Customer Outreach Startup Intercom Raises $6M Round(techcrunch.com)
techcrunch.com
Customer Outreach Startup Intercom Raises $6M Round
http://techcrunch.com/2013/06/19/intercom-series-a/
17 comments
We left intercom a couple of months ago, and that was down to a pricing decision on their part.
I know of other companies that will now leave due the price changes. I'm sure they'll run the figures, but my guess is that not truly grandfathering in the existing prices for existing customers will bring in less revenue due to the number leaving.
Plus is it worth upsetting existing customers and advocates for the sake of a few dollars?
I know of other companies that will now leave due the price changes. I'm sure they'll run the figures, but my guess is that not truly grandfathering in the existing prices for existing customers will bring in less revenue due to the number leaving.
Plus is it worth upsetting existing customers and advocates for the sake of a few dollars?
Hey Nathan. CEO of Intercom here. We mailed all our customers this morning about a grandfathering deal we're giving you.
I guess I have 6 months to figure out what to do. This kind of sucks for me.
I really like intercom. But i guess I am not the target customer for my startup because the economics don't make as much sense unless I can change my conversion dynamics before January.
The new pricing punishes small, bootstrapped businesses who have a free tier in their product, because of how they've defined an "active" user.
"An active user is defined as having used your product in the last 30 days"
https://www.intercom.io/pricing
Let's say you have 1% conversion from free to paid. Some larger percent use your free tier.
Because these free users are "active users", you have to pay effectively 4.4 cents a month ($11 / 250) per user.
The problem here is that if you got a big push of "free tier" users who may not be qualified, it can cost you a lot of money. Ie, 1000 users signup because of some promotion, but let's say they came from TechCrunch and didn't convert. You still have to pay $40 to intercom for the privilege of hosting these free users.
This also happens with email announcements (new product features, content, etc) that can drive some percentage of users back to the site. So, if I activate a few hundred dormant users with an email (who use the site, but don't upgrade), it will cost me a lot of money.
So, unless you have a big enough premium user base to subsidize the free users, this is going to be prohibitive.
I really like intercom. But i guess I am not the target customer for my startup because the economics don't make as much sense unless I can change my conversion dynamics before January.
The new pricing punishes small, bootstrapped businesses who have a free tier in their product, because of how they've defined an "active" user.
"An active user is defined as having used your product in the last 30 days"
https://www.intercom.io/pricing
Let's say you have 1% conversion from free to paid. Some larger percent use your free tier.
Because these free users are "active users", you have to pay effectively 4.4 cents a month ($11 / 250) per user.
The problem here is that if you got a big push of "free tier" users who may not be qualified, it can cost you a lot of money. Ie, 1000 users signup because of some promotion, but let's say they came from TechCrunch and didn't convert. You still have to pay $40 to intercom for the privilege of hosting these free users.
This also happens with email announcements (new product features, content, etc) that can drive some percentage of users back to the site. So, if I activate a few hundred dormant users with an email (who use the site, but don't upgrade), it will cost me a lot of money.
So, unless you have a big enough premium user base to subsidize the free users, this is going to be prohibitive.
Totally agree -- my pricing can't sustain the cost per-user in this model. Any my site's usage is very seasonal, easily up to 10x at different times of year, and it isn't clear how dynamic the plans are.
Possibly my pricing is wrong, but simply per-user seems like a very blunt instrument. Not sure what a better way of measuring the 'value' here is though. Ideally % of total hosting bill would seem 'fair', but if a service is going to cost 30-50% of the hosting costs then it needs to provide an awful lot.
Possibly my pricing is wrong, but simply per-user seems like a very blunt instrument. Not sure what a better way of measuring the 'value' here is though. Ideally % of total hosting bill would seem 'fair', but if a service is going to cost 30-50% of the hosting costs then it needs to provide an awful lot.
Same here. The majority of our SaaS users are non-paying (and will never pay because of their user role). With the new plans, we would immediate go from $50/month to $400+/month. That's a lot for a bootstrapped startup and would be one of our most expenses services we pay for.
We would be happy to pay even $99 or $149 a month, but increasing the price 8-9x is a big jump, as great as the product is.
We would be happy to pay even $99 or $149 a month, but increasing the price 8-9x is a big jump, as great as the product is.
