play their strategy through differentiation from other photo editors that flood the internet and mobile apps.

Their pricing strategy could be qualified as “foot on the door” by providing a freemium model very similar to Evernote. They basically expect their customers to like the free service enough to want more features and benefits that are only provided in the upgraded version; and consequently purchasing a monthly or yearly plan.

Overall, they have a simple and apparently effective pricing strategy that could be improved. Some starting suggestions would be: 1) Clarifying the option plans; 2) Provide more plan options. Different packages with different features in order to be able to achieve price discrimination based on different purchasing powers and willingness.

Womply: Sales and Distribution Analysis

Womply is a very interesting start-up positioned at the intersection of two fast-growing spaces: Merchant deals and business analytics. They offer two main products to businesses: Insights and Loyalty Cloud. Loyalty Cloud is a deals platform, directed at consumers who may be embarrassed or otherwise less likely to use a printed/digital coupon. Their platform allows business to deliver deals to consumers via text message, by tracking their credit card numbers. In this way, businesses can see how often and how much consumers spend, and reward them in any way they’d like (including cash back onto their cards, special offers such as free dessert, or even priority reservations on holidays). Loyalty Cloud appears to be a clever improvement to traditional deal platforms (such as Groupon, LivingSocial, and Google Offers). Insights, on the other hand, is a business analytics platform, billed on angel.co as:

Google Analytics + Compete.com + Salesforce for brick & mortar merchants.

On their website, they expand this, to explain that Insight offers:

• Report card grades for revenue performance, transaction volume, average transaction size.
• Social media analysis for Facebook and Twitter.
• Online reputation tracker.
• Performance comparison against competitors and businesses in all verticals.

They go on to offer pricing for this platform at $9/month. However, this does not include the texted/credit card linked deals platform. Tech Cocktail reports in January 2012:

The company’s first product, Loyalty Cloud, is actually a super simple loyalty solution for small businesses. …The system is not expensive either – the monthly subscription fee is $100 (for most merchants) per location, and you get a free month trial in general.

Womply is turning to ISOs (independant sales organizations) to help sell its Insights and Loyalty Cloud products, ISO&Agent reports on January 16, 2013:

Merchants pay $9 a month for Womply’s Insights product, and Loyalty Cloud ranges from $19 to $100 a month, depending on the merchant’s revenue. ISOs cannot mark up the prices but can share some of Womply’s revenue.

I felt it was quite interesting how, when clicking the “Womply for Businesses” link, I was shown only information about the Insights product (none at all about Loyalty Cloud). [Note: I was able to access the page for Loyalty Cloud on their website, by entering an obvious phrase into their URL system. Since there are no links on their site to this page, I won’t post a link here.] For the benefits it provides, $9/month is very reasonable, close to a rounding error for most businesses. I can imagine the Insight product as a sort of (benevolent) trojan horse, or the business equivalent of a “Free Inspection.” While I expect that the Insight product will itself create value for many firms, once the data is collected and analyzed, I would imagine that Womply will be able to make a stronger pitch for the Loyalty Cloud product (and suggest that the benefits of Loyalty Cloud use will be easily seen from the Insight platform).

It appears that The Tarrant (Texas county containing Fort Worth and Arlington) Small Business Development Center inked a deal as well (along with many other business and economic development agencies), further indicating that Womply may consider Insights a loss-leader:

As part of our new partnership with Womply, you will receive a FREE lifetime license to Insights and a no-contract, one-year license to Loyalty Cloud. Insights will be available to members starting on November 5, and Loyalty Cloud will be available soon.

Overall, I think that Womply has two very strong and attractive products, which make sense for bricks and mortar businesses. Their deals platform (Loyalty Cloud) is easier for consumers than competitors offerings, and this ease and transparency likely results in higher effectiveness for merchants. Their business analytics platform is (I believe) unique and seems to be a value-add for both the bricks and mortar business, as well as to Womply in their sales process for Loyalty Cloud. Their pricing model seems quite attractive, likely to lead to fast growth of a paying customer base (for the Insights product), putting Womply in a strong position to convert these low-revenue customers to the higher-revenue Loyalty Cloud product. I believe the two-tier pricing model (with Insights nearly free) is a very strong strategy, and I’m looking forward to seeing how it performs in the marketplace.

PayScale – Pricing Analysis

PayScale.com is an online resource designed to inform employees and employers about the ranges of salaries earned by very specific subsets of the workforce. PayScale employs rigorous methodology, which it advertises openly on its website, to transform “salary into a science”. The management team has identified a pain-point felt by almost any individual looking for a new job and companies attempting to understand what compensation structures may best attract and maintain a competitive workforce.

PayScale offers two differents product suites. The first targets individuals, whether they be looking for a new job or decided how much of a pay hike to ask for after their next promotion. An individual takes a detailed survey so that PayScale’s software can enter the correct inputs regarding years of experience, level and quality of education, and other core capabilities. Then, the software produces a detailed report of relevant profiles of other employees with the same experience. This service is provided free of charge for the individuals, and can be linked to LinkedIn to promote interconnectedness and network effects. PayScale also offers complementary reports on cost of living, career goals, and employer Q&A.

On the other hand, PayScale offers employers a suite of products designed to enhance HR and recruiting capabilities. The company offers a free Sample Compensation Report to prove its value to customers, after which subscription services offer employers a variety of tools to improve their HR departments’ ability to maintain competitiveness.  After a free offering, HR specific whitepapers are also available for purchase. To flesh out the remainder of the pricing strategy, companies may buy advertising space on PayScale’s website. Generally, this pricing strategy encourages individuals, which are essentially the product to employers, to enter their information free of charge and to continue utilizing the service. Employers are willing to pay for access to this information, as well as professional analyses of trends in specific industries. In this way, PayScale restricts any economic burden to those institutions that are most interested and willing to pay on a long-term basis.

DreamBox Learning- Pricing Analysis

DreamBox Learning is an subscription-based, online math program for elementary students.  The product aims to capture market share by providing more engaging and adaptive lessons that help educators and parents raise student performance at an accelerated pace.  To maintain a broad appeal, DreamBox  Learning is designed in alignment with the Common Core State Standards.  The curriculum strategy makes the program an attractive tool for administrators, math coordinators and teachers; their target market.

