How to Increase Prices & Keep Customers Happy

Colin and Brent discuss how to increase prices and keep customers happy

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[00:00:00] Colin Keeley: All right. Hello and welcome back. This is Colin Keeley. Here

[00:00:05] Brent Sanders: And I am Brent Sanders.

[00:00:07] Colin Keeley: we are two guys buying and building wonderful internet companies.

[00:00:12] Brent Sanders: That is right. And this week we got a couple things to talk about, but the first one is raising prices. Right? We're gonna talk about raising prices on one of our portfolio companies.

[00:00:21] Colin Keeley: Yeah. Uh, yeah, long awaited. Uh, so many people on historical plans, , probably from like 15 years ago. And we finally decided to raise prices, , and you were pretty hesitant about it for quite a while.

[00:00:36] Brent Sanders: Yeah. You know, it's I, as one person raised today. And, and so you've been feeling most of the support emails, cuz it gives me so much anxiety. So I appreciate that. Thank you. But I.

think. There was messaging by the old owner that we weren't really aware of, that there was this like $9 for life plan, which seemed like a terrible idea.

Why would you ever say for life, which is obviously why we're coming into this being the only ones who've done, a price increase and like, Yeah, 10, 15 years. So that was my first reaction today was like, why, why would they do that? Like, why would you save for life? Why? Like, what's the advantage of that

[00:01:14] Colin Keeley: Yeah, I

[00:01:15] Brent Sanders: up?

[00:01:16] Colin Keeley: it right. Costs go up and really what you're saying. If, if the price never changes and inflation's going crazy, it's like, you're actually paying less and less every year. And so the costs are increasing and they're paying less and less every year. It's a tough position to be in.

[00:01:30] Brent Sanders: Not good, not good. So it, you wanna walk through, you know, I know you, you, throughout some tweets there, that was pretty interesting around what we've been talking about and, and how we roll this out. But, Um,

What was step one for, I mean, we notified people and then I think there were, there were a whole bunch of principles.

You, you brought up that we, we started with, but we started by copying Netflix, right? That, that the king of price increases.

[00:01:57] Colin Keeley: Uh, yeah, so almost all big companies are pretty good at it and it really, every company should be, but for whatever reason, you know, technical people, designers, that's like, you know, frowned upon. We can't possibly raise prices, whatever we lose customers. Um, but yeah, Netflix, Hulu, I just looked at all the big examples, Spotify, Disney, they all have really nice, you know, emails that they send, unfortunately like, you know, once a year, whatever, like pretty often.

Um, but the principles I kinda laid out is like, Justify it. So talk up the value you're adding. So Netflix is like, you know, we're raising prices, but it's to bring you more great content. And so, you know, stay tuned for all this awesome stuff that's coming. And so we did something similar. Like we're bringing up new features and we need some money to pay for it.

So justify, I think was a big one. , push the date off. So it's not like surprise prices are changing today. And maybe we could have given more of a heads up, but we did push it off like a month. So it gives people time to change if they want to. And, You know, otherwise they kind of forget about it and, you know, whatever, other principles, you know, be clear, don't be sneaky.

Like, you know, this is what's happening on this date. Uh don't apologize. So I know you wanted a waiver a little bit and be like, oh, it's okay. We could let him stay. I was like, no, no,

[00:03:11] Brent Sanders: Well, yeah, I mean like, so here was here was the thinking it's like, how, uh, how would one customer that's threatening to leave? If you just said, you know what fine, we'll, we'll, we'll hold yours off for another six months or use that as like a, I don't know what the word for this is, but like, you know, just something to, to kind of smooth things over you'll eventually get the, the upgrade.

but if they were gonna churn, you might as well do something. It it's like Comcast. It's like, they're, they're raising your rates, they're raising your rates or they're charging you for this. And then once you say, like, You know, we're, we're done and I'm, I'm gonna cancel my account. They're like, okay, hold on, sir, let me transfer you to, you know, the retention department and then they strike a deal that's like better than you had before.

