Untitled

Discuss this episode in the Muse community

Follow @MuseAppHQ on Twitter

---

Show notes

00:00:00 - Speaker 1: Pricing is uniquely susceptible to getting gridlocked. Everyone has opinions about pricing, as they can and should. It tends to be an emotional topic. There usually is not a team or a person whose full time job it is to do pricing, unlike product design or product engineering, and it often takes more effort than you think or realize.

00:00:25 - Speaker 2: Hello and welcome to Meta Muse. Muse is a tool for thought on iPad, but this podcast isn’t about Muse the product. It’s about Muse, the company, and the small team behind it. I’m Adam Wiggins. I’m here with my colleague Mark McGranaghan. Hey, and my colleague Leonard Zaburski. Hi. And Leonard, you are a longtime member of the Muse team, you are the design powerhouse behind all the lovely things that people I think are familiar with, but it’s your first time on the podcast here, so maybe you could just quickly tell us about your background, what was your journey that brought you to Muse.

00:01:00 - Speaker 3: Yeah, I started about 2 years ago with MS and I actually came from studying interface design in Potsdam near Berlin here and just had done some freelancing, basically found out that wasn’t really for me and was looking for something else. So I saw that I can switch design memo you posted about news. And yeah, we kind of started working together and sort of just worked on going from a prototype into a real product.

00:01:26 - Speaker 2: Yeah, if I’m not mistaken, maybe Mark originally found you through two works you published. One is Desktop Neo, which is sort of a rethinking of desktop operating systems for kind of more modern productivity, which obviously is quite on point for us. Then you have another done one called the Cloudfall, which I think is a bit more about consumer data, how apps could potentially in a hypothetical world kind of give users more control over their data and privacy while also giving you a lot of the benefits of the aggregation. I’ll link to both of those in the show notes.

00:02:01 - Speaker 1: The other side of the origin story is whenever I’m working on a hard problem, I like to search for the prior art on it to see what other people have done and to learn from that. And so back in the early days of Muse, when we were thinking about the core design problems, I went into DuckDuckGo and typed like direct manipulation touch interface, and one of the very best things I saw was the work Mener had done like, oh man, we got to email this guy and see if we can get him to come work with us and one thing led to another.

00:02:27 - Speaker 2: That’s right, I think it was actually really good timing. You had just read the Ink & Switch piece on the Muse Studio for ideas at that point, still very much a research prototype, we were still thinking about even whether to try to commercialize it, so it was maybe hot on your mind, so the timing was very good.

00:02:44 - Speaker 3: Yeah, and I was actually really surprised after I published both of those essays, like how much feedback you can get and how well it actually works to basically publish something where you’re working on exactly the thing you’re interested in, which maybe, you know, isn’t something that a lot of people are interested in, but sort of the more niche it is, the more feedback you get from the people that also care about the same sort of stuff. And so it actually works out really well to find sort of the people you want to work with.

00:03:11 - Speaker 2: Exactly right. Find your tribe by that weird thing that only you and 20 other people in the world care about, and if you publish that and put it on the internet, you can all kind of find each other.

So our topic today is pricing, and this is a big one for a lot of reasons. So Muse just launched new pricing, we kind of call it pricing V2 internally, and just really briefly, you know, I’ll link the new pricing page and we’re gonna write a memo on it, that sort of thing, but basically we’re going from having one price, which was $100 a year, to two tiers of membership, a pro plan that remains $100 but then kind of a starter plan that’s $40 and then you can also pay for those on a monthly basis, so you can potentially get started for $4 a month.

And we’ll talk a little bit more about our journey there, but I think for me one of the most important framings on this is that pricing is incredibly important. It’s really important to your business. The stakes are very high, right, the right price and you can make a successful business, the wrong price either too low or too high, and you can basically fail. And furthermore, in my experience on this, because I’ve been involved in a number of teams setting prices for products, there’s no real playbook. I feel like almost any other type of product development, business work, particularly in the startup space.

Marketing, sales, engineering, design, there are playbooks and best practices and lots of material that you can find. There’s a few books and things on how to price your sass product or how to price your hourly rates as a consultant, but I found them pretty unsatisfying and it feels like a really just kind of.

And frontier and no one really knows how to do it, but it’s critically important to your business and it’s really important to your customers, obviously.

So I think that makes it a pretty rich topic and why I’m also really pleased we did manage to get the second iteration of pricing out because I’ve been on many teams that have done it and it’s hard, it’s hard because the stakes are high.