The pricing plan that DreamBox has initiated reflects their product positioning by making the options relatively clear for educators.  Upon viewing a live demo, schools can receive a free trial.  Once the trial period ends, 12-month licenses contracts can be purchased.  Also available are options for parents which are not as accessible on the website.

Pricing and Purchase Information

Category	Price
For a school, unlimited students	$7,000 per year
For individual students, classrooms, or grades	$25 per student per year
For parents, 1 child	$59.95 per 6 months
For parents, up to 4 kids	$99.95

Overall, the subscription pricing plans are clear and direct for educators, who appear to be DreamBox Learning’s primary target customer.  The two price plans are easy to locate and understand and offer flexibility for schools of various sizes.  What is lacking, however, is a simple summary indicating the key features and services that are included with the product.  Such a summary would be helpful for potential customers to compare the product and understand the all the value the product offers, all in one place.

The pricing for parents tiered similarly as that for schools, but at a “discounted” rate to further encourage home use adoption.  These plans, however, are somewhat buried on the website making it hard to find and, ultimately, somewhat unclear.

In summary, DreamBox Learning looks to have a great product and a simple, user-friendly pricing plan.  The messaging of their plans, however, could benefit from an update that more clearly and definitively conveyed the options and advantages of each and made the information more accessible for parents without undermining their apparent focus on schools.

General BioDiesel

 

General Biodiesel, Seattle based company, is currently trying to solve one of the most important US energy issues. US is presently importing over 60% of petroleum from overseas as well as US consumes 25% of the world’s supply while making up only 4% of the world’s population- staggering statistics.  As developing nations like China , India, and Brazil become more influential in energy’s world market, our national wealth and security depend on our ability to adapt and produce alternative fuels right here at home, which is the main mission of General Biodiesel.  They are working diligently in the production of high quality biodiesel fuel from sustainable sources (e.g., recycled cooking oil and other sustainable feedstocks) while providing strong returns to stakeholders, taking care of our customers and employees, and contributing to local economies.

Presently, General Bio is proving their products multiple locations in the west coast (CA and WA) due to their partnership and distribution with Propel. Propel is building stations that offer true alternatives to conventional petroleum, providing a selection of high-performance, premium-quality, renewable fuels at their locations. These fuel stations support Propel’s vision of clean energy for the automobile industry as well the mission of General Biodiesel.

Based on Clean Cities Alternative Fuel Price Report -2012, which is a quarterly report on the average prices and regional price trends of alternative fuels in the U.S. This document reports that the nationwide average price (all amounts are per gallon) for biodiesel (B20) has increased 35 cents from $3.83 to $4.18- these amount does not present the price of distribution for General Biodiesel. Compare to regular diesel fuel which is ~ $3.90; giving a vast disadvantaged to this eco-friendly fuel source. The prices collected, at-the-pump sales prices for each fuel, including Federal, and state motor fuel taxes. 

Rent the runway pricing

I decided to do my pricing analysis on Rent The Runway.  I have been fascinated by the concept of this website (as well as many others with similar models) that allow individuals to purchase an “experience of being rich” and wanted to get down to the nuts and bolts of how it works.  Rent the Runway is a service that allows people to rent high end designer dresses and accessories for special occasions such as weddings, proms and parties.   The dresses are rented out for a fraction of the cost of purchasing them with customers getting to keep the item for four days before returning it to Rent the Runway. 

The pricing for the rental dresses is a reflection of the cost of the gown.  The website lists out the retail cost of the gown and then lets you know what you can rent it for.  For example you can rent a $1,495 Vera Wang gown for $250 which is 16.7% of the retail price.  Next to this Vera Wang gown is a $2,195 dress by Yigal Azrouel that rents for $200 which is 9% of the cost of owning the gown.  This tells me that pricing must be an indicator of popularity and brand name.  If the less expensive Vera Wang rents out for more than the more expensive Yigal dress (a designer I have never heard of, though I am no fashion expert) this tells me that pricing adjusts based off how well an individual dress does in the marketplace.  

There is a filter for searching for rental wear by price.  This price search ranges from $30 to $200+.  Dresses in the $30 range tend to retail anywhere from $200-$400, whereas the dresses in the $200+ range could retail for as much as $3,000. 

To counter for a potential problem with fit, Rent the Runway will send your dress in two sizes for no extra charge.  In addition, if your dress doesn’t fit at all you can send it back within 24 hours and receive a full refund minus the original shipping cost.  Customers always pay initial shipping but receive a label for free return shipping. 

At the point of purchase Rent the Runway tries to upsell customers with incentives for additional purchases.  Once you select a dress you are interested in renting they give you a selection of “matching accessories” that can also be rented to match the dress.   They also offer items you can purchase at full price such as lip glosses, hair sprays and lotions for your big event.   They additionally incentivize use of the service in several ways.  Upon logging in I was given a $50 credit to use towards my first dress rental.  In addition they have a rewards program in which if you refer someone and they make a purchase you get a $20 credit to use on the website.

Overall, I would say that rent the runway is doing a great job with their pricing structure.  With the dress prices as is, each item in their inventory will be paid off after no
more than ten rentals.  At a rental time period of 4 days/customer, they could potential rent each dress out to 90 customers/year.  At this rate every rental after the 10^th rental is mainly profit.  Their major costs are likely dry cleaning, return shipping, administration and website upkeep.  These costs are probably easily covered off by a small percentage of each rental leaving them a large margin at the end of the day.  

GYMPACT

Whether it’s eating better, running, or working out at the gym; pretty much everyone wants to work at being healthier. However, staying motivated is the hardest part. We have all heard of the new-year’s resolutions that last a month and then are forgotten. People struggle with staying focused and committed to their gym goals.

GYMPACT is a 2012 startup that implemented a new smartphone app which motivates people to work out and stick with their goals. It works like this; the user commits to working out a certain number of times a week. In addition, the user “backs” his commitment with money. If the user does not complete his workout goal, he loses his money and the money is distributed among all of the people that have completed their goals. The pilot release of this app showed a 90% success rate.

