What I learned from “name your price” campaign

Hey there! Happy Saturday. My newsletter subscriber grew to almost 100 in a short 2 weeks. Thank you so much for your support!

Today, I want to share with you my learnings and thinkings around “pricing”.

Background story

A few weeks ago, I started a special campaign for my landing page design services. I let customers choose how much they wanted to pay, and each week I selected the highest offer to redesign a website.

Since then, my studio has designed around 10 websites, with prices offered ranging from $1 to $1000. It's interesting that two founders offered prices like $420.96 and $414.14.

If you followed my story, I began by offering free designs, and then I started charging $35 per website. Over time, I gradually increased the price for each landing page to $70, $140, $280, $320, and finally $688. Now, I am planning to increase the price again.

When my price reached $688, I faced some challenges in reaching more customers. It wasn't as easy for people to simply jump in and reserve a spot at that price. I noticed a decrease in inquiries and referrals. I realized I needed to make some changes.

Should I go back to offering $35 or free website designs? There is still demand for it, but I don't have enough time to handle 20 websites simultaneously. Additionally, it would not seem credible if my official price is $688 but I go back to offering a cheaper price.

Building trust is crucial for service businesses

What I've learned is that clients become repeat customers when they trust in the high-quality work my studio delivers, regardless of the price. People who have worked with me trust me, but those who haven't may reject me like nobody else. They appreciate the flexible pricing and availability I offer.

My main goal is to establish trust with founders who haven't worked with me before, regardless of the cost. I don't mind starting with free or offering inexpensive design work initially as long as it helps build trust and showcases my skills.

However, a better price helps filter out quality leads and also demonstrates demand from the market. I need that market feedback.

That's why I came up with the "name your price" campaign. Offering one slot per week is the pace I can handle at this stage, and I need something new each week to keep my account active.

If you're active on social media, the most important thing is to stay engaged, whether it's through daily posting or frequent interaction with the community. 

It's always worth experimenting and trying new things to keep your audience interested!

Focus on users’ habit if you are in software business

When building software, you can use similar strategies to test your pricing and understand market demands.

Should you charge or should it be free?

Legend founder John Rush, who is managing 24 startups simultaneously, asked his audience if he should offer free tools indefinitely, considering he can afford not to charge.

My response to that is this: Having a price helps you filter out customers who truly have long-term needs. While offering something for free is a great way to attract early customers, how will you know if you're better than your competition if you don't charge?

Many people take advantage of free offerings, but as soon as you start charging, they disappear. This indicates that they have alternatives available or that the problem isn't significant enough for them to pay for a solution.

Price is one of the most effective ways to test market demand. I wish I had done that earlier instead of later. I highly recommend charging a price for your software.

When to charge?

Many software companies use a freemium model, where users can try the software for free for a certain period, such as 7, 14, or 30 days, and then start paying once they find it useful.

One example of a long free trial period is Slack, which offers a 90-day pro trial. That's three months, which is a quarter of a whole year. But why?

Imagine you're a small team trying out Slack. In the first month, you might still be unsure if it's the right platform for you. In the second month, you start getting used to using it and begin inviting clients and more co-workers to join Slack. By the third month, you and your team are deeply involved in all the communications and connections on Slack. Once your communication is dependent on it, going back becomes difficult.

It takes time to build that habit. People have busy lives, and using your software might be just one out of a hundred things they think about every week. Focus on building that habit loop first, and only start charging when your software becomes an essential part of their workflow.

How to charge?

One example that impressed me is Hypefury's offer of 95% off the first month's price. When I tested Hypefury, I wasn't sure if it was the right tool for me after the initial free 14 days. I didn't have a chance to explore their other features due to a busy schedule.

However, trying another month for just $0.95 per month was a no-brainer! The brilliant part is that they collected payment information from users. Once you become more convinced about using this tool, upgrading is just one click away.

You can always start with lower prices. Increasing prices will make older users feel like they got a valuable deal, while newer users will be motivated to make a quick purchase.

The most important thing to remember is to focus on users' habits first and then consider the pricing. You want to use the free version to provide as much value as possible, so once users are hooked, they won't think of any other solutions but yours.

That’s it! Some of the learnings and thoughts about pricing recently. I hope you enjoyed it. 

Future Topics:

I am considering writing more around the topic for design and startups. Please let me know if any of the following interests you and if you have suggestions for topics you want me to cover in the future. Feel free to reply directly to this email and let me know :)

• What designs does an early stage startup need?

• First design hire: how to land the right design talent?

• What did most founders miss on their web design?

• Web Design Trends for Ai Companies

• Logo Design Trends for Ai Companies

• Design principles for busy founders