À la carte pricing

[tavor 668]

The pushback against the recently announced change to the Basic plan and price increases for the Plus and Premium plans highlights the difficulty of forcing users into a prepackaged tier that may or may not have sufficient value to the user to warrant a subscription. I think we see this play out with the low paid user ratio, and in the comments from both free and paid users on this forum with respect to the various changes where people are leaving, sticking with Basic, or downgrading their tier.

I think all the users here would like to see Evernote succeed, and I think almost everyone understands that success, and indeed survival long term, means the product must become profitable. So it really boils down to how can Evernote increase their paid user conversion ratio while at the same time keep bringing in lots of new users to try the product and potentially convert in the future. The answer is Evernote has to provide packages/tiers at price points that provide sufficient value relative to alternatives. The evidence (that I can see) suggests the current Plus and Premium tiers do not provide sufficient value to most of the user base.

How best to configure the tiers to provide that value? Well, who knows best what someone will value than the person himself/herself? Evernote has so many features that if you ask 100 people to rank those features in order of importance, you will get 100 different responses. One way to address this is to provide many more tiers, but this risks user confusion. Another, perhaps more elegant solution, is a la carte pricing.

Start with the current Basic tier (with limit of 2 concurrent devices running EN app, not counting browsers) for free.

You want a 3rd device? $5/year (just making up figures). Same for a 4th device (or maybe $4/year, and $3/yr for a 5th device as each additional device provides less utility). You want 10GB/mo upload capacity? $30/yr (as an aside, this is the kind of feature that has very narrow interest, but the relatively small number of users who can regularly upload 10GB/mo really need the feature). Only want 500MB/mo? $10/year. You want encrypted notebooks (hey, a guy can hope!)? $5/yr. You want pdf search? $10/year. And so on. I just made up the numbers, but the point is a la carte pricing lets people pay for the features they actually use and value and doesn't force them into paying for a feature that has no value to them (e.g., 10GB/mo upload) in order to get a feature they want. 

This is somewhat similar to what cable tv is experiencing, where now that the previously relatively closed market for content and content delivery is opening up and becoming competitive (like the competitive market Evernote is in), users are abandoning the huge cable packages that force them to pay for 100 channels, only 5-10 of which they value. In a competitive market, users will tend to move toward products/services that provide them with options to best suit their needs/desires. Plus and Premium tiers are like those huge cable packages - sure, there are some users who want all 100 channels, but most just want a handful. The cable company can insist that all users buy the 100-channel package but they risk driving away many users who they could have kept if they let those users pay for the channels they want.

For EN, which exists in an increasingly competitive market, giving users more choice could dramatically increase the number of paying users in a win-win scenario that gives users the features they want at a price that makes sense for them and gives EN a sustainable revenue base. The alternative of only 2 paid tiers - take it or leave it - may drive a lot of users into the arms of eagerly awaiting competitors, which not only lets sustainable revenue walk out the door, but gives those competitors the huge network effects that Evernote enjoyed years ago when they were the uncontested big gorilla in the note taking market.

Anyway, my $0.02. Would like to hear from other users whether they would prefer the ability to pay for the particular features they want as opposed to paying for a pre-determined bundle of features.

[CecilyTechuan 1]

Yes. This. I'm a premium user, who rarely uploads over 500mb/month, but I have (when I digitized my filing cabinet) used the 2 GB limit a few times. I'd definitely want something like a data plan for cell phones (like if we notify ahead of time that we want 5GB, we pay extra for that month only). I really really want to keep the PDF search, but care not at all about about emailing my account, etc. I will not be renewing any Evernote subscription as they stand now; I'll either continue using it as a free product (down from a Premium user) or replace EN with OneNote and supplement with Pinterest/Google Drive/etc.

[tavor 668]

2 hours ago, CecilyTechuan said:

Yes. This. I'm a premium user, who rarely uploads over 500mb/month, but I have (when I digitized my filing cabinet) used the 2 GB limit a few times. I'd definitely want something like a data plan for cell phones (like if we notify ahead of time that we want 5GB, we pay extra for that month only).

Right, and they have this already - i.e., if you want the extra data overhead for brief period, you can buy Premium for a month instead of an entire year. So the a la carte pricing I'm envisioning would have both monthly and annual rates.

And a la carte pricing would let users try new features for a few bucks. For example, if I wasn't sure whether pdf search was useful, I could pay for a month or two of it, give it a try and maybe I find that it adds real value to my use case and make it a permanent part of my subscription (thus expanding my use case). If pdf search is bundled with a bunch of other things I'm not interested in, maybe I never bother.

[gazumped 11,643]

Due respect but the billing backup to all this wonderful choice would be a nightmare.  I agree it's much fairer for lighter users to pay less,  but that's what OneNote and Keep and competition in general is there for.  All the software I buy comes in very limited choices as pioneered by that nice Mr Ford* - you can have any features you want,  as long as it's one of these.