Pricing plan and distribution plan: The distribution plan is primarily based on word of mouth. GYMPACT is confident that the users will be so happy with the program and will tell their friends with the same interests. In addition, GYMPACT has a blog where their users can discuss their successes. This is a free app in the Apple Store and GYMPACT is also currently offering a $5 credit for those who start the program. I believe the pricing and credit allowance may help people make the decision to upload the app.

Puzzazz Pricing

Puzzazz is a B2C gaming company that provides high-quality puzzle books through their fun and intuitive iPhone and iPad apps as well through the Amazon Kindle family of ebook readers. Puzzazz, started in 2008 by software architect and expert puzzle constructor Roy Leban, runs the only digital store dedicated exclusively to puzzles.

In order to better understand Puzzazz’s product, I downloaded Puzzazz on my iPhone. After installation, it displayed a bookshelf that had multiple puzzle books. I could open up all of the books and play one of the puzzles for free. The puzzle interface was very sleek and clean with a very intuitive interface. What is more, to fill in the puzzle, you can either use the keyboard or Puzzazz’s TouchWrite handwriting recognition tool. In my experience, TouchWrite made filling out crossword puzzles very enjoyable on the iPhone.

As for the pricing plan, Puzzazz provides the iPhone/iPad app for free on the Apple store. They then charge customers to buy digital puzzle books written by expert puzzle writers. To help customers decide which puzzle book to buy, every book has a free puzzle in order to help customers gauge the type of puzzle and its difficulty.

On positioning – Exo-Labs

As we learned in class, a good positioning statement conveys the essence of a company and as Goden believes, if done correctly, it takes eight words or less. The positioning statement intersects the product, customer, and channel. For this assignment, I reviewed the positioning of a startup company with a mission “to create more engaging learning experiences by providing teachers with great tools and students with more inspiring connections.” Meet Exo-Labs – founded here in Seattle in 2012 by experienced engineers to help teachers and students to connect with science and their first product, the Focus Microscope Camera.

The product

Their introductory product is the Focus Microscope Camera that “streams live images from any standard microscope to an iPad, iPhone, or iPod Touch – opening the world to exploration like never before.” With the exception of 3 rendered images that show the device, that’s about all we know. No specs. No product comparisons. No “this is why you need our camera…” I have to admit that in the day of the educated consumer in search of the ‘best overall deal’ and the ability to make trade-offs among price, features, and compatibility, I found this surprising. What makes this product better than what is out there? Do I have to buy a microscope stand along with the camera? Which microscope models is the camera compatible with already? Is it compatible with the new iPod lightening connector? It seems as if this is more of a product idea … like something someone would pitch on kick-starter to validate a market and potential interest. Having a bit more detail around what (are its specs and attributes), why (should I buy it, the iPad compatibility, and how it compares to the competition), and how (will it inspire and enhance my scientific learning) would go a long way to marketing and selling the project. The buyer needs a broad picture (and understanding) of why they need it. Also, having short, candid inspirational vignettes of actual user experiences and feedback would bring a lot of credibility as well.

The customer

We know from the home page that Exo-Labs is about creating “more engaging learning experiences by providing teachers with great tools and students with more inspiring connections.” So who’s the customer? Is it the teacher? Is it the student? Is it both? I find these two markets quite different and the approach (or channel) to reach them quite different as well. If the target market is the teacher, they must be convinced that this will not only help them be more successful as educators but also benefit the students in a way the current curriculum cannot. Change is not easy. And if it is indeed the educators, then I would suspect these products would be a school-district-wide purchase, which is an entirely different channel and marketing strategy altogether. If it is the student, then the student’s age would matter (primary school or high school) and if the marketing strategy should be geared more toward their parents as a consumer electronic device. These different customers are all valid choices but will require very different marketing and channel strategies.

The channel

From what I can tell from their website, the channel has yet to be defined. Their site is accepting “pre-order” sales but has no information on expected delivery dates or how you would obtain your product. Is it shipped directly from a garage, through Amazon, or by an educational retailer? Or, is the site purely marketing buzz and the intent is to sell directly to school districts? It’s just not clear.

Intersection of the three

According to Goden, this startup does not have a clear positioning statement. Perhaps they don’t know yet themselves and have left it out while they continue to pivot and zero-in on the optimal market. But even if they were waiting, I would suspect that they will be hard pressed to generate sales from their website based on the limited product information, confusing target market, and lack of a clear channel.

Big Fish Game’s change in distribution

I’m not a casual or online gamer. But the business fascinates me and I wanted to learn more. So I chose to analyze the change in the distribution model recently announced by Big Fish Games, a Seattle startup that offers over 2,500 games that can be downloaded to a PC or Mac, streamed to a number of mobile or stationary devices, played on-line through a browser, or played locally on your iPhone or iPad. But before discussing their change distribution, I’ll quickly review their distribution channel and business model.

The world-wide web – a perfect delivery channel for software and software-as-a-service

It’s hard to argue that the web offers the most affordable, furthest reaching, and fastest distribution channel for any software product. Big-fish had two primary business models in this channel. The first was a pay-as-you-go model—the user would only pay for games they downloaded. The second involved a monthly subscription service that allowed the user to apply points towards (downloaded) game purchases. Either way, the user was ‘downloading’ the game and playing it locally, on their device. As we have learned in class, having a committed monthly income stream has huge advantages for managing cash flow but needs to provide the perceived value over an a la carte approach. Big fish changed their pricing a few times in both models, reacting to consumer’s purchasing behavior. These changes worked temporarily to maximize profits and (perceived) consumer benefit but Big Fish noticed other changes as well. The download-an-app approach required game developers to port their games to the various platforms (the end-point in the “distribution channel”) and left them vulnerable to piracy, especially in countries like China and Korea with large, untapped consumers. Finally, Big Fish was noticing a trend away from the monthly subscription service and more towards a “freemium” model in which the games are free in order to build up a huge user base and then revenue is generated through user’s purchasing extra powers or goodies that enhance their game play.

