The one time pricing is very interesting. How do you define the $100 one time pricing? What if you decide to cut the product in the middle, do you give a full refund? Is there a time limit (20 years) or is this for as long as the service is alive? Is there a limit on file uploads? Is there a small annual recurring fee for maintenance?
$100 per person one-time works exactly how it reads.
If you have 27 employees, it costs $2700 one time. If you hire 3 more people, it's an extra $300, one time. If you let someone go, and hire another person, it's an extra $100. We don't sell against seats, we sell against unique people.
Hi Jason - mundane accounting question: how do you account for revenue deferral? I believe in general you're supposed to match revenues and expenses as they are incurred providing the services. i.e. Up-front revenue gets deferred over the lifetime of a contract, because you will incur costs of servicing that revenue during that whole time.
How does this work when there is no actual term?
(Sorry if this is off-topic - we're thinking through some pricing model stuff, and this was top of mind!)
"This is a one-time investment, not an ongoing expense."
I like the idea and it makes sense.
But I think it has to be restated in a way to not
sound as if there is a hidden cost that pops
out when getting to the fine print. That creates a negative
in a buyers mind [1]. Needs to be restated in more of a "ok I understand makes sense" or might backfire.
[1] Example: I had a building security system quote (cameras). Company said "we take care of the installation and everything". Quote states more or less "oh yeah but you have to supply 110vac outlets where we will put cameras". Oh great what is that going to cost me? Surprise. To me "everything" means turn key. Doesn't mean I am right but that is what I (not dealing with this every day) thought. My reaction. Had the salesperson said "Installation includes everything but electrical and that's normally $100 per outlet" prior to the quote I would have felt much better about the process.
It's all very clearly explained when we talk to the customer. Remember, no one can buy Know Your Company without spending at least a half hour talking with us first. We go through every single thing about the product, the model, and how it all works in those 30 minutes.
I was at a funeral the other day for a man who built a very successful residual alarm installation and monitoring business.
At the eulogy it was said that he taught his kids to say "and that's only" specifically the word "only" (not "just").
Btw, I would think that there is a fair amount of elasticity in this pricing. I would guess that people would pay $125 as easily as they would pay $100. "think" means that I would test. You may have already.
Since I brought up the point (which you answered) the way I would restate the copy (since this is HN and people want to learn and debate) would be:
(for now let's go with $125 for my illustration)
"The cost for this?
It's only $125 to setup an employee.
That's it.
The fee is one time and there are no additional or ongoing charges.
None at all."
(Note the word "setup" is used).
My point is by saying "$125 per employee" in my mind the (ad copy) gives me the impression that I won't have to pay if I replace an employee. The "only $125 to setup" in my opinion takes away that issue for the most part.
Strictly my thoughts from playing with pricing and wording for many many years. Others may feel differently. Personally I feel $125 is a better number than $100 can't quite put in words why.
Thanks for the clarification. It would be very interesting to see if anyone else adopts this pricing.
In spite of the flak you get from the HN crowd (the reason I am guessing, might be that you make it deceptively simple to hit $390,000 with 99% retention rate) it is always very refreshing to see your blog posts and the quality of your work is very inspiring. Thanks!
Most companies have a bit of turnover every single year. For knowledge based companies like mine, we have 3000 people at the desk. I don't know our turnover numbers, but if i ballpark it at around 20%, that would be $3M up front, then around $15000/yr perpetually, assuming that turnover rate.
For large enterprises, the upfront cost requires a bit of coaxing, while the maintenance cost is a no-brainer. I'd be curious to see where they go with larger installations. I'd love to see this product aimed at enterprises for 50-60 employees reporting up to a dirext or middle manager, while also proving insight to the executive team.