00:05:05 - Speaker 1: Yeah, and the context for Muse is that we were in a relatively unexplored part of the pricing IDMAs.

So if we go back to pricing V1, this is back in the early days of MUS, we had this aspiration to create a professional grade software product for.

The iPad and in order to do that, it would require a lot of development work and therefore we need to fund the business reasonably and so if you kind of do the math on this stuff, we realize that you realistically need a professional price for the business to work out and for us to be able to produce and maintain the software where professional prices caught on the order of $100 a year or $10 a month.

00:05:45 - Speaker 2: And I did some search on the priority there, it’s remarkably consistent, whether you look at something like Microsoft Office back when it was sold in a box, you know, it was $300 and you’d kind of need to buy a major new version about every 3 years, whether you go forward to today with SAS subscriptions, Photoshop, that sort of thing. Some things are higher, some things are lower, but that’s quite commonly, no matter how they package, it ends up being around that amount, again, for professional software, which is typically on the desktop or on the web.

00:06:14 - Speaker 1: Right, and that’s where the first big challenge came for us. There’s very well established precedent for pricing professional and especially enterprise products in the SAS model.

This is where your company uses ocean or whatever, and every seat in this app cost, I don’t know what notion is, but they’re almost all $10 + or minus $5 a month. I would bet notion is too. And the software is distributed in the usual fast model.

Now, for product reasons, we really want this to be an iPad native app and a pricing challenge there is that of course you need to sell that through the app store then and pricing the app store for professional product. has historically been almost nonexistent.

There are almost no products sold to the app store with a professional price. It’s much more dominated by consumer pricing, which might be free, it might be ad-based, or it might be consumption based, like a free to play game or a dating app or something. So a big question for us, a big risk for the business was can we actually deliver a professionally priced product for the iPad through the App Store. So we decided very early on to confront that question because it was a big risk and basically to try and see if it worked. And so that led us to pricing V1 which briefly was, there was one option, it was a one year membership for $99 or $99.99.

00:07:31 - Speaker 2: Yeah, and for the record, I’m not a big fan of the 99 cent trailing thingies. I know why psychologically that. Yeah, $399 seems like less than $4 but that’s not a choice because we sell through the app store, that’s imposed upon us by their system, so we end up with $99.99 dollars, but I tend to, you know, just refer to it as $100 when I am speaking informally.

00:07:53 - Speaker 1: Yeah, there you go. So we had this one membership option for one year for $100 and we wanted to see to what extent that would land with the market.

00:08:01 - Speaker 2: Yeah, and I remember when we first turned on sort of the paid product, which was very, I don’t know, nerve-wracking, exciting, but also nerve wracking, both because one we knew we were taking kind of a bold position to charge sort of a desktop product price for an iPad app.

Of course I believe the iPad can and should have great software. It’s an incredible piece of hardware and it seems a shame to me that there aren’t more really good professional tools for it. And so that’s part of our kind of whole hypothesis with this business. But yeah, we went to turn on the pricing, which was a little more than a year ago because we just had our first renewals come up and, you know, it really was this kind of bold experiment. We didn’t even have a monthly option, for example, and that was partially for simplicity, but it was partially to really see, OK, like if we really do this litmus test, does someone believe either the software today or more plausibly kind of the concept of what they think it could do for them is something they would pay this price for. And I remember turning it on and I thought that was very plausible that we would just get 0 people making a purchase, and pretty quickly we got our first few. I think our first few were kind of friends and family or investors or something like that just showing their support, which I appreciate and, you know, making sure our payment flow works and everything, but it wasn’t long after we turned it on that we got our first purchase from someone we didn’t even know who they were, they had never contacted support, you know, they just made a purchase and I ended up, you know, writing to some of those early people and basically kind of Not too pointedly, but kind of saying like, why did you buy this? Just to see if what they conceived, you know, what they thought they were buying or what was in their mind matched what we thought we were offering, but that was very promising. So even though early on, we’re basically still in the beta phase and we had a few users anyways, or pretty small number of active users. The fact that some of them wanted to purchase, and they wanted to purchase at this kind of unforgiving price, that didn’t even have the monthly option or whatever, that was a validation, that, yeah, we can do something in this range.

00:10:00 - Speaker 1: Yeah, and I remember sort of prepping the team on what we should expect and look for, which was we’re really trying to get a non-zero number of non-affiliated customers to buy.