New streaming service, optimized distribution channel

The streaming service Big Fish recently announced will allow them to “stream” the game in real-time as the user plays. So what does this mean? The game is actually “played” on a server in the cloud while images are sent to the user’s screen. The user’s finger swipes and button presses are sent back to the server where the game is played. Therefore, the game itself is no longer downloaded and doesn’t need to be ported (and re-ported) to various hardware platforms, saving developers time and money while simultaneously protecting against piracy too. Big Fish was certainly not the first company to jump on the streaming bandwagon but quickly realized the advantages and pivoted. In fact, it was reported that about 20% of its employees were assigned to developing the streaming service.

Is it the right move?

Absolutely. It’s a fantastic move for many reasons. First, it opens new markets that were once avoided by developers due to piracy. And these markets are huge and ripe for harvest. (An aside – with China’s recent lift on banning game consoles, I wonder how this will shift users away from their already on-line games to consoles where the gaming experience can be far superior.) That said, streaming games as a service still opens new, untapped markets and secondly, streaming games through a platform’s browser optimizes the development effort by eliminating the need to port the code to multiple hardware platforms. Big Fish has already set pricing for streaming at $7.99/month for all-you-can-play but will protect their existing channels by offering credits towards the purchase of special collector-edition games that are sold as downloaded items for a particular platform. It will be interesting to watch who emerges as leaders in the new streaming space as many companies, both small startups and the large giants like Amazon, compete for the casual gamer’s pocketbook.

Pricing & Distribution of Judy’s Book

In the first post I talked about the XX of Judy’s Book, which is both a social search tools and a paid online showcase platform for local businesses.

Pricing strategies & rationales

l  Judy’s Book’s online yellow pages services is good way for local business to conduct more effective marketing-approaching way more potential customers-while save money at the same time. The monthly fee, which is XX, is far less than that is spending on traditional marketing activities.

l  Judy’s Book obviously has a “give it away” pricing strategy because it a large group of free individual users.  

Distribution

As an online startup, Judy’s Book has the following method of distribution:

l  Commission: the local business who need to advertise their products and services to customers entrust Judy’s Book to showcase their business on its online platform. 

l  Subscription: these local businesses mentioned above are required to pay a monthly fee for using this platform, which is a form of subscribing Judy’s Book’s services.

l  Service: for this point I would argue that the services of commenting, sharing local businesses and online social networking are provided to free individual users, who, though not the direct customers of Judy’s Book, the markets that the business users intend to target. So service is also an important way of pricing for Judy’s Book.

 

 

GitHub Inc.

GitHub is a web-based hosting service founded in April 2008 (San Francisco), and host repositories that meet the needs of software development projects using the Git (open source project) revision control system. More specifically, GitHub is a code sharing and publishing service, but it can also be viewed as a social networking site for programmers; the site provides social networking functionality such as feeds, followers and the network graph to display how developers work on their versions of a repository. GitHub’s main selling features are allowing users to copy a repository from another user’s account (termed “forking”), thus enabling users the ability to eliminate writing preexisting code and modify it under their own terms. Changes made to the initial code can then be sent back to the original user via a “pull request”, and merged into the original code with a single click. GitHub can be accessed either via its self-titled website, or its desktop and mobile apps that are available for free.

Aside from these features, GitHub primarily makes its money by selling private repositories and on-premise instances of its software for enterprises, which can excel due to the collaborative nature of the platform. To some degree, this follows the Freemium financial model. Users are initially enticed into joining GitHub to gain unlimited access to a number of public repositories, or directories where Git code can be harbored; however, private repositories are charged a small fee in order to be upheld. The preset plans are relatively inexpensive and there are three grades available. There does not seem to be a decoy plan included at the higher price range, and larger purchases provide the customer with more value. The same pricing scheme applies for the business plans available.

In addition to their personal and business repository plans, GitHub offers another service for its more entrepreneurial minded customers. GitHub Enterprise (GHE) incorporates the same features as GitHub, but is packaged for running on an organization’s local network, and is marketed as “The best way to build and ship software, on your servers.” GHE is available to users for a 45 day trial session, after which it is available via a subscription pricing scheme. Customers purchase “seats”, a seat must be purchased for each individual in the organization that will have a GitHub Enterprise user account, that cost $21 per month to maintain. There is a 25% academic discount available.

GitHub offers an inexpensive and powerful service for its customers. There are few competitors in the market, none of which provide a platform as user friendly as the GitHub experience. Given its ease of access and little to no upfront cost, GitHub use has been steadily increasing. Andreessen Horowitz announced a $100 million Series A investment in GitHub several months ago, and has most recently expanded from 1 million to 2.8 million users over the past 14 months. All in all, GitHub provides a specialty service for a select community as a reasonable price.

Ebay’s multiple pricing choices

Maybe it has been long but recently I found ebay is doing its pricing slightly differently from other E-commerce. It has several pricing choices for customers to choose from.

While all E-commerce would categorize its goods by “regular price” and “sale”, ebay is also formatting the goods by “buy it now” and “auction”. This move replicates the hotel bidding process on Priceline. People can now pay what they think it worth for clothes and other stuff.

As there is always supply surplus on some goods, and sellers do not know what customers want to pay for these goods. There exists the gap between sellers’ wanting to charge and customers’ willing to pay. Bidding is a good way to diminish the gap.

The distribution of goods is quite the same with other e-commerce website like Amazon or 6PM. They are not producers of goods, but only distributing goods in the supply chain. They interact with the end-users directly by online sales, which might be described as “wholesaler” or “distributor”. 

Estately: Pricing & Distribution

Like many other real estate brokerage firms, Estately generates its revenue from commission income of real estate transactions. It has offices in Washington, California, Illinois, New York, and Georgia. For regions other than these areas, it provides services to customers through partnership with local real estate brokerage agencies. The pricing is no differentiation as compared to other real estate agencies, and is higher than that charged by Redfin.com, an online real estate brokerage service company based in Seattle.

Estately runs a website – www.estately.com , which collects real estate information from different multiple listing services (MLS) across the United States and presents the information with a map service. Besides, it also provides local community information for houses for sale or for lease. Although the online service is free, it provides several valuable services to the company. First, the online service becomes an important channel for Estately to acquire new clients. Convenience, in-time information update and other service like mortgage calculation help retain current and potential customers. Second, the website becomes an important self-learning and home hunting center for customers, thus reduces the time of helping customers to visit houses that do not fit those customers. By doing this, Estately can cut its cost and enhance its efficiency and productivity. Third, the website is also an important channel to promote the company. Customers can clearly see the value the company provides, and the quality online further assures customers that the experience with this company may be great.

