SEASON 2 - EPISODE 175 - DECEMBER 3, 2025

Picking pricing

How do you land on the right price for a product? This week, 37signals co-founders Jason Fried and David Heinemeier Hansson pull back the curtain on the pricing choices they’ve made over the years, including the options the public never saw. They talk about why chasing giant enterprise deals isn’t for them, and why simple, steady pricing beats clever tricks.

Watch the full video episode on YouTube

Key Takeaways

00:11 - The pricing experiments over the years
10:48 - Why 37signals avoids enterprise deals
18:05 - How Basecamp’s pricing style differs from HEY’s
25:12 - Avoiding gimmicks and overthinking
31:03 - Fizzy’s pricing model

Links & Resources

Transcript

Kimberly (00:00): Welcome to REWORK, a podcast by 37signals about the better way to work and run your business. I’m Kimberly Rhodes, joined by the co-founders of 37signals, Jason Fried and David Heinemeier Hansson. This week we’re going to talk a little bit about pricing and some different pricing models and how you can pick your pricing for a product. We’re working on some new things here at the company and with that comes deciding how that price is going to look. So let’s just maybe start with some of the different pricing models that we’ve used in the past. I know we have different pricing obviously for Basecamp and HEY. What are some of the things you guys are thinking about when you’re picking a price for a new product?

Jason (00:36): Well, I think we can go back to historical pricing. We started out as a web design firm, so we were doing price per project, so we never really did an hourly rate, but some people can do that. We did just, here’s the project, it’s $50,000, that’s it, that kind of thing. So we did that. We also explored this idea called 37express, which was a one page redesign for 3,500 bucks and it took one week.

Kimberly (01:02): Oh, interesting.

Jason (01:03): So what we realized was that companies basically, there’s three things. They want to know what they’re going to get. They want to know how long it’s going to take, and they want to know what it’s going to cost. Everybody wants to know those three things yet consulting pricing is none of those things, basically. It just kind of goes on forever. You don’t really know what the deliverables are going to be and you don’t know what it’s going to really cost in the end, kind of sort of know, but maybe not really. So we tried to do this thing where you buy one page at a time, and that worked pretty well for us. We didn’t make a fortune on it, but it was an interesting novel approach and we tried that for a while and that worked out pretty well. So we did that. Then we got into SaaS stuff, which was early days. I think we did this product originally called Single File, how David and I met. And that was 12 bucks a month or something. It was just some flat monthly fee. So we started doing that early on.

Kimberly (01:51): Okay, wait, let’s pause right there. When you say it was $12 a month, if that was the price, did you just pull that number out of the air? Were you looking at your expenses to determine what that price would be?

Jason (02:01): I mean I’m pulling out of the air now too. I don’t remember exactly, but I think it was 12 bucks. I think it was 12. I don’t know if David remembers, but maybe there’s even three tiers. I don’t remember. You don’t really know because we didn’t know if anyone would buy the thing. So you can’t really back out your expense. I mean you know what your expenses are in a sense, but you don’t really know how many customers are… we need to cover that. Is it even possible? Is it even in the realm of possibility that we’re going to have that many people? Or do we need to charge 900 bucks a month to cover… this is never going to work. So…

(02:29): At some point you just kind of pick a number that seems reasonable, that you think maybe is possible, that feels affordable, that feels like something you might pay, and you keep your costs down in general, always, and you just try and make it work. I mean that’s kind of what we’ve essentially done over the years and luckily we’ve had something that hit really big, which is Basecamp, which makes us able to do all sorts of other pricing experiments with other products that may or may not work out. But we have the buffer because we do have one thing at least that really worked out and sort of Highrise to some degree, and so it has HEY to some degree, but nothing quite like Basecamp. Anyway, the point being that we’ve tried a bunch of things from fixed prices to fixed smaller project prices to per product pricing, monthly subscription, annual pricing, per user pricing.