So it’s like excluding friends and family and investors, people who show up and believe in the software enough to pay in $100 and I say some small number because regardless of what price you charge, like if we charged 99 cents. A lot of people would say it’s too expensive. You’re always going to have a bunch of people saying that.

What you really need when you’re early on is, is there some non-zero evidence this has traction and then as you go on, you need to worry more about conversion rates and so on and so forth, and we’re starting to do more of that, but it was really, can we get some initial believers and I think we did.

00:10:39 - Speaker 2: And as a product person or just speaking to kind of the product management discipline generally, will you pay or actual proof that they will pay is one of the main ways you kind of seek validation for your product market fit hypothesis, because just liking something or being enthusiastic about it or thinking it’s cool or even using it, these are all good, but enthusiasm alone. There is an indicator, but it’s not enough. There’s something really, the rubber meets the road, or it really puts a point on it to say, OK, yeah, you like this, but enough to part with your hard earned cash for it, and that’s really an important moment in those early days, it’s less about, can you make enough money and just will people pay at all, because that’s an indicator that you’ve created something of value.

00:11:27 - Speaker 3: Yeah, and I think that was also a huge motivation for the whole team to go from people saying, OK, this is nice, and you know, we did use the tests and people liked it, but it’s a different level of people actually start paying for the app, you know, then you’re actually working on a product and not on a research prototyping thing anymore.

00:11:46 - Speaker 2: Oh, I agree, yeah, I totally felt like a moment of growing up, maturing, things getting real, and also on the support side right now when someone writes in and we have like a little kind of plugin in our system where we can see if they’re a paying customer or not, and if they are, you know, of course we tend to give them priority support, particularly if they have a problem, and it wasn’t right away, but I remember the first day we had essentially an angry customer where something wasn’t working the way they wanted and Yeah, they were upset because they had parted with money for this and again, it’s just a very different dynamic when you’re in this business transaction. They might like your podcast or your cool vibe or your nice design article or whatever, but at the end, now they’re using your product to solve a real problem they have. In their personal life or their professional life or whatever, and if it’s not doing what they expected or what they want it to do, they might get upset and then you have an obligation to them and it’s just very different from, check out my cool research prototype or even my MVP that I’m letting you use for free.

So yeah, once we got that initial data of people would pay and they would pay this professional price, that was a good learning, but then from there, having been active for a year now and especially after we launched, there was kind of the steady trickle of beta users converting, but the launch was where, you know, the graph kind of started to change shape.

In a really nice way and we started to see, OK, there really is a business here, but in the meantime, you know, we knew this was just our first stab at pricing. We knew it was never going to be the end state and so we over the course of this year, and particularly post launch when the numbers became, you can start to see patterns when the numbers are bigger. I think we learned quite a few things and that’s what kind of motivated our let’s do a pricing V2 roll in the things we’ve learned because I think price is just like product you have to iterate on it to improve it. It’s hard to do for those previous mentioned reasons, the stakes. High, it’s emotional. People hate price changes if you have to do that, but I also think it’s critically important because the price being comfortable or accessible, having to be a fit for what people want is crucial, and you just won’t get there without iteration and experimentation.

00:13:47 - Speaker 1: Yeah, so we did notice some patterns with this V1 pricing.

There were, first of all, a friend of people who were happy to pay it, so that was good, stayed 0.0, and there were not surprisingly, a lot of people who were unwilling to pay the $100 a year price.

Now we expected most of that, of course. So you gotta drill in a little bit.

In particular, there’s a lot of comments that essentially implied that they would never pay anything for this type of software, which is fine, you know, it’s your life and your money, but that’s not something that we were gonna be able to help them with. In the near term.

But there were some more interesting cases. One group of cases is people who valued the software a lot, but have less ability to pay for various reasons. So students actually were a big group of this. A lot of students use and like Muse, but they’re in a different situation for most of the professionals who might otherwise use Muse.

Another one was people who were in different countries and for reasons of the local economy or the currency, the price as it was translated originally by Apple might not have been suitable. And then I think there were also some people who were not happy about or unwilling to do a subscription, which we should talk more about.

Then there were people who I think are open to the idea of using a product like Muse, but they were looking for a few more features.

I think the most common things there would be sync slash collaboration and just some more core features around richer data types and so on. So I think that roughly summarizes what we learned with the one.

00:15:07 - Speaker 2: And that point around folks for whom the price wasn’t accessible, students, maybe folks globally, that leads into, I think to me, one of the underlying principles here is we’re making the software because we want as many people as possible to use what we’re creating, right? We fancy ourselves artists or artisans or something like that. We’re making this to help people and I feel incredibly good and happy when I see people using what we’ve created to do interesting work.