And it's, so it it's gotta be a thing that, that works. I mean, it versus losing revenue. Cause I also don't think anybody's talking to each other, like our customers are, they don't have a user's group, right? There's not like a blink sale message board that, uh, people are talking on about their rates.

[00:04:05] Colin Keeley: That's fair. I, I think as like a guiding principle, don't do anything that Comcast is doing. like, Like, I, I don't wanna be cutting like backroom deals, uh, or

[00:04:16] Brent Sanders: oh yeah.

[00:04:17] Colin Keeley: like kind of hurts our credibility to some extent. So it's just like, you know, upfront, these are the prices, like we're not striking deals with, you know, other people behind your back.


[00:04:25] Brent Sanders: yeah.

[00:04:26] Colin Keeley: I really also don't wanna reward people for complaining. Like I, I don't wanna be dealing with, you know, extra, you know, complaints. Uh, but I think the biggest thing is like, people are gonna complain and they're gonna, you know, threaten to churn or whatever. But if it's a reasonable price increase, which ours was.

Like, and not that many people actually churned like maybe 40 people wrote in, you know, complaining to some extent, uh, a number of people were actually nice about it. Like, you know, prices increases have been going up across the board. That makes sense. Or like I realized I had a sweetheart deal for like 15 years.

but in reality, like only I think one to two people churned a day. So like probably under 10 total, you know, more will turn, but, uh, the price increase is gonna be like a dramatic improvement in revenue.

[00:05:10] Brent Sanders: Yeah, It, if you run the numbers, the, the confusing part about this, and I think the most jarring thing is that we have. business suffers from, you know, having two versions. And then within the old version, there are four different tiers that effectively are all the same thing. It's just promotions.

During some time when you signed up, it was either, I think there was a 7, 9, 12. So across both sites, it's again, it's basically the same product, but across all the sites, we have a, I think a 7, 9, 12. And then we have a $12 and 50, or that's an annual, and then we have 15, so that's five different price points.

And so obviously as you skew to the lower part, you're like, wow, that that's. So we raised it from 15 to 1899, right? Or is, did I get it right? 15 to 18?

[00:06:00] Colin Keeley: right.

[00:06:01] Brent Sanders: So we went from 15 to 18, which is really reason reasonable that if you were on nine you're, like nine to 18. But I feel like there was a good, good message here.

It's like the, the, one of the main things. So obviously we're, we've rolled out ACH. We've rolled out. Uh, we're rolling out new design. We're rolling out, um, Zapier and. API integrations. I, I think we've done a pretty poor job. I haven't messaged any of that stuff out. It's just like gets rolled out and, you know, people, people notice it.

Um, so I think that's probably would help with some of the, the pain here. And we're only rolling those changes to the new platform, the old platform. The other thing here is we're investing in that platform to make it so. So are some people that just love it and they want the old one. They never want anything to change.

And it's like, great for us to keep that running the costs are definitely going up for that. Like, there's, there's quite a bit that goes into actually running a system 10 plus years old. Now that wasn't the case before. So, you know, there, there's a ton of reasons why we can get into with P people, but, um, You know, I think the, the brilliant part of this price is like having killing these nine and $7.

It was just a, it's so old. You can't really, you can barely get breakfast at Starbucks for nine bucks, like the invoicing for your business for a month. It's not unreasonable, but I get it. It's double. But the, the interesting thing here is we have pushed. I don't know if you noticed, but I think we, a lot of people sign up for the annual plan on next to get lock in 1250 for the year.

So it's created some urgency around that and I. I think you still have a good, like way to push people forward without feeling like they're going double right. To get 1250 a month's amortized over the year, but you you're upfront paying, um, seems like to be a good release bill. So in, in the conversations that I've had with folks that are like, ah, this is just too much like, Hey, get on good on the new platform, sign up for the year and lock in a, a, a price that's a, a more modest change.

And we love that cuz we definitely want the cash up front.