(03:18): We even did a thing with Know Your Company, which is a product we launched a number of years ago where it was sort of a hybrid of one… it was a hundred bucks per employee, once. So this is sort of a precursor to the ONCE idea also, which was selling software just again one price forever. But this was the idea was it’s recurring in a sense in that employees come and go and so a company will, they’ll hire someone new and they’ll have to pay us a hundred bucks to get them in the system, but there’s not a recurring fee for that individual employee. We’ve tried many things is what I’m trying to get at. I think it’s fun to try a lot of things. This idea that there’s just one way which is per seat and that’s just how it is. That’s just what people have fallen into and there’s good reasons for it, especially if you’re selling 10,000 seats. You can charge big customers more than you can charge small customers, but there’s penalties to that and there’s cons to that. There’s also advantages to that. So lots of the different ways to look at it.

David (04:12): I think one of the interesting things to look back upon in our history is the things that didn’t work out, the things we did not ship. And the one that stands out to me is our original pricing plan for Campfire, which was our chat product. We launched it back in I think 2005 or 2006, I think 2005. We were going to charge per room.

(04:33): We were going to basically make it very affordable, I think like five bucks to charge per room and we got quite far down the line of that and not too long before launch I sort of had the conversation with Jason, would we actually do this? Would you put in your credit card to buy a one-off chat room even if it’s relatively affordable? And I think it kind of failed the test Jason was talking about, would we buy it? Would I pull out my personal credit card to purchase this thing like that? And we then didn’t ship it. Campfire reverted to the more traditional model of just being per month, but it was not per seat, it was just a fixed price per month. The other one we’ve done that I find interesting and perhaps we should revisit one day is the pricing model for Highrise, which were based around buckets.

(05:23): If you have zero to 15 people on this system, you pay X. If you have 15 to 30, you pay Y. And I think there’s something there where you escape this sense that every single time you go to add another user, you’re having a conversation about is that worth it? It creates some other problems. Now you have step functions and maybe people are going to try to stay within the bucket, but I’ve certainly felt this when we’ve reviewed our pricing or our cost when we’re using other people’s products. In fact, we just reviewed our Zoom setup.

(05:57): And Zoom is an interesting model because they price on the main per seat is for folks who need to host a meeting that lasts for more than 45 minutes. If you allow folks on your account that don’t need to go for that long, at least under some models, they’ve gotten quite a lot more complicated, they weren’t going to charge as much. So I could see all those dynamics that our customers go through when we think like, well actually, does everyone really need it? Or maybe this 45 minute limit is actually a feature, a hidden blessing, maybe more people should be on and maybe Jason and I should be on that too. But ultimately just all that gamesmanship that arrives with it, which is one of the reasons I always really liked the pricing we ended up with for Basecamp for many years, which was one price. $99, whether you’re three people or you’re 10,000 people, it’s just one fixed price.

(06:51): There’s only the buy or don’t buy option. But of course, again, nothing is free of trade-offs. And with that particular model, we ran it for several years after testing the heck out of it before introducing… I think we tested for six months running all sorts of A/B long run testing, cohorts, blah blah blah. And the math looked appealing after that six months test, it looked like, yep, we’re going to lose some signups, but we’re more than going to make up for it in the increased per account revenue. And then as these things go, you maybe get a little wiser when you run the experiment for a little longer. There’s a lot of these A/B testing, especially around pricing, that’s all just based upon is it going to make sense right now if we switch over given the traffic that we have? And I do think there are ways people, including us, can get snookered by that time horizon, where you just look at what’s going to happen right now, you don’t look at the secondary effects, which when it came to Basecamp was fewer people signed up, which again, alright in the moment, it doesn’t matter. Fewer people but more revenue that looks like a good transaction, it looks like a good trade. And then four years down the line there’s some secondary, viral effects here.

