Picking pricing

Key takeaways

1. Fried says pricing for an untested product starts with a number that seems reasonable, feels affordable and is something you might pay yourself, while you keep costs low.
2. Hansson says a six-month A/B test showed Basecamp's flat $99 price gaining revenue, but years later fewer signups meant fewer invites and less viral growth, so judge pricing over a long time horizon.
3. Basecamp caps its price at $299 a month for unlimited seats so it never chases whales, because Hansson says big enterprise deals warp the company and fill the product with one-customer checkboxes.
4. Fried says 37signals avoids coupon codes and rarely changes prices on existing customers, so buyers don't wait for a sale or feel burned by a later price drop.
5. Hansson says a two-and-a-half-month statistical effort to find Basecamp's price ended with a gut call of $15 a seat or $299 flat, and he warns that over-testing leaves prices constantly shifting.