However, if we look around in the real estate industry, we can see that many big real estate brokerage firms like Windermere also provide more holistic services to their customers. They not only provide online service but also other service like seminars, real estate auction bidding workshops, etc. Estately still needs to explore new ways to differentiate itself as Redfin.com or Zillow.com does.

ZipList Pricing

ZipList allows it’s users to “create and manage [their] grocery shopping list, find and save [their] favorite recipes from across the web, get great savings and share with [their] entire family – for free!”

ZipList provides users with one location where they can store recipes, shopping lists, and grocery store deals. Additionally, ZipList makes the experience of grocery shopping social so a family can share one grocery list. The whole grocery shopping process can be done on your phone and it is free for users.

ZipList makes its money through its partners. Some of their featured partners include publishers such as Epicurious, Martha Stewart, and CooksRecipies.com, food bloggers such as Simply Recipes and Recipe Girl, large brands, and celebrity chefs. Although there are no specifics on how much ZipList charges various companies they list a wide variety of ways to partner.

ZipList allows its partners to use their technology of recipe clipping and grocery list making directly on the partners website or app. ZipList is offering its partners a service and making their websites easier for the user to interact with. Partners can embed an “Add to Shopping List” or “Add to Recipe Box” button. Additionally, ZipList allows partners to advertise deals that will pop up when specific items are added to a user’s shopping list. This increases visibility for grocery stores.

For Celebrity Chefs and others who use offline media, ZipList provides a Text-to-RECIPE service. Viewers who discover a wonderful recipe while watching TV are able to text a number and the recipe will be added to the users ZipList recipe box automatically. No one wants to have a pen and paper nearby while watching a cooking show so ZipList allows viewers to quickly get the information they need. For the show this is likely to draw repeat viewers.

ZipList also provides integrated banner ads. For example, ZipList partnered with Pepperidge Farm recently so online banner viewers were able to add the Pepperidge Farm product being advertised directly to their shopping list. Finally, ZipList offers opportunities for companies to advertise directly on the ZipList website.

All of these services not only generate revenue for ZipList but also allow them to advertise for themselves at the same time. In the end it is a win-win situation. It seems that most online services geared toward food are free for users and ZipList is no exception. ZipList makes its money through partners and they seem to be off to a great start.

 

 

PetHub – Pricing and distribution strategy

With PetHub, pet owners can protect their pets with QR code pet tags. If the pet goes missing, anyone with a smart phone can scan the tag, view the pet’s profile and get in contact with the owner. The online profile of the pet contains critical medical, dietary and contact information and each PetHub Digital ID tag links to a toll-free 24/7 Found Pet Hotline. When the tag is scanned, PetHub “Amber Alert” texts are sent through PetHub’s National Pet Recovery Database to alert nearby shelters and help find the pet. Once found, the pet’s location can be tracked in real time. Pet owners can subscribe to one of three types of monthly services (freemium model) based on their needs.

US Pet industry is estimated at $52.87 Billion in 2012 and an estimated $12.56 billion will be spent on supplies and OTC Medicine according to the 2011-2012 APPA National Pet Owners Survey. There are total 85.2 Million households in the US with cats and dogs as pets and the total number of dogs and cats owned by them is 164.6 Million.

Pet owners will be the primary customer for the QR tags and will be making purchases to ensure their pet’s safety and recovery. These tags can be purchased online or at retail stores or at Vet clinics. Also, bulk orders can be made directly by connecting with the Pethub team and those tags can be customized.

Tag sales – the tags cost anywhere from $12 onwards and can be higher based on the size of the tag and the customized nature. Freemium subscription model based on the pet protection package and ranges from $39/ year and $49/ year for the silver and gold plans respectively. The $39/ year model includes Online Pet Profile, Toll-Free 24/7 Found Pet Hotline, Amber Alert Pet recovery database and email notification with GPS Mapping. The $49/year Gold plan includes everything available in the silver plan and an additional $3,000 of Emergency coverage.

Other existing websites and tag companies like “PetQRtag.com” and “ScanMyPetPls.com” are in the market and offer similar services. However, these are based on sales of the tags with no service/ subscription model.

 

Pricing and Distribution analysis: “Buddy”

Buddy is a company that provides the back-end support for application developers who don’t want to spend their time on analytics and would rather devote their time to making the best application they can produce. Buddy analytics allows an application development company to analyze their user data in a useful and meaningful way, by providing cross-platform abilities and real-time, native data. This cloud software also allows you to revise your query and see the revised data backwards in time. The types of user information they can analyze include: basic usage information, real-time data on what users are doing inside the application, where they are doing it, and what they have been doing. They claim that with Buddy analytics performing all the infographics and statistics on your users, preparation for marketing meetings can be easier.

 

Buddy has a tiered pricing strategy and offers a freemium version of its services for new developers. All versions include file storage, a number of supported applications on their platform, white label support and numerous other functions. The free version, however, only allows up to a half million API calls per month and charges $0.20 for every extra per 1,000 API calls. All new developer accounts are free and come with room to develop, test and debug the application. New users will also only pay for what they use, until they reach the level of success that drives their traffic over a half million API calls per month. At that point, the new developer can pay for overages or upgrade to the next level. The next version, called the Pro-version, allows up to 10,000,000 API calls per month with every per 1,000 extra API calls costing an extra $0.15. The last version, called the global version, has a custom pricing model in which the developer would have to contact Buddy and get a custom pricing plan. The global version is for any large-scale developer over 10,000,000 API calls per month. Buddy is available to users and Buddy uses the cloud to build the infrastructure needed to analyze the traffic of the user’s application. This means their distribution model involves virtual software that can be accessed through the internet.