(08:06): Well, that also means then fewer people are going to get invited to other people’s Basecamps because we have fewer signs up in the first place and then they don’t learn about and they don’t sign up. So sometimes these snowball effects just take a while to show up. Sometimes they take years to show up. And we ultimately ended up reverting, partially, that model where there still is a fixed price, everything you want modeled for Basecamp at the high end, but then at the lower end we now have per seat. So a million different ways to do it and also just a million ways where you can get lost listening to other people. I think for all the questions I get on pricing, my answer is usually you got to test it with who’s buying your product and why they’re buying it and what time horizon they’re buying it.

(08:53): For example, with Basecamp, the majority of the cancellations that we get, they aren’t necessarily this is too expensive or I’m going somewhere else, it’s my project stopped, I lost my whatever contract, I don’t need it right now. I might come back later. And for other companies it’s totally different. So I’d actually say there’s very little, you can generalize from pricing, there’s very little wisdom you can extract that’s just total generic rules that apply to everyone all the time. The surest thing is you got to test and then after you’ve tested, you got to retest. You’re like, is this still true? Two years in, three years in.

Jason (09:27): The other thing I would add too, and David alluded to it, is that we do have a very unique pricing model with Basecamp, which is we offer both per seat at 15 bucks and also unlimited seats at $299 a month flat. There may be some others, but I’m not really aware of any other companies that really kind of cap the high end. Most will be like, hey, you want to pay me 15 bucks a seat for 5,000 people? We’ll be happy to take that. We’ve decided not to do that. We feel like the problem with that is that you end up basically chasing whales and you want to chase the companies that give you the most money, of course. I get it, it makes sense. But then you become a different kind of company. You become a company that primarily is going to cater to try to sell thousand seat accounts and that’s a different kind of company than a company that’s going to sell to a company of six people.

(10:13): And we are much closer to a company of six people than we are to a company of a thousand people. And so we prefer to cater to small and medium-sized businesses. And then, some of those businesses can get bigger over time and we say, you know what? You don’t have to worry. These costs are not going to run on you. The most you can basically pay us is $299 a month and we’d be happy to have your business at that level. You can invite as many people as you want and you’re going to be good to go there. So that’s another thing that we do offer with Basecamp is these two tiers. It’s still kind of a single price in a sense, single seat pricing and single unlimited use pricing. We don’t have multiple tiers of per seat, for example.

Kimberly (10:48): What’s interesting is when we went from the fixed $99 per month to a per seat, it seems like there is an intention of appealing to people that are smaller because in theory there’s a lot of companies who are paying us less than they were before and I think that’s kind of abnormal. Usually prices are going up for us. For some companies prices were actually less.

David (11:12): That was literally the mission. The mission was literally make Basecamp more affordable at the low end such that a company of three don’t feel like, well, a hundred bucks, that seems like a little much such that you can get them in the door. And I think this was part of the realization over the years is that we’d lost some of the low end because the entry point of a hundred bucks a month was just too high for a whole category of companies that perhaps aren’t even companies. This is the other thing, I mean, most companies aren’t even companies by the time they start, by the time things get rolling. But what is true is that whatever they use once they get rolling, there’s a good chance they’ll stick to that for at least quite a while until they’re huge and maybe need something else. And we’d lost some of that.

(11:59): I mean we knew that going in, we knew that the folks that were going to get scared off were going to be on the low end and we rationalized it by saying, well, you know what? Overall it still makes sense. But I think for us it just kind of didn’t. We have always been philosophically, spiritually, product-wise aligned with the underdogs, with folks who are small but trying to come up and trying to get ahead, and just a realization that even $99 a month was a little too high for our primary audience of starters, people who are just getting going and losing that was not the right tradeoff. And as Jason says, just as much on the high end saying, you know what, we don’t even want to provoke the temptation. We’ve been there a couple of times in a couple of situations over the years where for various circumstances, one funny anecdote, the original Twitter was using Campfire, that chat program we were talking about earlier where they were, they were a whale. And first they were using just way too many resources and we bumped the price to what I thought was going to scare them off, I think $5,000 a month or something.