But at the same time, we also have to make a sustainable business.

I like this, I think I’ve heard people say that, you know, money and cash flow for a business is kind of like oxygen for a person. You don’t live to breathe, but you definitely need oxygen if you want to keep living. That’s not the purpose of life, but it is a necessary sort of mechanism. So for us, we’re sort of looking for that happy balance where as many people as possible can use this software and get value from it, but also make a sustainable business, and that’ll lead into, yeah, some of these other topics we might talk about, but how we could, and what we hope the V2 pricing has done is to try to make it accessible to more people, not everyone, for sure, and I’m sure there will be a V3 and V4 down the road, but to me that was both one of the biggest things we learned and one of the big goals with the next iteration.

00:16:24 - Speaker 3: So when we actually ended up with pricing is a set of changes and maybe the most obvious one of those is the introduction of a cheaper plan, what we are calling the starter membership. So before we are yet, this single membership, $99 it gets you the full thing.

And now, the startup membership is less than half of that, and it has the same set of features, but it basically puts a limit on the number of cards you can have and the size boards can have.

And then the other thing we are doing is adding monthly pricing to those membership options.

So before, you would have to pay the yearly price upfront. And it turns out that a lot of people actually just want to pay monthly, and so we just support that.

00:17:08 - Speaker 2: And I will say that I think part of my motivation in having only the yearly before was you were a little bit sort of supporting our Kickstarter.

Or sort of helping fund development for something that you believed could be good and then now because we have a more mature product that you think it’s pretty well proven to solve a set of problems for a certain kind of person that you might want to subscribe for a couple of months and then that proves its value to you and you want to get the discount on the yearly plan, or maybe you just, you only have a need for a project for a couple of months and you just want to pay for the time when you’re getting value and not when you’re not.

And that fits better with, we’re less in this mode of aspirational, and onto we have a real product, it works really well, lots of people use it, lots of people get value from it, and I wanna open that up more.

00:17:55 - Speaker 3: Yeah, and I think this concept of gradually getting people more and more involved in use is really key to our new pricing, yeah.

Before we kind of had this free trial option and we specifically said M as a free trial. And now we are kind of reframing that as, as the base version of MUS and specifically saying, OK, it’s not a trial anymore.

You can actually use this for months, basically, or even for years. And we have seen a lot of our users do that. And then, you know, many months after using the free version, they discover, OK, uses actually works for them now and they become a member. And maybe, you know, they become like a startup member at first and then a year later they can become a pro member. And that is sort of, I think what we really need to support with news and the prising.

00:18:42 - Speaker 2: Yeah, before we asked you to make this pretty big leap of faith commitment, now we have a way to ease into things, and as it proves its value, you can use it more and pay for what you need, or if it’s not proving its value, you hopefully haven’t lost too much.

Notably the new base, what we’re not calling the free tier, that’s no different than the trial we had before. It’s still unlimited time, 100 cards, but I think when we first did that, I don’t know if we thought that maybe it was more limited, or maybe we knew it was pretty generous, but we kind of wanted to frame it as a trial to really say, you know, this is software you need to pay for, and I think we’ve gotten that message across and so now we’re softening a little. We’ve basically been framing them all along, but this is just kind of explaining it in a way that makes that a little more clear.

Depending on who you talk to, software subscriptions are seen as either the absolute savior of the software industry and just a great deal for both businesses that get to support their ongoing development and customers who can pay for just what they need when they need it and not have a big upfront cost for software that they may or may not. Use long term, or there’s many people who have a deep dislike that it feels like renting your software, you’re going to get tricked into paying when you don’t really need it, that you’re going to get locked out of your data somehow, that it’s just a really uncomfortable or unpleasant way to fund software development.

And then we have an additional wrinkle here with doing all this in the iOS App Store world, which inherits so much of the iPhone consumer ads supported data monetization world of things where the big apps on a phone are Facebook and TikTok, not productivity tools that you pay for, and so the iPad ends up sort of inheriting that, so. That’s a huge topic there, but I guess before we get into philosophy there, it’s worth talking about what we actually did on this pricing B2, which is what I like to call alumni mode. I don’t know that we actually call it that in the software at all. I’m not sure that phrasing appears anywhere.

00:20:39 - Speaker 1: I think that’s actually interesting because they basically didn’t need to think about it for the first year.

00:20:44 - Speaker 2: It’s true.