[00:08:02] Colin Keeley: Yeah, that's a good point. I have been pushing people that, and it is nice way to offer a discount. That's like aligned with our incentives here.

[00:08:10] Brent Sanders: Yeah, I think that's the one thing we did well with it. I think, uh, head I, if we had to do this over again, I think. I, I know we, we just kept delaying with everything with on this, but I we're releasing a bunch of the new features at the end of this month. It would've been nice to release those, then do the price update, but sometimes it's just important to just set a date and then it'll force us to get it done.

You know, otherwise shufflings.

[00:08:38] Colin Keeley: Yeah. Yeah, for sure. I guess in reality, like looking back that would've been nice, but like, if anything, I would've raised prices six months ago. Cause we're gonna have so much more money coming in the door and you could have done that in advance.

[00:08:51] Brent Sanders: Yeah. And so to the point around, like, if people do churn, if for every one person that churn, like it's, I don't know what the, the numbers are, but like, because of the $9 going to 18. It's like, it's fine. If we lose, you know, a certain number of people, I think you projected like a 20%, 10% churn.

[00:09:12] Colin Keeley: We're gonna fall way below 10% churn is my, like the path we're on right now. But if we had, I think if we saw 30% churn or more, uh, we're still like in the plus just cuz these historical prices were so, so low.

[00:09:27] Brent Sanders: Yeah. They were insane.

[00:09:29] Colin Keeley: and we're gonna see, I don't know, like a single digit, well single digits, uh, churn.

[00:09:35] Brent Sanders: Yeah. I mean, and maybe we keep track of those churns. And I mean, I think that we've had one, I don't know, one or two people ask for their data, but the other thing here is, is like happy to help them revolve off. And then coming back to my Midwestern nature, like let's reach back out to those people and see if they wanna reactivate.

There were some people that were like, Hey, this is a seasonal business. It's like, Would be nice to have the ability for them to just turn it off. I mean, it's software. So the margins are high. That being said, we are investing a lot into the features that people ask for, for, um, you know, if they want to keep this, I think this is the best solution for. This like two platform issue we have where like some of the customers love, love, love the old version. It's like, great. If you love it, like it it's gonna be more expensive. Cuz we are investing in, in keeping it around forever, which is gonna get more and more and more expensive.

[00:10:29] Colin Keeley: Yeah. The other piece of this is like choosing the customers you want. And if someone can't, you know, handle a few more allies a month, like those just aren't gonna be good customers and that kind of weeds 'em out to some extent. And you know, the seasonality thing, I'd say if like, if you can't afford like an extra 20 bucks, 40 bucks or something for, you know, lunch not working, like

[00:10:50] Brent Sanders: Right.

[00:10:51] Colin Keeley: maybe it's not our best customer to be focusing on anyway.

[00:10:55] Brent Sanders: Yeah. I, I mean, I would say like, there's a bunch of. Tools out there that you can really get free invoicing. If you really want to, you can do it through PayPal, you can do it through Venmo. You could do it through, you know, I don't wanna be touting all these, you know, they have don't have features. We do, and they're not an invoicing platform, but if you just need to, you know, crap out some invoices and get 'em paid this day and age, there's a bunch of free stuff that you can do where people will be happy to, to take your money.

But you know, if you want to have the features that we have and have like a proper invoicing system, that's just, I feel like we're still at the bottom of the market. Even with the price upgrades.

[00:11:30] Colin Keeley: Yeah, I mean, $19 a month is, you know, nothing it's, uh, you know, chip is approaching those prices like lunches are approaching those prices.

[00:11:38] Brent Sanders: yeah. um, cool. What else is going on? So we, we, we are, what did we start that last week? And now we've, we've informed just about everybody and, um, We'll we'll see how it ends up and probably report back on, on the next next podcast. See, see what the, the number, I, guess maybe we should probably wager you.

You're thinking single digits turn.

[00:12:01] Colin Keeley: yeah. I mean, we're on, on the path of like, well, below 5% churn

[00:12:06] Brent Sanders: Okay.

