Experiments in Pricing

Really great article. Thanks for sharing your experience!

Brilliant article, Ash.

How did you come up with your $49 figure? Were you ever concerned with offering unlimited storage at a fixed price?

I'm curious what metrics you used to allow you to feel comfortable with this pricing structure.

Thanks.

Jackson -

I point out Neil Davidson's e-book which is a great reference on pricing theory. I came to that price by first asking what I'd be willing to pay. My wife and I use CloudFire every day and are users #1 and #2. I also looked at the competitive landscape which is the strongest reference point customers use in an existing market.

As to offering unlimited storage, you have to make certain assumptions on what the "actual average storage per customer" will be (something we measure) and also factor in the falling scale for storage/bandwidth pricing. The key is run some back-of-the-envelope calculations to justify the business model but then measure all the assumptions. There is also the possibility of offering future value added services like prints, dvds, etc. but the model has to work without them.