 

The freemium pricing used by Buddy, is a proven pricing model that has been used by many other large internet/cloud service/software companies, like DropBox. This pricing model allows the company to grab a large amount of people that just want to try it out. Once they are dependent on the software or service and need extra room or extra functions, they will be more likely to pay for it. If they charged $250/month for new developers, these new developers would be less likely to splurge on services they don’t know will actually help them. Also, most of these new developing application companies are severely bootstrapped and don’t have extra cash around. If Buddy starts charging once the company has gotten off their feet, they are more likely to stick with a familiar analytics service provider and upgrade to the next version for a fee. As for the distribution, most cloud services/software companies don’t need large distribution plans, as they can reach their target market online and only allow paid/free access with a password and username. It would be a good idea if they invested in adwords to promote their services, since so many analytic companies occupy this space. However, if they are have the right services; people will start trying their services by using the free version.

Trupanion-Pricing & Distribution Strategy

Trupanion is a pet insurance provider based in Seattle, Washington. It offers and administers cat and dog insurance in the United States, Canada and Puerto Rico. Trupanion focuses on those who want to provide their pet with the best medical care with less worry about cost by providing financial peace of mind in the case of an unfortunate accident or illness.

Trupanion aims to provide pet the best medical care and make pet insurance simple and easy to understand. At Trupanion, full 90% coverage is available at any veterinary clinic, emergency care center or specialty hospital. Their comprehensive pet insurance policy covers surgeries, diagnostic tests, medications, treatment and hospital stays if pet gets sick or injured. Besides, no payout limits for cats and dogs who enroll between the ages of eight weeks and 14 years of age.

Trupanion uses a Demand-different Pricing Strategy. Since different pets have different healthy conditions, they cost very differently for treatment. So pet owners have varies demands of pet insurance. Trupanion’s monthly pet health insurance premiums are based on three factors – the age of the pet at enrollment, the pet’s breed, and the location of the pet. These factors as they apply to specific pet are taken into account relative to the average costs of a pet to determine the premium. In addition, depending on specific budget and situation, customers can also have the option to choose a pet insurance deductible. A deductible is the amount of veterinary bill for which customers are responsible before they start to cover the costs. Customers have the option of any deductible amount between $50 and $1,000, as well as the option for no deductible at all. Trupanion will never raise premiums based on the age of the pet and the amount of claims made over the lifetime of the pet. With Trupanion’s insurance, customers will be reimbursed 90% of covered veterinary cost. Customers pay the remaining 10%, as well as the monthly premium, examination fees and routine preventative care.

As for the distribution strategy, Trupanion directly sell their services to the consumers through its website and telephone. Before enroll a pet in insurance, Trupanion do not require any veterinary exams, and they don’t make customers wait a few days to see whether they have been approved. Customers only need to fill out an enrollment form online to get a quote, or they can call and speak to one of Trupanion’s customer care partners. Once customers have quote, they will be able to adjust deductible to fit their budget and enroll their pet right away. Currently, Trupanion also introduce itself and find new customer through social network, like Facebook and Twitter. Besides, they use own blog and YouTobe Vedio for advertising. In addition, since they directly sell services to the end-users, the public praise or word of mouth marketing should be one of their most effective distribution channels.

 

Whitepages.com – pricing

Whitepages.com is a tool that “offers consumers one-click access to more than 200 million adults and also provides them with the ability to edit and control their own listings.” They allow users to search their records to locate more than 200 million adults that are stored in their files and update and maintain their own records.

Whitepages.com has both a professional and consumer business that they manage. Both of these businesses utilize a tiered pricing scheme. On the consumer side, when an user searches for a specific name, they can down select to the specific person they are looking to find, and then they pay based on the amount of information they want on that person. To obtain a person’s address, phone, and residence history it will cost you an one time fee of $0.95 per transaction, to obtain a comprehensive background report costs a one time fee of $29.95 per transaction, and if you are going to be searching for a lot of transactions (such as if you were a private investigator perhaps), they offer an annual plan that allows you to have basic public record search capability for just slightly over the background report price at $39.95 per year.

The professional plan , ” leverages its proprietary phone number intelligence by tapping into WhitePages.com’s database of more than 300 MM phone numbers, including landline, hard-to-find and mobile numbers.”   For this plan they charge both a tiered and licensing approach. There are two options, the first one is a reverse phone number search where the pricing starts at the intro rate of $19.95 per month for 20 look ups and one user (one license/seat) and increases all the way up to the “enterprise” rate of $999/ month for 10,000 look ups and 50 users. The other option is a people search which has both a basic and plus option, the basic option is $99.95 per month with 5 users and 2000 look ups and the plus is $199.95 per month with 20 users and 6000 look ups.

Overall the main way that pricing is differentiated for whitepages.com is the more information you want the more money that it will cost to obtain that information.  The more people who are looking for information, the more money it will cost to retrieve that information. For smaller businesses this could be a good way to generate sales leads, buying one or 2 seats and looking up key prospective clients that you want to target at companies in your market.

Shiftboard Pricing

Shiftboard is a company that specializes in scheduling and management software. The software contains all the usual elements you’d expect from scheduling software: day/week/month views of the calendar, color coding, availability blocking, and compartmentalizing different calendars. But it also has added features, like the ability to send urgent text messages to members of a calendar, upload document attachments to certain events, post a google maps link to an event, have users do self-scheduling, and provide reports and analytics of calendar events. The website describes a range of uses for the software including staff scheduling, event scheduling, healthcare scheduling, and call center scheduling. The software has been used by companies and organizations that range in size from 50 people to 50,000 people.

The Shiftboard website clearly outlines their pricing strategy for the product. They split their product into four categories based on the features that you receive and how much you pay: Basic ($50/month), Standard ($125/month), Professional ($275/month), Enterprise ($475/month).

“Basic”

The Basic version of the software comes with the option of a free trial period. The first 1,000 users who can access the database, and first 50 users who manage the database (called “active people”) are included. Each additional active user is $2, and additional regular users are $10 per 1000. This package includes all the core tools but no additional add-ons. There is only one type of profile, and no financial tools. Their customer service is described as “very good” for this package.