(13:07): They didn’t get scared off, at least not for quite a while and we’re like, damn it. Now we have a whale. What do we do with the whale? And just that one experience was enough to remind me that yeah, that’s not the business I want to be in. I do not want to be in enterprise sales because not only does it warp the organization to sales targets, sales departments, key account managers, all roles that we don’t have. We have zero people in sales, zero key account managers, everyone does sales to some extent. I’m doing sales when we’re talking right now. Support does sales when they’re interacting with customers and the product teams are doing sales when they’re improving the product, but we didn’t have any sort of salespeople in the traditional sense of it, and this is exactly what you’re going to get the first time you see that whale come in the door and you go like, well, let me do the math here.

(13:58): If we could land two whales per salesperson, we should just hire a ton of salespeople. And before you know it, you’re fucking Salesforce, right? Absolutely the last company in the world, I would have any interest in being an operating as. And the only way you get around that is by structurally preventing yourself from engaging in that temptation. And it’s not just about the organization that gets warped, it’s also the product. I think we talked about this earlier, that a lot of products that have flipped over where they originally get this traction with small to medium sized businesses because they just have a great idea and they have a great product, as soon as they tip over and they become an enterprise sales company, you can start seeing every deal closed as a checkbox in the settings menu. And if you look at some of these products that’s been around for a while, Slack, for example, now I’m really ragging here on Salesforce.

(14:51): You could see all the deals. There’s literally, I think at this point, maybe even hundreds of these deal check boxes. Some whale wanted something out of your product. It didn’t make sense necessarily to anyone else, but it’s 12,000 seats, man, can we just add it? It’s not a big deal, is it? Well, that’s quarter one and now you have quarter two and four and unlimited. And every single time you just accumulate all this cruff, cruff, cruff, cruff, because you can’t afford to say no. For us, any customer for Basecamp is going to pay us $299. We can afford to say no if someone comes with an idea and we don’t think fits for us or for the broad customer base, we can say thank you for that idea, but well usually we just say thank you for this. In the olden days when Jason was doing customer supporting.

(15:41): Yeah, no, we’re not doing that. And thankfully we have customer support people now who are more tactful in their rejections of feature requests, although I still sometimes wish we did the old way. I always actually love it when I talk to someone who runs a business like Jason used to run it in customer support, and I’ll ask for something, what do you think? Is that a good idea? He’s like, no, that’s not a good idea. That’s a terrible idea. Lemme tell you why. Oh yeah. Actually sometimes there’s this flip where you gain more respect from someone who does not believe the customer is always right, at least when it comes to the vision of their product and so forth. But just not letting the business drive your product towards the optimization of those whales means that over time you end up in a very different place.

(16:26): And I think this is why when we continue to attract people as a small and medium sized business, who come to Basecamp, the message, the feedback is always the same. This system is so easy to use. We were using Clickup or we were using one of these other things that’s gone down that mega seats route and it was just too much. There were just too many things. And with Basecamp, I don’t need to teach anyone anything. You’re like, yes, that’s exactly right. That structurally comes from that fork in the road that we’re not going to put crap into the product because there’s one whale who needs it. Which is also why historically all the way back in the day people said like, oh, Basecamp, it’s great, but aren’t you afraid that Microsoft is going to come eat your lunch? And our arrogant answer was always no.

(17:12): Microsoft’s going to get built the kind of product that takes Microsoft to build it, which is a completely different kind of product then what we’re trying to build. If you throw 500 engineers at something at Microsoft, you’re going to get a monstrosity that takes 500 engineers to build. And at the time Basecamp was built by like six people. And even to this day, it’s built closer to six than it is to any other number. So you just end up with very different products and having the conviction to stick with that is partly downstream from all these other decisions that we’ve made in the business, like not taking venture capital, not having certain growth expectations because I will say now as an investor into other startups, especially here in Denmark, I could totally see the appeal. If I was going to juice my return on some of these investments, I’d probably tell ‘em like, hey listen, here’s the playbook. It’s called the enterprise sales. Hire some salespeople. Go that route, close some deals, add some check boxes if that’s what they want. And I always think of that like, oh my god, I have that temptation now and I would hate it if that was imposed on me.

