Ben Sauer’s Blog

Back in September I attended clearleft’s dconstruct conference. One presentation in the day really stuck out, and reviewing the slides again today I felt inspired to comment/echo one particular point.

Joshua Porter used some psychology principles to examine how to provide a persuasive user experience. See the slides and audio from his presentation are available, in case you missed it (I’ve embedded the presentation below).

Over the past few years, I’ve been exposed to a great number of webapps+software that had a free version or trial and then offered something extra in the paid service. Most of them were non-essential to my work, but did offer something I enjoyed using, and potentially made me a little bit more efficient (e.g. mindmeister or basecamp).

One thing they all share in common: the paid service or one off price felt too expensive. There are now so many services that I’d like to buy into, that my pricing decision isn’t made in isolation. I find myself thinking: “that’s not too expensive, but if I was only using it occasionally and there are 20 others, it costs too much.”.

The Sign Up Problem

Joshua’s presentation illustrates ‘the signup problem’ brilliantly (see slide 29). Software customers overvalue their existing software (“why should I pay for x new widget?” i.e. hard to persuade) and software makers overvalue what they’ve created (“my widget really IS worth x much!!” i.e. missing out on sales).

I find myself thinking about the second point every time I get to the ‘Pricing’ page of software I might buy. I’m convinced that sellers are missing out on big chunks of sales as a result.

If there’s an ongoing cost, even if its small, I also worry about being tied into something I won’t use much, especially if I’m paying for a few. If I’m buying software at a one off cost, I end up thinking that the price is wrong given the ultra-low marginal cost.

Maybe I’m too frugal, and unrepresentative of the way a lot of buyers think. What I do know is this: when I buy software/services online, its not just about the alternatives to one particular market. I lump together everything I’m spending on these things into one big cost that I (irrationally?) try to keep under control. Therefore, things that don’t directly compete (e.g. basecamp for project management and blinksale for invoicing) end up affecting each other.

Now I know I’ve skipped over operating costs, development costs, and a lot of other factors that influence supply and demand. However, I can’t help but feel that these markets are being constrained by cognitive biases.

I’d be very interested to hear about alternative pricing/incentive approaches to the existing models. This is something I’ve been thinking about in relation to other industries (particularly film and music – MUCH more on that later).

This issue is important to me at the moment as I’m formulating more ideas about how to take the useful things that are out there and explain the benefits to individuals and businesses (see my ‘Geek Habits for non-Geeks’ workshop). The pricing model will be critical to adoption in so many cases, that I feel strongly that things need to change.

Mostly I end up thinking about how to assess how useful something is to a particular individual, and ‘tip’ on this basis. Something along these lines:

“You’ve used our widget for 99 hours this month, we suggest you pay X on this basis.”

“You’ve used our widget to create 50 files, we suggest you pay X on this basis.”

Taking this a step further, you could leverage cognitive bias to get people paying more, or at least more consistently. Social proof is instructive here, and I know its been tried on the independent music scene (wish I could remember which artist tried this…).

“On average, people have paid x per month to use our software. Pay this amount now.“

I’d like to take this last idea into the real world, but I’ll save the idea for another article. Thanks to Joshua for getting me thinking about this!