00:20:45 - Speaker 1: There’s actually been a whole series of these things.

00:20:47 - Speaker 2: Yeah, there’s many elements of the subscription model to talk about, but when it comes to that being locked out of your data and feeling like you’re being held hostage, and it’s a very reasonable thing to feel because so much of modern business models in general have to do with sort of data. Control data swamps, but particularly for something like productivity tools where you want to access your work, you know, you want to be able to go and pull up the source documents for a master thesis you worked on 3 years ago or 5 years ago, regardless of whether you’ve been paying for the software all that time.

So the way we wanted to address that specific thing, because it is really the case, we’re not trying to monetize your data and ownership and control and access to your data, we’re trying to monetize great software, a great tool that feels good and provides you really a supercharging your thinking experience, and you’re paying for that value while you’re getting it, and when you don’t need it anymore, you don’t pay and your data is not something you need to worry about.

So kind of our solution to that was What I’m usually calling alumni mode, which is basically that once you cancel or don’t let your subscription renew, then all your data is still there, you can still access it, you can navigate, you can search, you can move stuff around, you can even still scribble with the pencil, but you just can’t add new stuff. And so I hope we’ll see how it plays out, but I hope this is something where someone could, if they wanted, subscribe, become a member to Muse for a few months or a year, or however long they need it. And then if they’re not getting value from it currently, they let that expire, and then they can still access all their data, they don’t need to worry about it being locked up, and if at a later time they want to resubscribe because they have a new project, they can do that. And we’ll see how that works out in practice, but at least my hope is that will help address that getting locked out of your data, that that’s the purpose of the subscription fear, I think very reasonable fear that people have.

00:22:33 - Speaker 1: Yeah, and this brings us to the philosophy of subscription pricing for software. It’s a huge topic. One thing I’d say is that I do believe most software is fundamentally subscription, whether you want to be or not or whether you call it that or not, that’s what’s really going on under the hood.

Now there are different periods that are possible. Adam, you mentioned it used to be that you might buy Word and use it for 3 or 4 years, and then you would buy the next version. So effectively you have a subscription period of 3 years, or you can have more like the modern situation where you have month-based pricing. So I think there are actually a few things that are happening when people are concerned about subscription pricing.

One is call it the annualized total cost of ownership and however it’s charged, they don’t want to pay, say $100 a year for a software tool.

And again, that’s fine. I think a lot of cases it’s not viable and that software is not going to get made and so it is what it is.

I think there’s another piece of it, which is a sense of agency and control. And in the case of buying boxed software or buying something like a car, you have much more agency over when the period ends and what you do with the thing as it’s approaching the end of the period. Like you can choose to ride out the car and keep using it, running to the ground, or you can sell it. And, you know, Ford can’t come and like yank the car out from under you because they changed their mind about cars, right? So it’s a sense. Of you have more agency over your stuff, and I think that’s a large part of what people are objecting to with traditional subscriptions. First, the price and paying monthly per se. So insofar as that is the case, I think this model where you have a credit card charge monthly, but you have essentially indefinite control over your own data through a alumni mode and B exporting to very standard flat files that have been around for decades, perhaps that threads the needle.

00:24:20 - Speaker 2: And maybe another point related to software subscriptions is acknowledging how much it is the case that software is a living thing that needs care and feeding, and even if you’re not improving it, which hopefully our team’s hard at work trying to improve our app, make it even far better in a 12 month period than it was at the start, but even if you take that out, there’s just an ongoing maintenance thing, right? And I have old side projects and whatever that I don’t know, a game that I put in the app store and you know at some point we didn’t have time to maintain it and it just fell out because you got to keep up to date with the APIs and you got to like make it match the modern world and you could complain, OK, is this just some kind of treadmill of Microsoft or Apple or whoever the platform provider is that’s making you do the latest API because they want to get you on their latest operating system version and there’s probably some of that, but honestly, I think it’s just the internet.

And software and technology is this really dynamic place and every year we have huge leaps forward in everything like screens getting more vivid to internet connections getting faster. You can do more, software gets better, computers get better and get more capable, and that’s great, but it means that all of this is.

Kind of a living ecosystem and everything is connected together, and there’s lots of older programs that I love, but they aren’t maintained and as a result, they stop, even if they don’t completely stop working, they just stop being relevant to the modern world, right? And that’s a shame. You need that maintenance if you want the software to sort of stay relevant.

