Jason Fried: We want fewer customers. Basecamp increased prices (sort of)

Let's start from what happened last week. Without any announcements 37Signals dropped a low end plan from the Basecamp sign-up page ($24/month for 15 projects and 5GB of disk space). Now, the cheapest option on this page is $49 for 35 projects and 15 GB. Of course, this caused a loud reaction of bloggers and competitors. Bloggers started speculating that Basecamp feels so confident that has lost interest in small business. Competitors started pitching alternative project management tools and Zoho even pushed the promotion for customers switching from Basecamp to Zoho Projects. 37Signals co-founder Jason Fried has clarified the situation. "In fact, Basecamp hasn't raised prices. Existing users continue to pay the same price for the same subscription plans. The company is just experimenting with the sign-up page design. The $24 plan is still available (inside) for those who sign-up for free account and then wants to upgrade". Nevertheless, the idea of the experiment is clear: Basecamp focuses on the more "expensive" clients. Here's why:

Now we'll be telling not about Basecamp, but about the other new 37Signals product - Draft. It's a simple whiteboard for iPad, which allows your to draw sketches with your finger and send them to colleagues via email or Campfire group chat.



Jason says that the company has developed Draft for itself. Before, to share ideas developer had to draw something on a paper, scan it and upload to Campfire. Draft - greatly improves this process. Though there were already some similar drawing tools in the App Store, all they weren't suitable enough for 37Signals. Some of them were too complicated, others can't send sketches by email and upload them to Campfire.

Being happy with the new tool 37Signals team thought, why not sell it to others? The competing tools, like the majority of applications in the App Store, cost 1 to 3 dollars. So it's logical to set a price within that range. Or may be offer the product for free?

"We think free or one-dollar-price is a business cancer" - says Jason. "With a price tag of a buck or two, I think we could have easily sold 10,000 copies of the software (from June). On the surface, that sounds great. But not when you think about all the resources required to serve 10,000 customers. That's the software business, an a good number of those 10,000 people are going to need help. Some are going to complain. Some will request a lot of features. Some will ask a lot of questions. Could we provide excellent service for many thousands of additional customers paying a one-time price of $1.99? Would that reduce our ability to service our Basecamp and Highrise customers? We believed it would.

So we decided not to participate in a race to the bottom and not to pay attention to what the other drawing apps sell for. We focused only on the real value which Draft brings to us. If we need Draft but not the other existing tools, then there are other companies with the same needs. And we priced Draft at $9.99. When we presented the new product in the blog - users shouted: Are you guys nuts? Is there a gas leak in the 37s offices?

At the moment we have sold 2,000 copies and earned $20000. And we prefer to have 2000 customers than 20,000. We want to have fewer customers. But we want only happy customers. "

See also: Top 10 Project Management software