[00:12:07] Colin Keeley: would be my

[00:12:08] Brent Sanders: going, I'm going nine and a half percent. This is my prices. Right? Number?

[00:12:13] Colin Keeley: That's pretty high. Okay. I we'd still be like, you know, definitely in the positive, but that would be interesting if it was that high.

[00:12:21] Brent Sanders: We'll see, I, cause I think there's this there's like right now where you do the notification and then there's that actual, oh, I got, just got charged a new amount and then we'll see how many cards get through or people, you know, we'll see, we'll see what happens because I'm of the mindset that like people see it, most people ignore it until it hits their credit, the card.

And then. Their statement, you know, when they get their statement, they're like, wait, this is more, why are we paying for this? What do we do with this? So we'll see. The other shoe is, is yet to drop, I think, but I hope not hope you're right.

[00:12:53] Colin Keeley: My other fear is like, not that they care about the price increase, but that they didn't even realize that they were still paying us. And like an email from us is just like, oh, forgot to cancel that one. Um,

[00:13:02] Brent Sanders: No people people know they, they get emails from us on receipts too. I think they still get a monthly email from, I know classic does it. I don't think next does it unless you've opted in for them. but

yeah, it's not, I don't know. I think that is, that's something that I'm always concerned about is like people that's sort of like.

Attrition that just happens. And, but I don't know. I think everyone, at least six, most business owners for a business that's been around this long. Like the cards will just expire. Right? It's like For companies that have been around for like 10, 15 years, like this it's like they only, a lot of those customers just eventually just fall off cuz of their cards.

[00:13:43] Colin Keeley: For sure. Yeah. Well, we'll see. We'll, uh, update everyone and, uh, I guess it's a couple weeks out is when it actually happens.

[00:13:53] Brent Sanders: Uh, you wanna talk about your sneakers?

[00:13:56] Colin Keeley: This is a weird issue I've been having, uh, it's been a big issue in my life. So, uh, for some background I've only worn Kobe basketball shoes for like, well, over 10 years and I had a great system for buying 'em. Uh, so why, I guess initially they're low tops and they run like low to the ground and they're also kinda like zero drop really close to it, which is where your heels heel is not elevated, uh, like a running shoe or something would be.

Um, so all that's desirable, like it makes you quicker. It makes you less likely to spray an ankle, less likely to like tear your Achilles

[00:14:29] Brent Sanders: Oh, yeah. I've totally seen you wearing these. Yeah. I'm looking at 'em on online, right? The Nikes. Yeah.

[00:14:34] Colin Keeley: Yeah. So, you know, Kobe's definitely like a student of the game and he designed these shoes with Nike. Um, and so I historically I wear size 14 and a half in those. And so I'd just go to eBay sort by offers and offer everyone like 40 to $60 for these like $150 shoes. And, you know, five people would accept.

So I I'd have like five pairs and I wouldn't have to buy shoes again for quite a while. And then. So I was, you know, burning through 'em COVID not really wearing 'em once they go buy Samora and eBay and use versions of these shoes are going for 400, $800 in like size 14 and 15. It was like, it's like 10 times the price that they used to be.

And so the issue happening here is that, uh, when Kobe died, his wife canceled the contract with Nike, cuz she was pissed off that Nike wasn't promoting the shoes enough. And apparently it's not just me, but all NBA players like covet these shoes. And so like this is the new currency in NBA is like these dead stock Jordan or Kobe's from like, you know, 20, 10 to 2014.

[00:15:39] Brent Sanders: Oh, no. And, and the sneakerheads, like, they don't let anything slide. Like these are like, it reminds me the same people that were like trading baseball cards or, or, you know, going to like super into trading baseball cards or whatever, you know, the collectors and the, the con concentrators of this stuff.

And I'm looking on flight club right now. And you're, you're absolutely right. I mean, and these aren't even the ones that. I mean, they're all sorts of crazy colors and, but yeah, I can't find a pair under 400 right now.