00:25:46 - Speaker 1: Yeah, exactly, that’s sort of the underlying reason for why most software is fundamentally a subscription, and I mean you can look at it the other way. What would it even mean to buy a one time software product of Muse’s nature in the iOS store? I think realistically. Buying a license for like 1 to 3 years depending on the whims of Apple and so forth, right? There’s no reasonable expectation that that software could work forever. And if you were thinking, you know, the software works forever and you get indefinite upgrades, that seems unreasonable to me. So I think the subscription makes more sense.

00:26:18 - Speaker 2: I think there are a number of, particularly indie apps in the app store.

I think of things as one of the better examples of a really well made and kind of professionally priced.

I think it’s like a one time purchase, camera, $50.70 dollars for the iPad and you then it’s $30 for the phone, and I forget what it is for the desktop, but they do major new versions.

And those major new versions are paid upgrades and they do those major new versions every few years.

So that’s more like the kind of Microsoft Office in the box model and there you feel maybe a little bit more like you paid one time, you’re not going to be surprised by a recurring charge coming on your credit card, which I understand that is very unpleasant feeling.

And then also you feel like you have indefinite access to this, but of course, what’s gonna happen is the developer’s gonna move on to the new version, the old version’s gonna become less relevant.

I don’t know what they do for long term maintenance, but in the end, yeah, I just feel like software is a living thing, and if you’re continuing to get value from it, paying for that value is sort of best for everyone.

00:27:13 - Speaker 1: Yeah, and a bit of an aside here, but I do think there is a place for software that is designed very specifically to be packaged and distributed, and this is software for use in what I would describe as austere or even adversarial environments where you don’t want your ability to use the software to be jeopardized by, you know, for example, the payment processor doesn’t like what you’re doing anymore. So if you’re working on an encrypted messaging app, for example, you might want to distribute that in a way, engineer and distribute in a way that has a real chance of working for several years after you do that. But that’s like a huge effort and compromise and you’re not going to be able to achieve the level of productivity and quality that you can with modern living software, but for certain specialized use cases, I do think that makes sense.

00:27:56 - Speaker 2: You know, the software in the Mars rover or in the Mars rover is the first thing that came to mind on that, something that needs to keep operating at a distance, some new version of whatever Linux or iOS or whatever coming out can’t break it. It should be a very kind of static, it should be in a kind of stasis and self-contained. That makes sense there, and there are other examples of that, but most of us were using these devices that are connected to the internet, that are in collaboration with other humans, and protocols are evolving, and file formats are evolving, and there’s new capabilities all the time, and necessarily the software is kind of a living thing.

00:28:32 - Speaker 1: This is even more out there, but I could imagine someone undertaking the project to design a whole ecosystem for software that was designed in this way.

There’s been this sort of change recently towards more static linking of programs where if your program has software dependencies, you basically bundle all those things up into your program and distribute that instead of looking for those dependencies at. Run time on whatever machine you’re running on.

So you could imagine a system that kind of took that to the next level is where you bundle in maybe the OS, maybe actually hardware, so you design the whole thing from the bottom up to be runable for a very long time. But that’s the whole undertaking and importantly, it’s not the software ecosystem that most of us are operating in.

00:29:10 - Speaker 3: Yeah, and I think what Apple has been trying to do by pushing subscriptions in the app store is exactly to enable developers to continue developing the app and being profitable without having to constantly create a new version of the app and basically confusing all the previous users.

That works out great when the company actually wants to do that.

I do think there’s a problem by basically Apple forcing all apps into this subscription model if they want to be profitable because, you know, it’s not really that viable for us to have a one time purchase in the app store that is priced above, say, $3 or something.

And you can’t really invent your own payment model or anything in the app store, you kind of have to choose what Apple has to offer. And so I think a lot of apps end up.

Basically using subscriptions without really giving the user of the benefits that should come with it.

And then, of course, the user kind of easily gets frustrated and feels like, OK, subscriptions are kind of a scam. And then for us, it becomes really difficult to kind of differentiate from that and, you know, try to frame our pricing in a way that still makes sense for users.

00:30:20 - Speaker 2: The App Store side of it is a whole set of challenges. On one hand, it comes with very turnkey ways to take payment and currency conversions and product packages and promo codes and essentially there’s a lot of software in a box stuff that you get, I don’t say for free but just built in, but it’s also very constraining.