* The car guy,  not other ones...

[tavor 668]

21 hours ago, gazumped said:

Due respect but the billing backup to all this wonderful choice would be a nightmare. 

We can operate space stations for years continuously, design self-driving cars, and track millions of bids/asks and stock transactions on exchange servers in a timeframe that measures in microseconds, but billing for a service that allows multiple options is too difficult? I don't buy that.

21 hours ago, gazumped said:

I agree it's much fairer for lighter users to pay less,  but that's what OneNote and Keep and competition in general is there for. 

Sure, if Evernote wants to concede a significant portion of its user base to the competition. I'm talking about monetizing a broad swath of the user base, as opposed to losing them and the network effects they bring.

[jbenson2 2,147]

20 minutes ago, tavor said:

We can operate space stations for years continuously, design self-driving cars, and track millions of bids/asks and stock transactions on exchange servers in a timeframe that measures in microseconds, but billing for a service that allows multiple options is too difficult? I don't buy that.

 

 

 

I want  à la carte pricing for Evernote billed by the number of minutes I actually use the program. Law firms have no trouble billing by time. Employers can measure the time worked by their hourly workers. Therefore, since it is possible, and I want it, Evernote should adjust their billing program according to my wishes.

[Metrodon 2,184]

28 minutes ago, jbenson2 said:

I want  à la carte pricing for Evernote billed by the number of minutes I actually use the program. Law firms have no trouble billing by time. Employers can measure the time worked by their hourly workers. Therefore, since it is possible, and I want it, Evernote should adjust their billing program according to my wishes.

I want my billing to take into account WHERE i am using Evernote. If I'm in the office then I'm probably being paid and productive and so Evernote should charge me more than when I check my shopping list from bed.

Without this feature I'll be going IMMEDIATELY to OneNote, which is so brilliant I've only not moved before because...erm because....erm....

[tavor 668]

49 minutes ago, jbenson2 said:

I want  à la carte pricing for Evernote billed by the number of minutes I actually use the program. Law firms have no trouble billing by time. Employers can measure the time worked by their hourly workers. Therefore, since it is possible, and I want it, Evernote should adjust their billing program according to my wishes.

 

20 minutes ago, Metrodon said:

I want my billing to take into account WHERE i am using Evernote. If I'm in the office then I'm probably being paid and productive and so Evernote should charge me more than when I check my shopping list from bed.

Without this feature I'll be going IMMEDIATELY to OneNote, which is so brilliant I've only not moved before because...erm because....erm....

???

I was making a suggestion as to how Evernote might monetize a much larger swatch of their user base than the tiny fraction they currently do, and countered an argument re: technical feasibility by showing that from a technical perspective, this is a rather small challenge. And I am met with snark that completely misrepresents my point? 

Where did I demand anything? Where did I say I'm leaving for OneNote?

If you want to have a discussion on the merits of the idea of a la carte pricing, I'm happy to engage, but I'd expect "Guru" level posters to be above the sort of silliness demonstrated in these replies.

[Metrodon 2,184]

Your "technical feasibility" argument was facile. It got the response it deserved.

[BoxOfFoxes 43]

I think this is a good and user-friendly suggestion, but it won't happen because Evernote is consciously bundling highly-desired features with less-desired features in order to inflate the perceived "value" of the bundles they are offering.

For example, "PDF indexing" is likely a highly desired feature of the Premium plan. At the same time, "10 GB upload bandwidth per month", "digitize business cards" or "presentation mode for notes" are maybe not as universally desired features. Currently, the Premium plan is 60 Euros per year. If we said "You can just get PDF indexing for 10 Euros per year", a TON of people would likely switch to that.

Same goes for bundling "be able to stay logged in on more than two devices at the same time" into a 30 Euro tier - it's not worth that much, and free users who make the switch won't suddenly use 1 GB per month on mail forwarding, but they have to pay the full price if they want to get the one feature they desire.

In fact, going further, Evernote is likely banking on very few people actually using all the features they pay for - if all Premium users suddenly started uploading 10 GB of PDF/Office files per month with the intention to search through them all daily, then the Premium price (or Evernote as a company) would explode (or conversely, Premium features would suddenly be trimmed).

[tavor 668]

1 hour ago, BoxOfFoxes said:

I think this is a good and user-friendly suggestion, but it won't happen because Evernote is consciously bundling highly-desired features with less-desired features in order to inflate the perceived "value" of the bundles they are offering.

For example, "PDF indexing" is likely a highly desired feature of the Premium plan. At the same time, "10 GB upload bandwidth per month", "digitize business cards" or "presentation mode for notes" are maybe not as universally desired features. Currently, the Premium plan is 70 Euros per year. If we said "You can just get PDF indexing for 10 Euros per year", a TON of people would likely switch to that.