[00:16:07] Colin Keeley: It's the weirdest thing. So like I've used pairs that apparently could sell for like 400, but this is like my only pair of BA shoes. So I finally wandered into like buying new shoes and there's like a kind of a successor to Kobe. That's not under the Kobe name. They're $170 and it's like, uh, Like a huge release, even though it's not like under, you know, it's not Jordan or LeBron or like a brand name, these are like performance shoes.

And so I've logged in 9:00 AM to like, try to buy these shoes in pink of all colors. Like I just like, I need these shoes. I don't care what color they're and they sell out instantly. And so I was on, you know, I tried to buy it. It's just impossible. So they must all get bought by bots and then they immediately go to like the resellers.


[00:16:50] Brent Sanders: wow.

[00:16:51] Colin Keeley: I was so desperate for shoes. I ended up, I had to pay a reseller. I got 'em for two 50, so not like a horrible markup, but, um, this is like the problem I've been dealing with.

[00:17:01] Brent Sanders: that's crazy. I mean, hopefully they'll yeah. I mean, even, it just seems like that coupled with.

I'm sure production slowed down or at some point for Nike, but, um, Man. So are you just gonna quit playing basketball?

[00:17:14] Colin Keeley: I got these new shoes. So hopefully they'll ask me a while. I mean, the ones I've been wearing were made in 2014, so that's something, but it's like, what is going on? That it's so hard to buy like $200 pink shoes. It's like, are we struggling to make shoes or Nike? Like, this is the new business model of just not making enough shoes.


[00:17:33] Brent Sanders: maybe, I mean, I think people are the collector bug is definitely in an all time high it's feeling like beanie babies a little bit, not, not necessarily like sneakerheads and stuff, but just the NFT thing. And, um, you know, people storing value in strange, strange, different ways.

[00:17:49] Colin Keeley: Yeah, well, I don't appreciate it.

[00:17:55] Brent Sanders: Good to know. Good to know. Um, well that's uh, but you still been playing basketball and you still in, you start to go back to the gym, like it's, it's no masks.

[00:18:05] Colin Keeley: No more mass. Yeah, the world's back to normal COVID is over world war II has begun, uh, onto the new narrative.

[00:18:14] Brent Sanders: Oh, man. We're not even gonna comment on that, but yeah, it's, uh, the only I would comment is, you know, like many, uh, folks that work in the sort of decentralized software world. Um, it's definitely having an impact, like working with Ukrainian developers and Russian developers. And it's think that I'm noticing is everyone's just kind of like, this is the Russian developers are like, Ugh, this is awkward.

Like, I don't know what's going on. Um, they're just kind of in disbelief that it's happening in their own country. It's like, um, But yeah, it's, it's weird to see. Cause I work with a lot of the folks. I mean the, the Ukrainian folks have, are totally gone dark. A lot of 'em like, they're, it's like, Hey, I gotta take time off work.

It's like, yeah, yeah.

yeah. I, I understand that. Um, and it's, it's scary from what I hear of the folks that I, I do work with or have worked with from time to time, trying to keep up with them is. Moving their families to Poland, but you know, the military age, men are not being allowed out of the Bo out of the country. So they're trying to leave and they're getting sent back and trying to figure out ways to get out. But, uh, they're, they're stuck and these are getting stuck in some real dangerous places where there's bombings and the Army's rolling through. It's it's pretty fucking freaky to be honest. So total, total mess after total mess, uh, year 20, 22, apparently.

[00:19:37] Colin Keeley: So that's the Ukrainians, right? Uh, you you've been talking to some Russian developers, what's it? Like, are they still working normally?

[00:19:42] Brent Sanders: They're working normally they're, they're like, they're the ones with fr Ukrainian friends. Like one of 'em that I work with is, you know, he spends half used to spend half of his time in Ukraine. And like, I think has half of his family is Ukrainian and it's like, you know, Ukraine and Russia. It's like, you're in Canada, we're here in Mexico.

