the goose

1. Find out what they want:  @replies
2. Go and get it: Some of last week went into building credit card processing into Ag Tweet
3. Give it to them: 4 paying subscribers – whoop.

Ag Tweet did something last week that 99% of web applications fail to do.  It garnered some paying customers.  Four of them in fact, eaching shelling out €3 a month.  I’m writing up a brief explanation of how it was put together and why I made various choices including pricing models.

So what was the objective of this bit of development?  The real objective was to simply fuel the number of people who are using Ag Tweet.  @replies (text messages sent to phones when someone is mentioned on twitter) were the top request from users and I had a hunch that by providing the service it would improve the number of people that sign up.

Pricing

I am working on the theory that pricing for subscription services is not set by value but instead by what the customer has available in a budget to spend on that item.  This isn’t a theory that has any grounding other than my own whim.  A lot of people, and certainly the most vocal, using agtweet are between 14  – 20.  These guys are great – they shout about agtweet and badger their mates into signing up.  I also carried out a survey amongst the beta testers.  This is what they had to say about a price.

I was pretty happy with this response.  Of course I would have been happier if people had said they would pay 9 – 16 euro a month but I guess turkey’s don’t vote for Christmas.  So why pick €3 and not €5?  Three reasons.

1. Three euro really sounds like not a lot of money.  I’d expect a lot of people to give it a whirl and a lot of them won’t be bothered with unsubscribing for such a small amount.  They’d rather let their credit cards expire.
2. What I really wanted to do is test to see if anyone would bother taking out their credit card at all. I know a lot of people talk about pricing high and discounting – but really these €3 guys are just there to spread the word (by tweeting about the service) and and provide a funnel for the higher price plans.  I only plan on breaking even on them.
3. I knew from the test group that 67% of users would have enough replies in 50 / month while 30% would need 150 and the remainder would need 300 per month.  My long term goal would be for the subscriptions to break down in that fashion.

That would give me a subscription breakdown something like this.

So all this work for 80 lousy euros?  Well actually  – no.  It is worse than that.  50% of agtweet users are on meteor while the rest are on some othe network.  I can MMS the meteor guys for free.  This was the original brainchild of @jmccrohan. I’m selling the text messages to the other guys roughly at cost price which means I should clear a cool €40 a month if all goes according to plan.  I could cut out the SMS cost altogether by making it a Meteor only service but for now I’m effectively using them to subsidise the others and help build numbers.

So why bother?  Well that is a good question.  Its pretty clear that on these prices it is not going to make a lot of money any time soon.  Instead I’m just stoking the fire.  This way it won’t cost me anything to run and hopefully adding the functionality will help to build the subscriber base.  Eventually the subscribers will start upgrading  and at that stage we’ll see some more revenue.

Payment method

I originally intended to take payment by Paypal, mostly for ease of integration.  The problem with Paypal is that they don’t support Laser and I knew a lot of users didn’t have a credit card.  I decided to use my Worldpay account instead.  There was another reason to use worldpay.  I have found that PayPal subscriptions are fragile little things.  I’m not sure what they put in the subscription emails but they positively beg subscribers to unsubscribe.  I’ve found way lower unsubscription rates with Worldpay.  Worldpay does allow you unsubscibe but the agreements tend to live longer than Paypal for some reason.

So here we have it.  Three price plans.  The integration was fairly straightforward although I have been getting a lot of requests to take payment by debiting phone credit.  I’ve been looking into onebip.com which seem to have a pretty transparent and easy to understand intration.  The only challenge is that they take about 50% commission on all payments.  That means I’ll have to make it more expensive ot pay via this method – unless I made it a Meteor only option.  Now that I write that – it may not be a such a bad idea.  Maybe the Meteor customers can drive awareness with their cheap tweets.