Kimberly (18:05): Okay. We have talked about other products. Let’s talk a little bit about Basecamp versus HEY. So we’ve experimented with Basecamp pricing. If I’m not mistaken, HEY pricing has been the same from day one till it is now. Tell me a little bit about that. Why is that?

Jason (18:22): Well, HEY’s priced at basically a hundred bucks a year, $99 bucks a year, and it’s primarily consumer product, so it’s still a big ask.

Kimberly (18:30): Especially when email can be free.

Jason (18:32): Right? It’s like, what about eight bucks a month, right? And that’s right, you’re competing against free. So there’s a time when you just have to concede.

(18:40): Like I think, HEY is worth $35 a month. Well, it’s not going to go anywhere. It’s just not going to happen. I mean, maybe it would. I highly doubt that it would. And so you just have to come up with a number that just feels right, signals some degree of quality. There’s also a thing that can happen when something is too cheap. That’s always a tricky thing. Then you can also look at something like WhatsApp, which was a dollar per year and it did pretty well. There’s a bunch of psychology here also, but we decided just to make it one price. Now there is a per seat pricing option for multi-user, for your own custom domain and for companies, but on the customer, consumer side, it’s just like a hundred bucks a year, you pay for it once, there’s no monthly fee. So we’re not doing the month to month thing.

(19:21): It’s annual. And there’s a few reasons why we chose to do that. It’s just an easier purchase. Do I want this? Do I not want this? Do I want think about it once a year versus every month seeing a bill, a bill, a bill kind of thing? It just seems easier all through by just saying It’s a hundred bucks a year and if you like it, great. If you don’t totally get it. And that’s how we do that. We also have a short free trial as well in the beginning, but because with HEY you get a hey.com email address, we can’t just let everyone take up all the email addresses because once an email address is sort of used, you can’t kind of throw it back in the pool. You can during a trial period perhaps, but you can’t after two or three months, which is another reason why we do the annual thing that you’re committing to a year. And even if you paid for your email address for a year and you choose never to use HEY again, that email address now does belong to you. We’re not taking that back from you. So that is locked in with you and you can set up forwarding to forward it somewhere else if you’d like. But there’s a commitment required to have that ability, which is one full year payment.

Kimberly (20:18): When you guys were talking about HEY pricing, were you bouncing around other pricing models?

David (20:24): We definitely seriously considered what the trade off was going to be with the yearly pricing when so many other things, including in the consumer space are priced on a monthly basis, that the $99 was going to accentuate that HEY was expensive compared to Gmail, which is free. But it’s also one of those things where on the one hand adjacent say, we’re actually selling real estate. And the value of that real estate is directly tied to its exclusivity that someone is getting a hey.com account. They can get a, if my name wasn’t David, they could have gotten David@hey.com and there’s a lot of first names out there and we have such a small pool of customers compared to Gmail, right? You sign up for Gmail now, you can’t even be probably David9939. Shit that’s taken. 9934. Shit that’s taken too. Just like the real estate has been so plunder in that regard that there’s just only truly unattractive options left on that menu.

(21:32): So part of what someone is buying with HEY is they’re buying entry to a much smaller namespace, to a much smaller club, and they can actually get a nice sounding email address where they don’t sound like a moron if they have to read it aloud on the phone, without having to go all the way of like, I’m going to get my own domain. I’m going to go through all that rigmarole. And do you know what? Some of that psychology as Jason says, There’s some degree of scarcity where higher prices are better. In fact, with HEY itself, it actually has multiple prices. It has the $99 a year, if you have four letters or more in your name. By the time you get down to three letters, that’s a really small name space. dhh@hey.com. Yep, I got that. We’re charging, how much are we charging for that Jason?

Jason (22:21): 300 bucks, I think.

David (22:23): 300 bucks.

Jason (22:24): Yeah, I totally forgot about that. You’re right.

Kimberly (22:25): I did too.