I have the sense that it’s optimized for indie developers, you know, like a single person making an app that kind of fits into a particular. Box and the more you need to or wish to do something a little outside that box. So for me, for example, there’s a lot of frustration and things I would like us to be able to do to give a really great experience to people to help start change that perception of subscription software, especially on iOS as being not desirable. For example, I’d love to do a 30 day money back guarantee. You can try it. There’s a button right in the app if you decide. Yep, this isn’t for me after all. You can basically go in there and just click the button and get an instant refund. And to me that’s different from free trials. We don’t even have a free trial on the new subscription because I feel like I’m making the decision or pushing a button to make a purchase for the future and then inevitably I’m going to get surprised and it’s going to charge me when I wasn’t expecting it and it’s, I think it’s just kind of a bad experience where I think an instant refund in some period could be a better experience, but we just can’t do that. That’s not part of the App Store mechanics. So pros and cons on that, but I think part of the challenge again is that it’s working within this whole payment system, an app ecosystem that evolved out of the iPhone, consumer apps had supported data monetization on the back end, or in some cases, you know, here’s 399 1 time purchase for a fun little casual game, that kind of thing. You need something very different in terms of payment infrastructure and in terms of just how you have a relationship with your customers, things like being able to do refunds or partial refunds or whatever. That is something that makes a lot of sense for business software, for productivity tools, and doesn’t yet exist in this ecosystem.

Another element of the App Store is for a lot of folks, particularly if they come through a search or something like that, maybe they never even saw them use website, their first exposure to what is this product, what does it do, and Importantly, what is the cost is the App Store, but actually the way that it’s set up now, it’s not that obvious whether sort of what the pricing model is, because the App Store was originally built around or designed around these kind of one time immediate purchases where to even download the app, you had to like press this button that had a price on it. Now it was pretty clear and subscriptions were kind of added in after and you can surface them a little bit with these kind of featuring. Things, but it’s just not that clear what the pricing model is really someone should read our pricing page kind of in tandem with evaluating whether they want to download and try the app, but if they come through the app store, they don’t see that and they don’t really have a sense of what is this cost, what is the model, what can I expect on that. I think that also creates a lot of friction or confusion or just mismatched expectations, because as Mark says, there’s people for whom they’re not interested in or able to buy a professional tool on their iPad, but if they download it, spend a little time trying it, and then find that the business model, payment model doesn’t match what makes sense for them, they might feel kind of frustrated at the time they invested there. But putting aside App Store listing challenges, Leonard, you worked a fair bit on how we communicate the free plan in this new B2 pricing. How would you describe where we landed on that?

00:33:53 - Speaker 3: Yeah, I think it’s especially difficult for use because it’s such a different app from most others, and people really need to try it out to even know what it is about and you like get a sense of whether it might be useful for them.

So we really need people to, first of all, try and use and not think too much about the pricing basically upfront because they don’t even know yet what kind of value they might get out of it.

And so that’s why we kind of try to really change the communication from, OK, you can use Muse as a free trial and then you kind of have to pay up to the base version of Muse is free and you can use it however long you want. And then when you’re ready, you can become a member if you want to. And so the danger there for us, I think, is that it kind of devalues the product a bit because it is now like a free product and people can use it for free. And before we were kind of trying to build this image of news as a premium product and we You know, we are a professional tool that you pay for and you get the corresponding value out of it. And it’s a very sort of elegant, simple transaction that you make and in that way, I think we all really like that idea of, yeah, use as a paid product and that’s it. But yeah, I think it’s a really good experiment, at least for us to see how far we can push this free plan of use without sort of sacrificing the paid plans.

00:35:17 - Speaker 2: That’s a good point. I hadn’t thought about that before, but Fremium, that’s what you call sort of the business model where you can use something for a limited time for free, but then there’s some kind of gate you cross where you need to upgrade to paying, and this makes me think a bit about, of course, another product I’ve had quite a bit of experience working on pricing for, which is Hiroku. And in both cases, I think you know Haroki was kind of a category breaker or as an invention of a new category. It sort of predated a lot of the server list and other stuff that exists today. And so yeah, you really have to try it to get it. You can’t just say it’s a better X because it is something kind of truly novel and it’s not for everyone, but if you try it, you can find out if it is for you and then once you know if it is for you. Then that can lead to, you know, thinking about whether it’s something you wish to pay for, and Muse is very much the same thing, you know, if you come in thinking, oh, it’s a sketching app, or an artistic painting app, that’s wrong, and you’ll find that out pretty quickly in trying it, or if you come in thinking that it’s more of a text-oriented note taking app.

