In my ever increasing desire for transparency and living out loud here is my current thinking on pricing in my new business SaneBox.

First, this is a thought experiment, I’m not going to start charging tomorrow. The website needs way more documentation and our invitation and email communications need to be significantly slicked up.

But, that stuff is pretty close.  So it is time to think about this.

My original idea was free for 30 days and then if you still like us you pay an affordable monthly fee that would feel like the cost of a nice cup of coffee with a cookie.  Or maybe just the coffee.  Maybe a yearly product that would be 80% of paying each month. That still feels about right.

I’ve toyed with the idea of letting people pay what they feel it is worth like those music groups are doing.  It’s an interesting way to get feedback and might be a nice way to engender trust in my community.  Unfortunately, our subscription service Spreedly, requires us to choose a price so I’ll have to wait for another time to try that.

Ahhh, but the devil is in the details…

How to reward the great crew of alpha testers that have been using the product for free for the last couple of months and how to transition to a more stable business like relationship?  First, regardless of the pricing, they should get continued free service for a while and then a great discount.

But the biggest challenge is: The Price.  This isn’t like a gym where you hope lots of people sign up but no one shows up.  Each user is automatically a significant drain of resources in the form of some monthly charges and some capital expenses.  The good news here is that as time goes on those expenses should trend down.  I can purchase bandwidth more cheaply as I buy more of it and as it becomes cheaper around the net. The blades I buy in 2010 will do twice what my 2007 blades did for the same amount of money.

I like the idea of a basic and premium service with the idea that you can make the basic service more affordable for people that need it to be more affordable by charging more for more to people that can afford the more.  On the other hand, I can’t stand the premium services that appear to be nothing more than an excuse for charging more.  Having said that I don’t yet know what the premium service would look like so I guess I will field with the current basic service.

And there are issues around the internet culture that has developed around Freemium and other types of businesses that have figured out how to provide services for free or at a highly subsidized rate. I think the flip side of that is the many examples of Software as a service type businesses that are charging and doing well.  I personally use a bunch of them: flickr,  clarity accounting, pingdom, vimeo, mailchimp, crashplan, … .  They all have some things in common.  They provide a solid service that I need on a regular basis and they are priced so that the value proposition is clear.

I have to say that I would rather pay for a service and get some customer support than get a free service that I really need and run the risk of having no one to talk to when the sh*t hits the fan.  Just the other day, I actually got a call from Google. Seriously. From a guy who identified himself as being from google. I figured they were pissed about something since I have never heard of anyone getting a friendly call from them.  About 3 minutes into the call I realized that this guy was reaching out because I had paid for a google app premium account. Ahhhh, the joys of paying.