“Standard”

The Standard version of the software doesn’t not state that there is a free trial. The first 2,000 users who can access the database, and first 100 active people are included. Each additional active user is $3, and additional regular users are $10 per 1000. This package includes all the core tools plus three additional add-ons. There are two types of profiles plus financial tools. Their customer service is described as “great” for this package.

“Professional”

The Professional version of the software doesn’t not state that there is a free trial. The first 3,000 users who can access the database, and first 150 active people are included. Each additional active user is $4, and additional regular users are $10 per 1000. This package includes all the core tools plus four additional add-ons. There are three types of profiles plus financial tools. Their customer service is described as “fantastic” for this package.

“Enterprise”

The Enterprise version of the software doesn’t not state that there is a free trial, and in general the tools offered seem to be more customizable. The first 10,000+ users who can access the database, and first 200+ active people are included. Each additional active user is $5, and prices for additional regular users are negotiable based on volume pricing. This package includes all the core tools plus four+ additional add-ons. There are unlimited types of profiles plus financial tools. Their customer service is described as “extraordinary” for this package. Additionally, this package offers on-site training and set up in addition to the online training offered in the other packages.

DreamBox Learning – Pricing and Distribution

DreamBox Learning is a company that has developed an online math program for students in elementary school. It provides an online curriculum, as well as tutorials and quizzes to track progress. Educators can monitor students’ progress and receive statistics about their student body as a whole, and how they compare to other schools. Students have 24/7 access to the program.

The pricing for schools is available as a flat rate of $7,000 per year with unlimited students allowed to use the program, or $25 per year for individual students. This means a school with fewer than 280 students might be better off paying the fee on a per student basis. To help defray the cost of their program, the company has a great deal of evidence about the effectiveness of their program to assist schools in securing state and federal funding , especially Title I funding. Their website has a section on grant writing tips for educators.

DreamBox Learning markets primarily to elementary schools, but they have another avenue of sales by marketing directly to parents. For home use, the company offers a free 2 week trial, but also allows for parents to subscribe with a money back guarantee. Subscription costs $12.95 a month/$59.95 for 6 months for a single student, or $19.95 a month/$99.95 for 6 months for a family account for up to 4 students. This pricing model should provide a diverse revenue stream, but home accounts might require more support staff to assist people with problems using the online programs.

Taulia – Finding a niche in the Supply Chain financing market

Taulia has positioned themselves as the clever penny-pinching gnomes of the supply chain finance world. By developing a SAP-certified add-on, they have enabled themselves to make a significant amount of money based on a lot of pennies. (Think: Office Space, but legal)

Although Taulia doesn’t mention how they make money on their website or in any of their literature, it is obvious that they are getting a very small cut of every transaction they facilitate. Their business model is clever: Enable large corporations to capitalize on a sliding scale for supplier discounts instead of the normal suppler discount schedules (which give a 2% discount if the buyer pays within 10 days of invoice, but which offer no additional discount prior to that 10-day mark, and offer no discount at all after that 10-day mark). Think about it: Wouldn’t a 1.5% discount at 20 days be better (for both the buyer and supplier) than No discount at 20 days? The Supplier gets cash faster. (Cash is king!) The Buyer maintains a pre-set level of liquidity while capitalizing on a discount.

So Taulia offers this software program and a way to get discounts over a longer period of time. If you’re Coca-Cola Bottling (an actual client of Taulia), and you spend a few billion dollars a year on supplies, wouldn’t an extra 1% of discount (or even a fraction of a percent discount) be worth giving Taulia a cut? Trust me. It is. And when Taulia adds up all those little cuts (probably 0.1-0.2%) over a few billion dollars in transactions, they’re gonna be wearing golden diapers, baby! (Think about it…Saturday Night Live…Blue Oyster Cult…wait for it…yep, now you got it.)

And the buyer is thrilled that they are saving millions of dollars a year. One client claimed $140k in savings in a month! Tough to argue with those numbers.

If Taulia’s SAP add-on can be uploaded remotely, then Taulia is saving a considerable amount of money on travel, but I doubt they are doing that. I would expect Taulia to install the program and train the Finance and Accounts Payable departments in-person. This is their distribution model. I would expect as SAP incurs updates, Taulia would do the same.

Taulia is offering a great service, and the price is “hidden” in the savings that the Buyers are realizing based on that service. Taulia may run into problems in out-years as their clients push for greater savings from this service, and Taulia may feel pressured to decrease their cut from each transaction. This will drive the sales force to expand their client base continuously.

Pathable price strategy and distribution channel

Pathable is a local software company. It delivers their service to optimize the social network events and private meeting scheduling, especially for business conferences and settings. Pathable help transform the event website into a thriving community, enable attendees, speakers, exhibitors and sponsors to meet, converse, share ideas and schedule private meetings.

 

Pathable help social network and private meeting scheduling tools help your attendees meet before, during and after your event. The more engagement your attendees could access, the more successful your business conference is. Organizers establish the event community with your own brand, logo, look and URL. Under the registration integration, Pathable automatically import and invite attendees from RegOnline, Cvent or in-house ticketing system, which helps increase attendance and revenue with networking tools. Attendees find people with common interests before the event, choose session and schedule private meetings in their own Pathable community and export your calendar to Outlook, iCal or view on the mobile device. They can also find out which people you know from Facebook, Twitter, or LinkedIn who are attending. Attendees can even book a meeting by sending broadcast message to their client within the community. Exhibitors could virtualize tradeshow booths for their year-round exposure and interaction. Organizers would be able to sell multiple sponsorship opportunities within the interface. Speakers can upload their own session handouts and slide decks for easy attendee retrieval. Public social network, like Facebook is inappropriate for business settings and Pathable indicates the highest engagement level in the industry.

 

Pathable’s current pricing strategy is based on subscription. Typically, a single site event, which can remain active for up to a year, is quoted in two options. Basic, $799; Premium, $3,999. The quote difference stems from service delivery distinction in amount of member profile management, registration integration, customized exhibitor and sponsor landing page, site reservation, expert support and so on. As for multiple events, they have custom pricing quote that builds in some volume discounts.

