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The Cost of Free Doughnuts: 70 Years of Regret

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Re: The Cost of Free Doughnuts: 70 Years of Regret

#91

Post by floydnoel »

TAForObvReasons wrote: post #81
tomjakubowski wrote: post #68

Earlier quoted context omitted.

In general for SaaS, does it make sense to let customers choose between two (or more) pricing models, depending on their needs? Does this cause too much complication for the business? Curious why I haven't noticed schemes like this, other than at "enterprise" tiers where the customer is paying a lot for something closer to a custom solution and prices are negotiated.

It makes sense for the pricing to be aligned with what the users perceive as their usage/value. In any other shape, customers can and will adjust their usage or switch to something else. When you start selling per-seat licenses, everyone is incentivized to reshape usage so that only one seat is needed. That one seat is used by a team member who becomes the internal expert on the service, while everyone else turns to…

That, or everyone uses the same login tied to a shared user.

Re: The Cost of Free Doughnuts: 70 Years of Regret

#92

Post by clairity »

afterburner wrote: post #41
blakesterz wrote: post #8

I witnessed something like this when I worked at a Six Flags amusement park (wasn't 6F at the time) that had a decent size water park. They did exit surveys every night, asking as many people as they could if things were ok, and one year they also asked people "Would you pay extra for the water park", it was free as part of admission. So they wanted to know if people would pay extra. People said yes. Something like 9…

Was there something wrong with the way the exit survey was asked/written? Because that is remarkable. Was maybe part of the issue that people leaving when the exit survey was being run (at "night") not representative of the visitors as a whole?

this is a well-known issue in market research, and survey design in particular. stated preferences are nearly useless in understanding customer segments and behavior. respondents have hundreds of different reasons for not answering with their true preferences (in this case, to not to pay more/separately).

instead, you want to reveal preferences using techniques like conjoint analysis (not always feasible), which better simulates the actual choices respondents might make in real situations.

Re: The Cost of Free Doughnuts: 70 Years of Regret

#93

Post by klmadfejno »

RandallBrown wrote: post #13
blakesterz wrote: post #8

I witnessed something like this when I worked at a Six Flags amusement park (wasn't 6F at the time) that had a decent size water park. They did exit surveys every night, asking as many people as they could if things were ok, and one year they also asked people "Would you pay extra for the water park", it was free as part of admission. So they wanted to know if people would pay extra. People said yes. Something like 9…

A park in Indiana, Holiday World, did something sorta the opposite. They figured out how much the average guest paid for drinks, then raised the ticket prices that much but made all drinks free in the park. It was a huge success. People expect ticket prices to go up occasionally and they expect to be gouged for drinks. By getting "free" drinks, it felt like a huge value. (At least for me when I visited.) I bet it mad…

By what metric was it a success? Drinks, even non alcoholic ones, have phenomenal margins, and if you're stuck in a theme park or sports stadium, for hours, you basically have to purchase one. I'm a bit surprised this makes financial sense unless they really went for it.

For similar reasons, restaurants are hurting extra hard right now because people don't order drinks as often with delivery or takeout.

Re: The Cost of Free Doughnuts: 70 Years of Regret

#94

Post by mjevans »

afterburner wrote: post #41
blakesterz wrote: post #8

I witnessed something like this when I worked at a Six Flags amusement park (wasn't 6F at the time) that had a decent size water park. They did exit surveys every night, asking as many people as they could if things were ok, and one year they also asked people "Would you pay extra for the water park", it was free as part of admission. So they wanted to know if people would pay extra. People said yes. Something like 9…

Was there something wrong with the way the exit survey was asked/written? Because that is remarkable. Was maybe part of the issue that people leaving when the exit survey was being run (at "night") not representative of the visitors as a whole?

It could have also been expectations.

The people reading a poorly written survey might have thought that the park wanted to SPLIT the fee structure.

  * Same $$ Both Parks
  * Fraction, One Park
There are so many ways it could have been taken incorrectly, even the context of the other questions matters too.

