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Our Shift to Usage-Based Pricing

appsmith.com

31–40 of 41 posts

Re: Our Shift to Usage-Based Pricing

#31
This approach is fascinating - and I would love to hear more about it later on...

Specifically, the selection of the value metric as time spent in-app (eg. per user hour). This is value metric/pricing strategy that seems like its available to many companies. And yet very pick it as far as I can tell...

"the amount you pay is proportional to the value you receive from the product"

...but is it proportional to the amount of time a user spends in the product? Timely example: I just switched from a legacy bank with a bad UI to one of these neo-banks, which has a slick UI. I spend way less time with the new bank - and its not because i am getting less value...

It seems like this could create a bunch of suboptimal incentives.

For instance, in my last company, as the we optimized our product, user session time went down - not up (and yes, retention/NPS/satisfaction went up). B2B Users want to do their job quickly - not spend all day in a product. Setting OKRs with this pricing metric would lead to some interesting conversations internally...On the other side of the coin, customers will be incentivized to push time-consuming workflows outside of the product.

If you are trying to differentiate from competitors with more favorable pricing for cost-conscious customers, seems like something like Slacks fair billing policy that auto-downgrades dormant users could be an alternative direction.

I am also very open I am utterly wrong... like I said, I am honestly curious to hear how this goes. Good luck!

Re: Our Shift to Usage-Based Pricing

#33

Earlier quoted context omitted.

> I’m in the data space and a company like Snowflake has a model where you pay for compute by the second and storage by the byte. Very simple, transparent and everyone is aligned. Not sure everyone is aligned. Sounds like Snowflake got no incentive on optimizing queries. They even got an incentive doing the opposite. They must keep their infrastructure as-is without any optimization on compute time nor storage to ear…

Snowflake employee here, not speaking on behalf of the company. Short version is that you would think so, but it doesn't work that way for at least two reasons. 1. If we weren't investing in product optimization, but our competitors were, we'd quickly be outpaced. 2. When we invest in optimizing queries for our customers, the ROI on the Snowflake investment goes up. This results in actually getting even more money th…

Was a heavy Snowflake user at my last company - and this is what we saw.

Plenty of profiling tools to show why a query was taking a certain amount of time allowed us to optimise things, and also, the product seemed to get quicker over time.

Also love that, unlike BigQuery, you charge by compressed data size, not uncompressed data size.

Re: Our Shift to Usage-Based Pricing

#34

Earlier quoted context omitted.

> I’m in the data space and a company like Snowflake has a model where you pay for compute by the second and storage by the byte. Very simple, transparent and everyone is aligned. Not sure everyone is aligned. Sounds like Snowflake got no incentive on optimizing queries. They even got an incentive doing the opposite. They must keep their infrastructure as-is without any optimization on compute time nor storage to ear…

Snowflake employee here, not speaking on behalf of the company. Short version is that you would think so, but it doesn't work that way for at least two reasons. 1. If we weren't investing in product optimization, but our competitors were, we'd quickly be outpaced. 2. When we invest in optimizing queries for our customers, the ROI on the Snowflake investment goes up. This results in actually getting even more money th…

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Re: Our Shift to Usage-Based Pricing

#35

Hi HN readers, I’m the CEO and co-founder of Appsmith. Appsmith is a 2020 open source project that aims to be a quick way to build apps that talk to multiple data sources. People use Appsmith when they need a CRUD app or an admin panel or a complex internal enterprise application. We are an open source alternative to Retool. It’s hard enough to build a business model around an open source project and getting the pric…

> capped at $20 per user per month

the cost cap is brilliant. this is a hybrid between usage based and seat based pricing that addresses all concerns. well done and i'd love to read a retro after 6-12 months on surprises and validation

Re: Our Shift to Usage-Based Pricing

#36
Just wanted to add that usage-based pricing is a form of dynamic pricing, where the price for a given level of service is not fixed or is variable based on various factors like demand, supply, time of day, etc. In this case, the dynamic pricing parameter is based on usage.

When it comes to consumer protection laws, dynamic pricing is often treated as a form of price discrimination, where different customers are charged different prices for the same product or service. The legal treatment of price discrimination may vary from country to country, and it would be intriguing to see how usage-based pricing will be received in other countries.

Re: Our Shift to Usage-Based Pricing

#37

Just wanted to add that usage-based pricing is a form of dynamic pricing, where the price for a given level of service is not fixed or is variable based on various factors like demand, supply, time of day, etc. In this case, the dynamic pricing parameter is based on usage. When it comes to consumer protection laws, dynamic pricing is often treated as a form of price discrimination, where different customers are charg…

Good point. I could imagine someone with an impairment might take longer to navigate the service and would thus be charged more.

Re: Our Shift to Usage-Based Pricing

#38

I would love to use Appsmith and pay-by-usage, but I’m blocked by not being able to SSH tunnel into MySQL. Anyone with this same issue, please upvote! https://github.com/appsmithorg/appsmith/issues/518

Hey zackkatz, I'm Arpit, the CTO of Appsmith. Thank you so much for surfacing this Github issue. I know it's quite an old one and we still haven't provided a fix. I'll bump this up internally on our priority list.

Btw, since you are trying to connect to your web host, can I ask if you are self-hosting Appsmith or you are using Appsmith Cloud (https://app.appsmith.com) ?

Re: Our Shift to Usage-Based Pricing

#39

This approach is fascinating - and I would love to hear more about it later on... Specifically, the selection of the value metric as time spent in-app (eg. per user hour). This is value metric/pricing strategy that seems like its available to many companies. And yet very pick it as far as I can tell... "the amount you pay is proportional to the value you receive from the product" ...but is it proportional to the amou…

> I just switched from a legacy bank with a bad UI to one of these neo-banks, which has a slick UI. I spend way less time with the new bank - and its not because i am getting less value...

Pricing doesn't necessarily need to incentivize all good behavior. As you're aware, having a product with a bad UI is an incentive for your users to switch to alternative services.

Re: Our Shift to Usage-Based Pricing

#40

I would love to use Appsmith and pay-by-usage, but I’m blocked by not being able to SSH tunnel into MySQL. Anyone with this same issue, please upvote! https://github.com/appsmithorg/appsmith/issues/518

Hey zackkatz, I'm Arpit, the CTO of Appsmith. Thank you so much for surfacing this Github issue. I know it's quite an old one and we still haven't provided a fix. I'll bump this up internally on our priority list. Btw, since you are trying to connect to your web host, can I ask if you are self-hosting Appsmith or you are using Appsmith Cloud ( https://app.appsmith.com ) ?

Hi Arpit! That’s wonderful news, thank you!

I’m running Appsmith Cloud.

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