 

Distribution channel :

1. Website platform
2. Mobile app in IOS, blackberry and Android;
3. broadcast message between organizers, exhibitors/ sponsors, attendees, speakers to smooth the whole network community.
4. Compatible with Facebook, LinkedIn and Twitter, Pathable compares your social network contacts to the community membership so you know “who you know” that will be there, while separate profiles allow your attendees to present their professionally relevant information only.

 

 

Pricing Plan – Allrecipes.com

As part of the Foodiephiles group, I have chosen a similar concept/company that is Seattle based to research their pricing strategies.

Allrecipes.com is an online website (and downloadable app for your Smartphone), that allows you to search, save & create recipes. Their mission statement is: “Allrecipes, the world’s largest digital food brand, energizes home cooks with confidence so they can accomplish their everyday cooking goals—no matter the size or scope.” Allrecipes has a very similar concept that we at Foodiephiles would like to create however we would like to take this system to the next phase. We want to give more functionality to the users and those who enjoy cooking.
Allrecipes currently has two sources of income. They have advertising for products, stores, and similar/related industry companies as well as membership fees. For advertising, they present many different options for placing ads on the website for users to see. These many types range from Display, OPA & In-line ads to banners, video’s, and newsletters. With newsletters, companies or advertisers can sponsor the print material to gain attraction. In addition to these advertising avenues, Allrecipes also uses banners as a way to advertise on mobile devices as well as utilizing social media to lure new members to the site. I sent an inquiry email asking to get basic or high level pricing quotes and am still waiting to hear back. Regarding membership fees, there is a free basic version and then a “Pro” version that has the following breakdown in costs:

New Subscribers Renewal Current Promo
6 months $ 9.95 $19.95 $6.97
1 year $ 17.50 $ 34.95 $12.25
2 years $ 22.95 $44.95 $16.07

The basic version allows members to search recipes, save interesting recipes to their “recipe box,” rate & review recipes, see a shopping list preview of a recipe, and have the ability to click on a ingredient and search for more recipes with that ingredient. The “Pro” membership of course gives you all this however also allows members to create/add recipes, create & save menus, export the entire shopping list of a recipe, tweak recipes to your liking, and find out the nutritional facts of a meal or recipe.

So, when researching this website, we at Foodiephiles agree with a freemium model and could possibly look into an advanced, fee-based membership with additional functionalities. Here we could also have a “new user” discount, a renewal increased price, while running promos for new users and renewals. Though, we would definitely need to be launched and successfully working in order to start charging users.

Lastly, Allrecipes currently publishes their survey data, statistics & demographics on their website for free. One concept that we at Foodiephiles could think about is selling our data to advertisers instead of publishing it online for all to see.

DropBox – Pricing and Distribution Strategy

Dropbox was founded by Drew Houston and Arash Ferdowsi in 2007. It is a web based file hosting company that uses the cloud storage to enable users to store and share files and folders using the internet file synchronization.  This concept came about when there was a demand by people who needed a way to bring their files with them without sending email attachments or carrying USB drives.

When this company was launched there were many existing cloud storage companies. The Dropbox technology tried to keep the process simple and focused on the most important goal for which they started the project. There were 100,000 users registered by 2008, mostly gained through word of mouth and signups from referral programs. There was no money spent for advertisements and the technology was propagated by engineers who have had no prior marketing experience.

Dropbox uses the Freemium financial model and its free service provides 2GB of free online storage. Users who refer Dropbox to others can gain up to 8GB of additional free storage.  The free account and the paid account are identical in all aspects except for the amount of storage space offered. Providing the free account to users costs a lot of money to Dropbox but nevertheless Dropbox continues to provide the free accounts because it benefits Dropbox in several ways. Drew Houston, the CEO of Dropbox has pointed out that: ” Most of our growth is word of mouth / viral, so free users are still valuable: we grow faster, and they refer people who might pay “.

The pricing strategy focus had earlier been on a B2B model which eventually proliferated to a B2C model via the freemium model. The tiered pricing models is a Value based system that speaks to a wide range of consumers. For business accounts in particular it has been used with upper tiers who retain older versions of documents, and have branded extra-nets for secure file sharing with clients/partners, etc and an ‘enterprise’ plan that features a higher price. For the B2C consumers for instance, Dropbox has achieved critical mass by providing free addition storage through invites to new users.

The single most impactful thing about their referral program is that it has a two-sided incentive for sharing: the person who signs up through referral link gets a better deal than they would have gotten from the homepage, in addition to the bonus space.  The cost of the marginal space is truly minuscule as a cost of customer acquisition: a few pennies a month if the user actually fills it, and most will not. Drew Houston says that this 2-sided incentive increased signups for Dropbox by 60%. This initiative has created a truly robust ecosystem and a strong self-sustaining distribution network for Dropbox.

CellarTracker: Pricing & Distribution

CellarTracker is a tool for organizing/tracking one’s wine cellar.  It is a freemium website-only model, and thus is distributed online with free basic access for users.  This freemium model allows for users to try the basic tracking system to see whether it will work for them, while charging for features that true wine collectors will desire, such as value-tracking and access to professional wine scores.  The annual price increases as users want to track the value of more bottles of wine. 

There are several free or one-time-payment apps and websites on the market that can track wine cellar inventory and tasting notes, which means that CellarTracker must make trial free or very cheap.  By charging for access to professional reviews and value tracking, CellarTracker has positioned itself as the cellar inventory system for collectors.  The annual subscription model creates recurring revenue for the company because once users’ cellar data is in the system, the user’s switching costs become high if tracking their wine is a priority.  Similarly, their wine collector target is likely affluent, and thus is able to pay the annual subscription up-front, and is of a generation that is used to paying for services, online or not.  In addition, there are three price tiers above free, allowing the users to segment themselves on cellar volume and desire to track wine bottle value.

The online distribution model also makes sense – the target demographic is not necessarily up to date with the latest technology, but most are comfortable with the web.  However, by not offering an app, CellarTracker is ignoring the young, affluent wine collector who operates on mobile devices.  In addition, CellarTracker could have another revenue stream if they charge for the app.

All in all, the pricing and distribution for CellarTracker seems on-target for its demographic, the middle aged wine collector.  However, as mobile-device based young professionals have more discretionary income and start collecting wine, CellarTracker is missing out on a growing customer base by not having an app.