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Zendesk raises their prices 60%-300%, users predictably revolt

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Re: Zendesk raises their prices 60%-300%, users predictably revolt

#21

Post by krschultz »

robryan wrote: post #9

This seems to be a good example for the idea of setting your prices at the right level from very early on. Much better to err on the expensive side then drop them later than significant rises like these. Or initially offer a special deal so people know it will eventually cost more. Similar thing happens when going from freemium/ indirect revenue to charging. There was a big backlash when invision board did that, even…

Exactly. Anchor that price high, sell it low. Everyone at the old price will think they got a deal and "now its back to normal". Everyone coming in now won't know any better. If they didn't have sales at the old price, they wouldn't have anyway with the higher price anchor. There is never a reason to go too low early when you can just put that price up as a "discount" from the start.

Re: Zendesk raises their prices 60%-300%, users predictably revolt

#22

Post by tghw »

robryan wrote: post #9

This seems to be a good example for the idea of setting your prices at the right level from very early on. Much better to err on the expensive side then drop them later than significant rises like these. Or initially offer a special deal so people know it will eventually cost more. Similar thing happens when going from freemium/ indirect revenue to charging. There was a big backlash when invision board did that, even…

I don't think there is anything wrong with raising your prices. The main problem here is how they handled their existing user base. "Grandfathering" is not a short-term, temporary thing, what they're doing is a grace period.

The right way to handle this would be to just let everyone who was on an old plan stay on those plans. Then, instead of a backlash, they'd be getting a sales bump as people who were on the fence signed up before the price change deadline.

Re: Zendesk raises their prices 60%-300%, users predictably revolt

#23

Post by hga »

enntwo wrote: post #12

Regardless of who's side you fall on, I think this is a pretty good example of why allowing public comments is a bit of a dangerous move. (Clearly the more dangerous move here was the price hike, but I do not know the internals of the company that led to the decision, or the interest that it was in, so I will not comment on that so much.) It is tough to imagine them recoverving from the sort of mob-rule that has form…

I'm not sure you're right.

The backlash would be expressed elsewhere, here at least it's in a place they cannot afford to ignore.

Their actions going forward, e.g. if they purge the posting with the links to competitors, will tell us a lot about them and how they're going to deal with this.

Also note this could be part of an internal faction fight, one faction who's against this move may have wanted this so that they can show this immediate and detailed feedback from current customers to those in the company who put this in place.

In general, I find most "supress information and communications" strategies to not work well, and this is ever more true the more we build our communications infrastructures.

"The truth is out there" and pretending otherwise is likely to be futile.

Re: Zendesk raises their prices 60%-300%, users predictably revolt

#25

Post by tghw »

sjsivak wrote: post #3

To be fair, they are allowing customers to grandfather their pricing for a year: https://support.zendesk.com/entries/173169-new-grandfatherin... However: > "As a result, the new pricing reflects the added business value of each individual plan." I read that entire post and I was unable to find the added business value, these features all seem like they should be part of the product not really premium stuff.

That's not grandfathering (http://en.wikipedia.org/wiki/Grandfathering), that's a grace period. Calling it grandfathering is one of the worst parts of this whole mess.

Re: Zendesk raises their prices 60%-300%, users predictably revolt

#26

Post by jonknee »

uptown wrote: post #15

It seems like the are requiring the grandfathered customers to pre-pay a full year because maintaining two monthly pricing structures is more trouble to manage. But I'm curious what kind of blowback a company like this might face if existing customers were grandfathered into the old pricing plan for life. Would new customers resent existing customers? Without knowing Zendesk's financial situation, it's hard to know w…

It seems like they could just create a new product/sku/whatever for each of the new pricing points and then stop selling the old products. You can't buy into the old subscription but it's no biggy to continue to bill it.

The way they're doing it looks like a money grab (pay more now or pay up front for a year and then more later!).

Re: Zendesk raises their prices 60%-300%, users predictably revolt

#28

Post by ahoyhere »

boredguy8 wrote: post #19

I don't see why changing prices is a big deal. Apparently there's some pent-up frustration, but there is a real cost to keeping services online. If the price of electronic books doesn't increase over the next two years, I'll be astonished. And in fact, there's real danger to a business in terms of how they price their product. We were early adopters of RightNow, and we still pay an absurdly low price for their produc…

Here's why people are so angry:

* they clearly didn't hear about it in advance

* it was buried in the midst of discussing (minor) new features

* it locked them out of features they had before (XML export)

* it's a 2-3x increase for many people

* the grandfathering option forces them to come up with thousands on short notice, or not at all

* ZenDesk's blog managed to sound totally smug

* nobody from ZenDesk is answering emails, phones, or even comments

Basically, it's a nuclear disaster.

EDIT: Fixed line break issue. I never remember...

Re: Zendesk raises their prices 60%-300%, users predictably revolt

#29

Post by hga »

boredguy8 wrote: post #19

I don't see why changing prices is a big deal. Apparently there's some pent-up frustration, but there is a real cost to keeping services online. If the price of electronic books doesn't increase over the next two years, I'll be astonished. And in fact, there's real danger to a business in terms of how they price their product. We were early adopters of RightNow, and we still pay an absurdly low price for their produc…

I don't get the impression that they prepared their customer base for this. E.g. you know why you're paying "an absurdly low price" for RightNow and you should't be surprised if things change in an adverse way. E.g. I don't know anything about your and their situation, but say they grow so big they have to move to AWS and now providing service to you costs them cash money. You wouldn't be surprised if at the very least they passed that new cost of "goods" through to you.

Re: Zendesk raises their prices 60%-300%, users predictably revolt

#30

Post by ahoyhere »

hga wrote: post #23
enntwo wrote: post #12

Regardless of who's side you fall on, I think this is a pretty good example of why allowing public comments is a bit of a dangerous move. (Clearly the more dangerous move here was the price hike, but I do not know the internals of the company that led to the decision, or the interest that it was in, so I will not comment on that so much.) It is tough to imagine them recoverving from the sort of mob-rule that has form…

I'm not sure you're right. The backlash would be expressed elsewhere, here at least it's in a place they cannot afford to ignore. Their actions going forward, e.g. if they purge the posting with the links to competitors, will tell us a lot about them and how they're going to deal with this. Also note this could be part of an internal faction fight, one faction who's against this move may have wanted this so that they…

We allow public comments on our SaaS blog, but we don't use things like UserVoice for these reasons…

If the issue is a minor annoyance, people will be minorly annoyed. They will probably write support; we'll handle it; they'll get personal service; everybody's happy.

Until they see that other people have it too, and have the option to "vote it up," etc. That way, a minor annoyance a person would live with -- and be happy that you fixed -- becomes a major gripe.

Basically, your customer's interaction should be with you, not other customers, unless other customers are part of the "features" of your product. Because other customers will misrepresent, inflame, etc., meanwhile the initial irritated customer will have his/her first interaction with a tool, not a human being.

The moment they interact with a respectful person AT the company, they will calm down. Not so with a comment form.

Basically, it's an argument that goes both ways :)

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