It's not really a grandfather if it only lasts 6 months.
That's the one issue I had too. I still have early adopter customers of mine who pay me $6 a month (minimum now is 4x that), and I'd never dare to change their original pricing.
I don't know, is it really that much of an issue? I mean, you paid a reduced price for using the service early--albeit it would have been buggier, you're contributing useful feedback, etc., but you obviously were deriving a benefit from the service so it was a fair trade. Fast forward, the product is more mature and "better", is it that unreasonable to ask you to pay more after 6 months of getting to use the better product at the better early adopter rate? And that's the deal killer for you?
[note: I have nothing to do whatsoever with Intercom, just my 2 cents]
[note: I have nothing to do whatsoever with Intercom, just my 2 cents]
I believe in rewarding your earliest supporters.
Case in point, we sell our product for $99/year with a $20/month add-on. Some people got this for $39-$79 for life, and I'll never change that because I wouldn't have a product if not for their early support.
I'll also never ask our current customers to pay more, provided they stay active.
The overhead of keeping early adopters alive at initial prices is not significant, so there is very little risk in grandfathering them in. However, raising the price risks driving brand advocates (like those commenting here) away, or at best, making them disgruntled.
I guess I just don't see the upside.
Case in point, we sell our product for $99/year with a $20/month add-on. Some people got this for $39-$79 for life, and I'll never change that because I wouldn't have a product if not for their early support.
I'll also never ask our current customers to pay more, provided they stay active.
The overhead of keeping early adopters alive at initial prices is not significant, so there is very little risk in grandfathering them in. However, raising the price risks driving brand advocates (like those commenting here) away, or at best, making them disgruntled.
I guess I just don't see the upside.
Love the product, and while the grandfather'd pricing is nice - it only lasts for 6 months. If we were to continue using it past these 6 months Intercom would cost, on a monthly basis, more than our servers and other add-on services we already pay for combined. Pricing based on active users might make sense if your ARPU is high enough, at which point it's just a question of return, but at lower ARPU's it simply prices itself out of the equation - at least for us.
Intercom is an amazing product that's boosted our revenue and retention more than anything else we've done.
Love the product, and the founders are (from what I hear) awesome people.
Love the product, and the founders are (from what I hear) awesome people.
Are there alternatives to Intercom? Their new pricing is quite pricy for the value they provide.
Congrats guys! I've been a huge fan of Intercom and the team behind it since, well, back before they started charging.
Most products are going to need some sort of custom dashboard, will also eventually need a way to do in-app feature / maintenance notifications, sending and tracking lifecycle emails, etc. Intercom saves tons of time by distilling all of this into a simple JS include.
Most products are going to need some sort of custom dashboard, will also eventually need a way to do in-app feature / maintenance notifications, sending and tracking lifecycle emails, etc. Intercom saves tons of time by distilling all of this into a simple JS include.
We at BetterVoicemail.com love Intercom. We'll probably continue to use it with the new pricing, but we have a slightly odd way of doing things and might have to change some things around. We currently create an Intercom user in the first step of our sign-up process BEFORE he/she actually gives us their CC. We do this so we can send them reminder a reminder email the next day to complete the sign-up process. Unfortunately this counts toward the user quota now.
Fantastic product and team. If you get a chance definitely tune into their webinars. seminar.intercom.io
never thought I'd say that out loud.
never thought I'd say that out loud.
This is awesome. It's a legitimately game changing idea and in an industry that is still plagued by user dissatisfaction. They stand to change a lot.
I think if they make it a bit simpler to use with a less packed design it would be even more popular. It's already backed by a few big tech names...if they can get bigger, even more mainstream brands they'll be in a really good place.
I think if they make it a bit simpler to use with a less packed design it would be even more popular. It's already backed by a few big tech names...if they can get bigger, even more mainstream brands they'll be in a really good place.
As a fellow founder, I'm very happy for them.
As a user, I'm afraid I'm going to have to find a replacement. We made the transition from free to $50, and they were nice enough to provide a 50% discount on that, which is great.
But the new pricing means we'll have to pay $149/month to get the same value we're getting now. I haven't complained about the email garbling or the lack of a spam feature, but if they're going to want $149/month, they'll need to improve the service.
Perhaps they will reconsider and reward early adopters by grandfathering them instead of punching them in the face with a price increase.