Same goes for bundling "be able to stay logged in on more than two devices at the same time" into a 30 Euro tier - it's not worth that much, and free users who make the switch won't suddenly use 1 GB per month on mail forwarding, but they have to pay the full price if they want to get the one feature they desire.

In fact, going further, Evernote is likely banking on very few people actually using all the features they pay for - if all Premium users suddenly started uploading 10 GB of PDF/Office files per month with the intention to search through them all daily, then the Premium price (or Evernote as a company) would explode (or conversely, Premium features would suddenly be trimmed).

What you describe works well and earns a lot of money in an oligopolistic market for a high demand product - e.g., the market for television channels beyond the free over-the-air channels in many parts of the US for many years. Cable TV companies bundled many channels (often exceeding 100 channels) and your choice was this bundle of channels, most of which you would never watch, or stick to a handful of free over-the-air channels. They got away with this because they were the only option or one of 2 or 3 options (all of which offered similar large bundles). 

With widespread adoption of high speed internet, the market for television content and delivery in the US has exploded with new content distribution methods using the internet (Netflix, Hulu, etc.), new online content creators - Amazon, Netflix, etc., and even channels selling shows individually (e.g., HBO's Game of Thrones). And consumers are responding by "cutting the cord" and finding television content services that provide content packages that more closely match what a customer wants, and in many cases, creating their own 'bundle' by subscribing to, for example, Netflix + Amazon Prime, saving money on their old cable bills and paying for only what they actually want. Cable companies, no longer ensconced in their cushy oligopoly, are being forced to respond by offering smaller bundles of channels. 

The market for note taking apps is even more competitive than today's television content/delivery market, so bundling lots of features and charging on the basis that the customer is going to use all those features when the customer actually wants only 1 or 2 of the bundled features is a losing proposition in the long run. That doesn't mean a la carte pricing is the only possible solution - offering more/smaller bundles would also address this concern. But the current Plus and Premium bundles at current pricing, in the face of rapidly improving low/zero cost competition is a long-term loser, and certainly not the stuff of a "100 year company". Just my opinion.

[BoxOfFoxes 43]

1 hour ago, tavor said:

The market for note taking apps is even more competitive than today's television content/delivery market, so bundling lots of features and charging on the basis that the customer is going to use all those features when the customer actually wants only 1 or 2 of the bundled features is a losing proposition in the long run. That doesn't mean a la carte pricing is the only possible solution - offering more/smaller bundles would also address this concern. But the current Plus and Premium bundles at current pricing, in the face of rapidly improving low/zero cost competition is a long-term loser, and certainly not the stuff of a "100 year company". Just my opinion.

Long-term view is a fascinating debate, and I'm genuinely not sure whether the current two-plan scheme is wise (given the plans, the pricing and the feature shuffling). You make valid points, but the question is whether (or how long) customer inertia ( = as long as enough people are either too lazy or too invested to seriously consider alternatives, offering no alternative plans makes the most sense there since tons of people will be locked into one of two plans no matter how many features they really use) lets them continue on this road.

Generally speaking, offering more plans is likely not a bad idea - the tough part is figuring out price points that will encourage people to pick up some of the options without endangering the profitability of the company in the short/medium/long term.

Oh, and then there's the question what you do with the people with currently running paid plans, who will probably not be too happy that they just paid 60 Euros just for PDF indexing, which suddenly just costs [significantly less than 60] Euros as a stand-alone module.

[tavor 668]

1 hour ago, BoxOfFoxes said:

You make valid points, but the question is whether (or how long) customer inertia ( = as long as enough people are either too lazy or too invested to seriously consider alternatives, offering no alternative plans makes the most sense there since tons of people will be locked into one of two plans no matter how many features they really use) lets them continue on this road.

Right, and only Evernote employees have a good sense of how strong the inertia effect is. But look at this forum or the various blogs and comments sections thereto, and it seems there are lots of people who are switching away or at least making the effort to look at the alternatives, even if they aren't abandoning ship at this time. And this is true for both paying and free users, along with some very long-term power users. We have no idea if this is representative of the overall user base or if the majority of users just sucked it up and signed up for a paid tier or decided to stick with whatever tier they're already on despite the price increase.

The fact that developers for OneNote and Quip (and perhaps others) have import options specifically targeting Evernote helps lower the switching cost and thus reducing the inertia effect. And of course inertia works the other way as well - those new to note taking apps who opt for one of the competitors after looking at EN's paid tier pricing are people EN may never win over.

With an increasingly competitive landscape, every year's Evernote bill presents another opportunity for users to look around and see if the grass is greener elsewhere.

How this shakes out, I don't know. But I do know that, as a general principle, consumers want choice and denying that choice by offering take-it-or-leave-it bundles is a very challenging position to adopt and succeed with in a very competitive market.