The point is you have to try it and you’ll know if it resonates for you, but at the same time, people don’t want to invest the time to try something if they Feel like they’re going to be surprised by the price, right? You probably have this experience even window shopping, which is you walk by a store or display or something, you’re like, Oh, I really like that jacket, and then the shopkeepers, hey, you want to try it on, but if you glance at the price tag and see that it’s way out of your price range, you probably don’t even want to put it on because you just don’t even want to tempt yourself with it, which is I think a very reasonable kind of place to come from. So I think we have this challenge in general of we want to get people in, we want to have them try it to find out if it resonates, we want to give them as much time as they want, it’s not time limited, you know, it may take a while for it to really click, maybe you need to try it on one occasion, you know, really get it, come back a little later, you try it again, maybe you have a new project that it makes more sense for to make kind of taking the pressure off, you can try it as much as you need to until it clicks. And then once it clicks, then you can think about, OK, I wanna make this part of my life, part of my work, and I wanna be a paying customer, so I get the benefits of that. Now, what can I do to make that happen?

00:37:26 - Speaker 3: Yeah, and I think on a very practical level, then the challenge for us is when do we actually tell people how much it costs and when do we confront them with the price that we need to pay to actually use it fully.

And so we discussed this actually quite a bit whether we maybe want to put the price basically on the first screen and tell people so that they aren’t surprised.

But I think what we settled on is to, to only tell people, OK, news does cost something, basically, but you can try it out first and then as soon As they kind of went through our first onboarding steps, which is maybe like 5 or 10 minutes of trying the app and kind of getting a sense of what it is and what it might do for you. Then we kind of start pushing them towards opening our sort of pricing dialogue and actually seeing the different options and seeing what new actually costs.

00:38:16 - Speaker 2: It’s a really subtle balance to try to be upfront and set expectations and let people know what to expect, but also not being really pushy about, here’s the price, or you gotta buy this or whatever. We wanna make it clear, but we also wanna give you time in a low pressure environment to just figure out that more important question first of is this for me? Cause it really isn’t for everyone. It is a niche app, it’s a specialty app, it really resonates with certain people, but not with others. And you should find that out first, but you also don’t want to be surprised by the price tag.

00:38:49 - Speaker 1: Yeah, and I think this idea of users being in the right mindset and having the correct frame of reference is super important, because ultimately, especially for a prosumer project, this is gonna be a very emotional decision. There’s going to be verbalized rationalizations of your underlying emotional decision, but really it’s a, how do I feel about buying this thing ultimately? And that’s very much colored by the mindset you have as you’re going.

Through and using the product.

So I think it’s good that we try to establish this is a premium product early on and then when you go to make the actual emotional buying decision some months later, that’s been the context that you’ve been marinating in. You know, going back to the Hiroku example, I think this is an area where we struggled with because a lot of people came to use Hiokku and used it for a very long time because it was a place to do free stuff. And then when your business started to take off and you needed to spend $20 a month on dinos. People were having all kinds of weird and highly disproportionate emotional reactions to that because they were in this frame of reference of this is a place for free stuff, even when from a rational perspective would have made total sense to spend a little bit of money to support their business.

00:39:53 - Speaker 2: And one of my big learnings from the Hiroku experience was, first of all, having that smooth ramp, and I’m not even sure, certainly by the time I left that we had nailed that. You could even argue today it’s a little rocky, but something where, yeah, if you’re getting a huge amount of value for something totally for free for some number of years, you get almost an entitlement, and I don’t mean that in an accusatory way, you just get used to, oh, this is what I have for.

Free. And so then when you need to pay, it feels jarring or discontinuous, feels almost like a trick or something, whereas if you’ve been asked to pay earlier, then that’s a more natural, oh yeah, of course this is a product I need to pay for. And of course having those smooth steps and matching the value you’re getting to what you’re paying and that’s an Incredibly difficult thing to do. I don’t think there’s any ideal way to do it. I like a couple of books in the show notes on pricing that I basically think are not great, but at least they’re the best things out there about how to price your business, and one of them talks quite a bit about pricing consulting, how to pick an hourly rate if you’re a freelancer, and what it comes down to is hourly rate. Matches very poorly to the value a client is getting, right? You might spend 2 hours and do some amazing work for them that is worth $10,000 and then later you might grind away at a project for 50 hours and end up delivering something that’s not useful to them. But in the end it’s hard to really charge for value with sort of freelance work, so you kind of have to go with hourly and how do you try to match that up and you do the best you can, but I think one of the places that for me, I have some battle scars from the Hiroku pricing experience was this situation where cer