David (22:26): And then for two, for two letters. That’s a really small namespace just two, jf@hey.com.

Jason (22:32): Is that a thousand bucks a year? I don’t even know what we’re doing.

David (22:34): A thousand bucks a year. And do you know what? We’ve actually sold quite a few of those two letter ones because what other opportunity do you have to be able to get that? What would jf@gmail.com be worth today? If you could trade that on the secondary market? Probably quite the pretty penny because there actually is an appeal to that.

Jason (22:52): You can look at the X market or Twitter market now. They let you buy handles.

David (22:55): Exactly, yes. They’re going to make a whole… and all these scarcity plays or marketplace, that’s the same thing. Obviously the main one is domain names. I mean, we have paid hundreds of thousands of dollars over the years for various domain, probably at this point, well over a million dollars. And I’m familiar with deals that are obviously way, way bigger than that. There are domain names that I’ve sold for a hundred million dollars. So part of this is that’s the reality of it. That’s the appeal of it. So sometimes it’s not always just better to like, oh, let’s should make it free and then the namespace is full of crap and no one who signs up, whatever. What year are we into? 15 years after Gmail started? Not even 20 years after Gmail started, you only have scraps left over. That’s not very appealing. But also as Jason said, it’s so hard to generalize.

(23:44): You say, oh, so you should always try scarcity. Yeah, okay, but what do people don’t give a damn, right? If it was not called hey.com, if we had not purchased first a scarce piece of real estate that was really unique and appealing, if we were, heyemailsolutions.com, who the fuck would pay for jf@heyemailsolutions.com? Nobody. That’s who, right? So a lot of these things, they rest on subtleties, they rest on momentum, they rest on this fear of missing out. When HEY first launched, I mean, people were crazy. People were writing me and Jason like, ah, can I sign up for waiting list? If fernando@hey.com doesn’t want to complete their trial, can I be the first one to be notified? It’s just really interesting to see how these systems go and how much longevity there can be in some of this stuff. Obviously domain names. You could have bought a domain name in ’95 when they were literally just chopping them away and now it’s worth a hundred million dollars if it’s good enough 30 years later. Or you could bought a paper card, a magic the gathering card, that’s just a piece of fucking cardboard. A lot of this is deeply irrational if you just look at it in this ultra logical sense. Well, just a piece of paper. It’s just a set of strings. But you know what? Humans way more interested, they’re way more peculiar and they react to different things in different ways. And spending a hundred million dollars on a domain name may very well be worth it for someone.

Kimberly (25:11): Okay, let me ask you this because I have heard the theory about pricing high because you can always discount, you can always run a sale. That’s not something that we’ve typically done, but the holiday season, I feel like everything’s on sale. I get a million emails about things that are being discounted. Tell me your theories about that. It’s not like we’re typically running discounts or sales on the products that we make.

Jason (25:33): We’ve been pretty careful over the years not to offer coupon codes. There are some obscure cases when we’ve done that, but for the most part, there’s no coupon code or whatever field on our checkouts. We did have some stuff encoded in a URL at one time primarily for like sponsoring someone, sponsoring a podcast, go to this URL and you get 20% off or whatever it is. There’s some of that, but for the most part, we want people to go, this is the price. And when you’re going to buy this, you shouldn’t feel bad because it’s not like it’s going to go on sale next week. Or you’re not going to want to look at it again seven days later and see it went up or it went down or whatever. There’s just a sense of, well, I’m going to wait then let me just wait. I’m going to wait around for this to go on sale, which is what people tend to do in retail for a lot of reasons.

(26:14): And there’s probably good reasons for companies doing all sorts of things. Everyone’s different and there’s also sorts of reasons for doing things. But for us, we just want to say this is the price. This is the price at this time, and it’s probably going to be about this price for a while. We rarely even change prices on anything. We have over the years with Basecamp occasionally, but we don’t change, typically we have a couple times, but for the most part in 20 years we don’t change prices on existing customers. So new prices that we offer are only good for new customers. So if you buy something from us, for the most part, you should know that you’re pretty much kind of locked into that number for at least for a good long while. And maybe there’s going to be a small increase, 5% or something over time or 10% or whatever it is, but it’s not like you’re going to come back two weeks later and get pissed because, and I know Tesla’s been doing this, it’s very interesting.