It's like people go between all the time. But yeah, he was like, I can't believe. He was blown away that people aren't revolting. That's what he was like. I can't believe more, you know, everyone's like kind of buying into this thing. And I thought about that a little bit. And I thought about like, you know, what you've seen in the press, people are wearing these Z badges.

And, uh, it reminded me of like desert storm. Like, do you remember like the, you know, there were like T it's a desert storm and it's like, America, fuck. Yeah, And you know, we're gonna get Saddam and it's like, I think people ended up rallying a little bit more around that. And I'm, I'm not, of course not saying all Russians, I'm just saying as a, a nation, the government has been able to like, co-opt enough people that it's, um, you know, it it's complicated, but yeah, that, that was the feedback that I've heard is that they're like, I can't believe that this is a happening B don't, don't be mad at me.

I have nothing to do with it and see, like, I don't support it, but I also like don't, I'm kind of shocked that. You know, more people don't or, or it's more, not more like up in arms about it.

[00:21:07] Colin Keeley: it is. I mean, it is shocking. It's probably like the most shocking thing that's happened in our lifetimes of like, Kind of felt like we're beyond this a little bit. Like everyone's so interconnected that it wasn't realistic to happen, but yeah, it's a real war.

[00:21:20] Brent Sanders: Yeah, I, I guess the, it was like this, and then I remember the fall of the. The Berlin wall, but I was very young. I was like nine, 10 or something. I remember my brother was babysitting me and all of a sudden we were watching some stupid show and then all of a sudden they change it to like this just in.

And I was like, I had no idea what east and west Germany were at the time. No idea what you know, the USS R was. But I do remember that and I'll never forget just that evening feeling like, whoa, this is, this is crazy.

Probably the only other time that, and, and of course, nine 11 another great, great memory of fucking TV

[00:21:55] Colin Keeley: for sure. Yes. So,

[00:21:58] Brent Sanders: but yeah, we're, we're not beyond it.

[00:22:00] Colin Keeley: positive notes to end on here? You got anything else going on in your life?

[00:22:04] Brent Sanders: I mean, you know, um, excited to see what, what does happen. I mean, the, the price raises on the businesses. I like going back to that, I'm excited to see these new features come out and, and people kind of embrace, um, The platform a little bit more, I'm excited to roll out the new features and yeah.

Like be able to invest some more into the product. I mean, that's, it's a, we have put in a fair amount of capital and, and effort and time to build out some new features. And like, I can't wait to see that get supported and then continue doing more. You know, I think that's, this is just a very high, healthy thing to do in my mind, and it's not easy or convenient, but I'm glad we we're doing it.

[00:22:45] Colin Keeley: Yeah, that's one of the thing we didn't really talk about is like every time you contact customers, especially with something like this, they come back with a bunch of feature requests and that's just really nice to hear,

[00:22:54] Brent Sanders: Yeah, I love it. I love it. It's like be, and the even better is like things that are on your roadmap. Be like, yes, we're doing that in a couple weeks, going that in a couple months, like that's coming out in the next quarter. It's like the, that's the best thing to hear that you're actually navigating your roadmap correctly.

[00:23:11] Colin Keeley: Yeah. Yeah, for sure. Um, well, we'll try to do this more regularly. I think we took like a month off here. Uh, we'll get back to it.

[00:23:18] Brent Sanders: Yeah. Yeah, absolutely. Well, we, I have also talked about maybe bringing on some guests. So if you, our listener out there definitely tweet it Colin or I, and, you know, throw out suggestions for people you think we should talk to interview? I think we, we did. We've done what two or three guests in the past.

They always have been very interesting folks, so excited to see how that goes.

[00:23:40] Colin Keeley: For sure. Yeah. I've been talking a bunch of Twitter folks probably just should ping 'em and try to get 'em on, but, uh, stay tuned.

[00:23:47] Brent Sanders: All right. Thanks for listening.

[00:23:48] Colin Keeley: All right. Take care.

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