 

[gazumped 11,643]

35 minutes ago, tavor said:

denying that choice by offering take-it-or-leave-it bundles is a very challenging position to adopt and succeed with in a very competitive market.

Err..  is any software house offering a mix-and-match menu of options with an eventual subscription level based on usage?  I thought everyone followed the Ford method of "buy one of these <x> choices"

[tavor 668]

1 hour ago, gazumped said:

Err..  is any software house offering a mix-and-match menu of options with an eventual subscription level based on usage?  I thought everyone followed the Ford method of "buy one of these <x> choices"

Couple of things to keep in mind as it relates to EN's situation:

1. the product itself is much more free form in terms of how it's used than most software. I.e., most software is relatively narrowly tailored to perform a specific task. In that case, a la carte pricing or even several different bundles of features doesn't make sense. As Phil Libin once commented about Evernote, he sometimes has a difficult time explaining what it does; as he said, most users use 5% of Evernote's capabilities, and different users are using a different 5%. This is not very common for software. EN has so many use cases and many features (and so many more that we can imagine and have been requested on this forum) and many will never be used by some portion of the user base, but be highly valued by some other portion of the user base - e.g., 10GB/mo uploads - most don't need it, but those who go totally paperless might really value that feature.

2. In the consumer software market, much of EN's competition is free (or heavily subsidized) to the user. That puts a lot of pricing pressure on EN, especially when users feel like they are being forced to pay for a preset bundle of features, many of which they don't value.

Ford can offer, say, 4 trim levels on each model and let's assume consumer demand is for even greater choice (as is the case with EN's 2 tiers and ~5%(?) paid user ratio). Ford is relatively immune to that pressure because all its competitors are also offering 4 trim levels AND doing so at very comparable prices. And most of the features in the various trim levels actually get used. And the ones that don't are relatively easy to opt out of (e.g., sunroof) because there is usually a fairly similar trim level without it. 

That's quite different from EN's position where it has unused features in a bundle and severe undercutting by the competition.

Again, that's not to say a la carte pricing is the only possible solution. Simply going from 2 paid tiers to 4 paid tiers may be enough to convert a sufficiently large proportion of the user base by virtue of giving them the feeling that they are mostly using what they pay for and that the value offered is better than what the competition is offering for free. What I don't think will work is trying to be the cable company offering only 100 channel bundles in a market with lots of lower cost and/or more finely tuned options.

[gazumped 11,643]

Don't follow the logic.  Excel is also free form - can be used for home budget or multinational management information system (have used both).  Also databases,  CRM software etc etc.  All of it has total resources available to all users.  Up to you how much (or how little) of them you use.  Plus Evernote's competition doesn't apply any 'pricing pressure' - they're free! 

Evernote isn't (MHO) in the market to compete for the maximum number of users,  it's there to attract the maximum number of folks who want to pay for its services.

With free services you do get exactly what you pay for.  With Evernote... well,  they're getting better... 

[tavor 668]

14 minutes ago, gazumped said:

Don't follow the logic.  Excel is also free form - can be used for home budget or multinational management information system (have used both).  Also databases,  CRM software etc etc.  All of it has total resources available to all users.  Up to you how much (or how little) of them you use. 

I'm not saying there aren't a variety of uses cases for other software, just that they are fewer in number. I don't think MS can make the same 5% comment about Excel that Libin made about EN.

Interesting to note that even an operating system like Windows 7 comes in more tiers than Evernote.

 

14 minutes ago, gazumped said:

Plus Evernote's competition doesn't apply any 'pricing pressure' - they're free! 

Just the opposite in fact. When the competition is free, the pricing pressure is at a maximum.

 

14 minutes ago, gazumped said:

Evernote isn't (MHO) in the market to compete for the maximum number of users,  it's there to attract the maximum number of folks who want to pay for its services.

I never suggested EN should compete for max number of users. I'm suggesting a larger user base that pays for what they value will generate a lot more revenue than trying to cram potentially paying users into bundles they don't value.

[gazumped 11,643]

One of those 'agree to disagree' situations I think... 

[NewsLad 3]

I would certainly appreciate a few more price tiers or an a la carte approach. I am a Basic plan user and don't require any more than that, however, the two device limit is going to bit a bit of a nuisance.

I thought about going to the Plus plan but in Australia that is $6 a month and the Premium plan $10 (cheaper on a yearly subscription, of course). I probably only save about 15 to 20 documents a month so on the Plus plan that works out at 30 to 40 cents each, a bit stiff I thought.

When I went into my account to deregister some of my devices I received an offer of 50% off of the Premium plan for the first year. This made it only slightly cheaper than the Plus plan so didn't really help. Now if they had offered 50% off of the Plus plan I may have given that serious consideration.

For now I am going to see how it goes with the two device limit.