(27:01): Tesla’s prices on the retail products keep going down, which is incredible for a car company. You never ever see this except with Tesla. I’ve never seen it actually with anyone else. Model S Plaid used to be 140 grand I think, and now it’s like 89 or something, like I mean, and part of that is you buy a car and you’re like, should I wait? Maybe I should wait. They’re going to drop the price again. Now it doesn’t seem to have really affected them, but I can definitely understand the psychology for a customer if they’re used and being trained to notice that this company moves their prices around, you might just wait and people do this all the time. So anyway, we tried not to do that and that’s been our policy for better or for worse. Again, what we’re saying too is this is not, David’s mentioned testing, but we’re not scientific about this.

(27:46): We’re not running 50 tests. We don’t have a psychologist on staff who’s looking at human behavior. We’re kind of making stuff up and testing a few things here and there, but there may be far more ways for us to maximize the amount of money we charge people. We’re just not really interested in squeezing every last drop on it that. We’re trying to find something that’s reasonable, that feels good, that covers our costs, that makes us money, that doesn’t feel like we’re gouging anybody. That’s sort of our effort when it comes to pricing. Obviously there’s far more scientific ways to do this too.

David (28:15): And we actually have tried some of those scientific ways. When we first looked at moving away from the $99 fixed price for Basecamp, we had a whole team that tried for literally two and a half months to come up with the magic number ahead of actually committing to it. And what’s so funny about that whole process was it involved a lot of testing, a lot of rigorous statistical analysis, and in the end it was all for nothing because it just didn’t feel right. And Jason’s gut computer just went like, you know what? Let’s just make it 15 bucks a seat for that and then let’s have the $299. And it was so funny because we had this whole project and consumed multiple people’s time and attention for quite a while, and then in the end you’re like, well, fuck it. Let’s just go with this.

(29:04): And I think this is one of the ways so many companies do get lost all the time. They try to get certainty around pricing upfront. They try to think that they can analyze all these things and predict human behavior and maybe at some scale there are some people who could do it successfully. I have not seen a lot of that. I’ve seen far more people just getting lost in the weeds and then being surprised by what the market actually does when you give them a real price and you stick to it. This was one of Jason’s arguments I remember at the time were, well, if you know what, if we’re constantly testing and moving these things around to get optimizing our cohorts, we’re exactly going to induce the effect that someone can’t just say, hey, Basecamp is 15 bucks a seat or $299. There’s some communication value in the stability of prices too.

(29:52): So on the one hand we say test it, but on the other hand say, don’t test it all the time so much that nothing is ever fixed and everything is just constantly floating. Whatever you pick up in pennies there, may very well not be worth it. Extra point I’ll say there is, for Basecamp, the few times we have tested, what it has done to me is bring this marvel at the price elasticity curve. Anyone who’s done any business schooling, I’ve seen that curve where you have supply and demand and you have the prices and it just reaches perfectly. And quite a lot of times we have replicated that exact sort of textbook case where we’re trying to move them up the prices a little bit and then see demand go down a little bit. It’s not that easy in many cases. It’s not that often that the pricing fruit hangs so low that you could just, as some people on Twitter like to say or X, just raise your prices. Okay, yeah, give that a go, smart ass. If you think everyone could just do that all the time, you don’t think that would’ve happened? You know what, in a wide variety of mysterious ways, the market’s actually quite efficient.

Kimberly (31:02): Okay, so before we wrap it up, Fizzy our newest product, tell me a little bit about what you guys have been thinking about. I’m sure by this time this launches Fizzy will be out, but what kind of modeling pricing structures were you contemplating when it came to that product? Obviously very different from Basecamp, different type of product.