Re: The Cost of Free Doughnuts: 70 Years of Regret

#95

Post by papito »

If you have a service where the free deal was too good to be true, then it works. I am not salty at the New York Times. I pay for the subscription and it is well worth it.

Also, now I want a coffee and a doughnut, goddamn it. Is Dunkin still open in quarantine?

Re: The Cost of Free Doughnuts: 70 Years of Regret

#96

Post by selimthegrim »

_jal wrote: post #70
danso wrote: post #21

Earlier quoted context omitted.

This made me think of living in New York, during the $1-pizza-slice boom during the 2008 recession, and I was curious how those places were doing in more recent years. Looks like 2 Bros. Pizza (as of 2018) was still sticking to a dollar, but other places may not have: https://www.vice.com/en_us/article/evk75k/the-slow-death-of-... > It’s a beautiful system, but it’s quickly vanishing from the city’s food landscape ri…

A slice in NYC tends to match the cost of a subway ride. https://en.wikipedia.org/wiki/Pizza_Principle

Why not the dollar van slice then? (Jitney slice doesn’t have the same ring to it)

Re: The Cost of Free Doughnuts: 70 Years of Regret

#97

Post by criddell »

MaxBarraclough wrote: post #49
dperfect wrote: post #26

It's true - charging for something that was once free can be risky, but it isn't always bad as some might believe. I have great respect for businesses that charge for a service that provides real value - even if it was once free. Often times (especially in the startup world), companies start out offering a free product (operating at a loss) to gain market share. It's not often the best strategy, but in some markets i…

A similar thing happens in the podcasting space. It's a pity it's still quite inconvenient to make micropayments. If I could make a single click to pay a penny for access to a single article, I imagine I'd do so frequently.

Google Contributor is one attempt to pay creators and it's not terrible. The big downside is that even though ads are blocked, Google is still tracking you.

It would be nice if there was somebody other than Google running the program.

Re: The Cost of Free Doughnuts: 70 Years of Regret

#98

Post by danielrhodes »

013a wrote: post #57

I can call out one example of a poorly executed price raise: Apollo Engine ( https://www.apollographql.com/pricing ) There was a time when they charged for data points/performance traces ingested into the system. At our scale, we were paying around $100/month. We were prepared to scale that to their, I think it was, $550/month plan when our usage got that high. They relatively recently changed their structure to char…

This is an important point. A lot of companies do great revenue by selling seats, but that model is obviously not always applicable. In this case, you're pointing out that the marginal utility of a product like Apollo Engine is not driven by the number of users, but by the usage. In other products, say Box or Dropbox, the marginal utility is in how many people in an org you can get using the product, not in how much you use.

Re: The Cost of Free Doughnuts: 70 Years of Regret

#100

Post by caseysoftware »

blakesterz wrote: post #66
afterburner wrote: post #41

Earlier quoted context omitted.

Was there something wrong with the way the exit survey was asked/written? Because that is remarkable. Was maybe part of the issue that people leaving when the exit survey was being run (at "night") not representative of the visitors as a whole?

Great questions, I wondered how they got it so wrong, I still wonder how they got it so wrong. It never occurred to me it may have been time of day they asked the questions.

Three things strike me here: audience, proximity, and predicting behavior.

- The audience coming out of the waterpark at the end of the day are different than the people entering the overall park at the beginning of the day. If nothing else, the larger group will include people who have no interest in going to the waterpark and therefore find no value in it at all. The smaller audience is more highly qualified.

- The proximity comes down to when you received/perceived value. Polling people immediately after they had a fun filled day is terrible timing. Think of the last time you went to a movie you LOVED. On the way out, if someone had asked "want to see it again" you would have said "yes!" but a week later, much less so. Now a year later would you buy the same movie on streaming?

- And finally, people are terrible about predicting their own behavior, especially if it requires work or not-immediately visible value. That's why most New Year's resolutions are dead by February. After hitting this lots of times, I stay away from "would" questions: https://caseysoftware.com/blog/the-problem-with-would

But without going through that pain and suffering it first hand, it's hard to predict when/if it will occur. There are lots of other packaging & pricing strategies to address this intersection of economics & psychology.

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