5 Tips on Creating Subscription Plans in a Startup - Nozbe case

Today I want to share 5 basic tips and tricks on creating good payment plans for an online service.

I've been running Nozbe for more than 3 years now and I'm still learning a lot about pricing and selling... and we've come a long way from first Nozbe beta, first 3 Nozbe plans through 6 Nozbe plans a year later... and we've just reduced the payment plans to 4, giving our users unlimited projects and contexts in the process and now if you go to Nozbe signup page, you'll see this offer:

New-nozbe-plans

Here are some rules when creating subscription plans:

1. Reduce the amount of plans to the minimum

We used to have up to 6 different plans for different kinds of Nozbe users. After we've investigated the sales and usage we found out, that these can be reduced to 4 plans... and maybe even more. The idea is that users should have a simple choice. The more choice you give to the user, the less likely they are to buy from you.

2. Avoid Excel sheets - focus on the essential

We used to have a real excel sheet on our signup page. Lots of features and lots of "ticks" and "dashes" showing you which plan has what, which doesn't have, etc. Very confusing and lots of reading for the user. When we reduced the signup page to the one you're seeing above, our conversion rate trippled.

3. After focusing on the essential, focus even more on key differentiators

Find out what's the main difference between your plans. We thought they were amount of projects and contexts you would create. Later we realized they don't matter. Now the main differentiator is the number of users you can sign up for Nozbe, the second one is file storage and the third some additional features.

4. When doubling the price, X-duple the key differentiator. Folks want good bang for the buck!

- In Nozbe, personal account for less than 10 bucks is for one user only.
- Pay twice as much and you can have up to 5 users.
- Pay 2.5 times as much as the last one... and you can get 4 times the user count.
- Pay twice for the Team plan and you get 5 times the users (up to 100)

Anyway, see the pattern here? Raise the price a little and give a lot more. I've seen many startups double their features when doubling their price... what's the incentive for the user to go for a more expensive plan then?

5. Include as much as you can in the basic product. Give the entry users a good feel of what you've got.

I used to save SSL connection for higher-paying users. Now even on the personal plan you can have full SSL encryption, unlimited projects and contexts. You have a fully working Nozbe for the minimum price. You wouldn't want to pay for half-baked product the entry level price. Later, if you want more users or storage (key differentiators we talked about earlier) you'll upgrade to higher plans. But because I give you great basics, you already know what you're paying for.

This way I have lots of users who start with "Personal" plan and later upgrade to Family, Team or even Business plans.

.... and there is one more thing - give a great Money-back guarantee

People are risking a lot by trying your online web app. And they don't want to risk their money, especially not in the economy we're in right now. This is why I'm giving full 60-days money back guarantee on all Nozbe plans. I'm letting my users test Nozbe for full 2 months and if they are not happy for any reasons, I refund all of the money.

This works miracles. People know I'm here for the long haul and I want to make them happy and productive. They know that they can take their time to take Nozbe for a full spin totally risk free. Believe me, you want your users to be really comfortable using your app and giving you money.

These are just basics

These 5 basic tips may seem obvious to you but I've seen many startups fail in creating a compelling product plan list. Make sure to go through these 5 steps with your business and make sure you're offering your users a good bang for their buck.

Please let me know what works for you and for your business. Which tips help you convince your users to give you a try and pay you for the service. I'm looking forward to your tips and tricks!

--> me I'm Michael Sliwinski and I'm an entrepreneur who's also the...
.. Founder of Nozbe.com - a time and project management web application
.. Editor of Productive! Magazine - a global PDF publication on productivity
.. and a blogger as well as a producer of a weekly 2-minute Productive! show.

Posted on Monday, May 10, 2010 (business,nozbe,startup)

Rich
May 15, 2010 18:29
I think the money back guarantee is key. I am a typical individual user. I started with the free plan but the six project limit was not enough to see if I wanted to make a purchase. I purchased the entry level personal plan on a $7.00 month-to-month basis just to see if I would really use the product. The price of the new Personal plan just increased by $2.95 a month (42%) to $9.95. Regardless of new features, that was troublesome to me. For me anything more than $5/month (regardless of monthly or annual) causes me to be cautious.

After using Nozbe for less than 60 days I am still getting use to it. The non-discounted price of $89.95 annual is too much for me to purchase any product that didn't have a 60 day money back guarantee. I think the guarantee is critical to get people to use and get committed to a product.

Michael Sliwinski
May 17, 2010 11:46
I'm still amazed why for some businesses money-back guarantee is not standard. It shows trust and confirms commitment from the seller to deliver a great product or service. Whenever I see something as "non-refundable", I'm cautious.

We started off with 30-day money-back guarantee and now we've moved to 60 day to make sure everyone gets a good taste of being organized with Nozbe before they commit. And it's been working great for us.

$9.95 may sound an awful lot, but if you compare the price to two cups of Starbucks coffee, it's not all that much... and if you compare it to the gains of improved productivity and efficiency, it's a very low price to pay for being a more organized person. That's what I believe in.

Rich, thanks for a great comment and keep on integrating Nozbe into your workflow and if you have any questions, make sure to contact us!