Jason (31:21): So first of all, we’re going to give away a big chunk of cards. So Fizzy is basically a Kanban tool and you move cards between columns, let’s just call it that at its simplest level. So we’re going to give away a large number of cards for free to begin with. And we’re thinking that number’s going to be a thousand cards, so a thousand cards free. That could be like all anyone ever needs, possibly. Other people might burn through that in two and a half months, whatever it is. But there’s no time limit on that. After you’ve reached your limits, wherever that happens, if never, never, sometime, sometime, you can choose to upgrade. We’re currently going to have one upgrade price. Basically it’s like if you want to keep using this, it costs X.

Kimberly (32:00): For unlimited cards, unlimited number of users.

Jason (32:03): Unlimited cards, unlimited users. There’s going to be some limit on disc space storage ‘cause we can’t give you unlimited terabytes of data storage that does cost us something. Actually, it can cost quite a lot. So anyway, there’s going to be a storage thing, but we’re going to give away a generous amount. I’m not being specific because we haven’t totally nailed this down yet, but we think we’re probably going to start pricing around 20 bucks a month, for unlimited cards, unlimited people, and this is after you’ve reached your a thousand cards. In fact, we don’t even have a way to charge you on day one. This is like taking it from the Basecamp tradition where we couldn’t charge anybody for 30 days on Basecamp because we just didn’t build that until we had to build it. So we think it’s going to take a while for people to get to pass a thousand.

(32:37): Then they’ll buy if they want to buy. And this is kind of going to be more of an introductory price. So we’re going to start out at 20 bucks a month. It’s kind of price more like an accessory. We recognize that people are going to have other tools in their lives. This is not going to replace everything they use, but it might be something that’s additive, that they might also want to have. So we’re kind of pricing it like an accessory in a sense. So 20 bucks a month, unlimited feels very, very affordable for what it is. And at some point down the road, we might raise the price, but we’re going to give everybody a heads up before we do that saying, hey, if you’ve not upgraded yet, if you want to lock in this lower price, you can do that now. We’re probably going to raise the prices on, I’m making up that, this is not… July 1st, whatever. We’ll give people a heads up and then we’ll have a new price or we’ll not, we’ll see. We’ll stick with what we’re doing. We’ll have to see how it all goes, which is part of the idea. We just want to make this affordable, fair, kind of a no-brainer, an accessory buy that people will eventually, I think, as they use it, want to use it more and more and more and more and more and then feel very, very, very good about what they paid for it. So that’s the plan for launch here.

Kimberly (33:42): I mean, a thousand cards, if that ends up being the number, that’s super generous. I think especially for…

Jason (33:46): It might be too generous!

Kimberly (33:47): A small business. We’ve gone through a thousand cards very quickly in our account, but it seems like for a lot of other people that might take them a while.

Jason (33:55): It could. We’ll see. I mean, part of this is also like, you know what? I kind of don’t mind. If people are just loving this thing… in my opinion. There’s different ways to look at these products. We have Basecamp, which is the big time, huge, massive success, growth, cash cow kind of thing. And there’s new things we make occasionally. Fizzy being one of those things. Fizzy is probably not going to replicate Basecamp success. We don’t need to think about it as a thing that might do that. So if we have a lot of people using Fizzy and feeling really, really, really good about Fizzy, and many of them are paying us and many of them are not, I’m okay with that. I just want people to be using our stuff, get exposed to our things, and maybe they’ll check out Basecamp also. Maybe they’ll check out HEY, maybe Fizzy will become a very lucrative product at some point, don’t know.

(34:42): But for now, we’ve decided that we want to make sure people get in, try it, enjoy it, don’t feel limited by the number, and are just willing to give it a shot.

Kimberly (35:18): Okay, that’s a good place to wrap it up. Rework is a production of 37signals. You can find show notes and transcripts on our website at 37signals.com/podcast. Full video episodes are on YouTube. And if you have a question for Jason or David about a better way to work and run your business, leave us a video question. You can do that at 37signals.com/podcastquestion.