Increase in Revenue and Possible Move

The first couple of months of 2011 have been nuts. Lots going on but not so much going on with Bidsketch — sort of. I say sort of, because Jan 18, 37signals blogged about my Highrise integration and tweeted a link to the blog post.

This resulted in a small increase in traffic that day and a few extra conversions so I was initially bummed. The surprising thing about it was that this increase in conversions has been pretty steady for about a month and has given me nice increase in recurring revenue. I’ve now hit a level of revenue that can pay all my bills being that I’ve cut down on a lot of my expenses.

This is the awesome and exciting part. The frustrating part is that I’ve not been able to put much time into development or marketing since I’ve had so much going on with the day job. But I’m working on that problem and I’ll write some more about it tomorrow.

The other exciting thing that happened is that I may be moving to Washington! Spokane to be exact. A transfer through my wife’s job needs to be 100% approved before we can make the big move but it’s looking pretty good so far.

If the move to Washington happens then we’ll be out of south Florida in a couple of months. We’ve been looking to leave south Florida for a while for many reasons. But mainly it’s the insanely hot weather and the people here. It’s just not for us. We need a place where we can enjoy nice scenery and four seasons.

Being that we have three dogs and two cats, it won’t be an easy or cheap move, but this is part of the reason why I’ve focused on cutting expenses and saving lots of money over the past few months. For now, we’ll be waiting to hear back on whether it’ll happen and hopefully we can look forward to enjoying a nice change of scenery soon.

Last Update for 2010

It’s been a year since Bidsketch launched and it’s now able to replace a fair amount of my salary from my day job as a web development manager. It’s both exciting and nuts considering my first-year-goal was to simply hit 2k in recurring income. I’ve easily surpassed that goal but things are going to get tougher soon if I don’t make some major changes.

I’ve reinvested most of the revenue back into Bidsketch so I haven’t put much away into my savings account. I’ve also gotten kinda sloppy with my monthly recurring business expenses by adding services I truly don’t 100% need to keep my business running. I’m going to be changing that now. I’ll be slimming down my expenses and stashing away as much cash as I can for the next few months.  Monthly recurring expenses have already been cut and my car is up for sale at the moment (getting rid of my monthly car payment).

At the same time I’ll be wrapping up a major missing feature and then focusing all of my efforts on the marketing side of things. Things are going to get pretty exciting in the next couple of months and I can’t wait 🙂

Pricing Experiment Update

So I just finished sending out a new email campaign in MailChimp to all my existing trial users.

It was a message letting them know that I was making a pricing change to their accounts. What was the change? Both the Basic and Premium plans will be dropping in price.

I had mentioned the pricing experiment towards the end of my last post. While I’m bummed that it didn’t quite work out, I hope some of my users feel good about pricing going down.

It’s almost 2 AM now so I’ll just quickly say that the problem with the increased pricing was that my signup conversions AND my trial to paid conversions both dropped. It made it so that the higher pricing will cost me money if I keep it.

Like I said, I’m a bit disappointed at the results, but it wasn’t a complete loss. I now have some great feedback letting me know what I need to work on to get to the higher pricing.

Five Minutes to a 10x Increase in Conversions

Bidsketch is a SaaS based product I launched just a few months ago. It’s proposal software made specifically for designers.

It’s only been live about six months, but I’ve tried a lot of things to increase conversions. Mostly, they’ve been centered around A/B testing since I was trying to more efficient converting users before I looked at increasing traffic.

Some of the things I’ve tested:

  • Taglines
  • Signup button text
  • Button designs
  • Number of plans
  • Plan details
  • Page headlines (pricing page)

You get the idea.

While I saw some improvement in a couple of areas, the increase in conversions was minimal. And as you can imagine, my revenue didn’t have much of an increase either. Not to say that I’m done with A/B testing, there are several tests I’ve been itching to run, but everything I tried paled in comparison to the one thing that resulted in ten times the number of paid conversions.

So what did I do to get such fantastic results?

I killed my free plan.

Yep, I killed a critical part of my sales strategy. I was freaking out when I did it, but I went ahead and gave it a shot. And with that simple change, I went from a 0.7% conversion rate on paid plans, to a 6.5% conversion rate while having the same exact number of users stick around past the 30 day trial period.

Increase in conversions on paid plans:

Paid vs. Free

When I speak of conversions, know that I’m talking about conversions from my pricing page.

Also, keep in mind that I ask for a credit card upfront;  so there’s more friction to my signup process than most people say you should have.

Free plan? Nope.

Credit card required to try? You bet!

The result? More conversions than you can shake a stick at! Not really, I still have my day job, but a ten times increase in conversions certainly helps.

What About Converting Free Accounts?

When I initially made the change, I was worried that I wouldn’t get any paid signups which would’ve been pretty bad considering that I didn’t have those free account users signing up anymore.

The problem with free users is that they don’t convert to paid plans very well. Sure, I’ve only been live for a few months and the goal with these users is to develop a long term relationship so when they need to pay for an account, they do it with you. Still, in the best case scenarios you’re looking at a 2% upgrade conversion rate with SaaS apps like mine.

That didn’t stop me from trying to convert those free users when they were coming in. I tried all sorts of things but most of it had little impact if any.

A few things I tried to convert those users:

  • Added additional upgrade prompts (at the key places when performing certain actions).
  • Sent promotional emails offering discounts.
  • Gave 15 days to try Premium features for free.

The best I was able to achieve was a 1% conversion rate on upgrades. Not that great considering how much time I spent trying to convert them. Now, compare that to the five minutes it took to kill my free plan.

What This All Means

So, given everything that I’ve learned from this you might expect that I would have regretted launching with a free plan. I can’t say that I do.

There was a nice benefit to having that free plan for the first few weeks: I had plenty of users to give me great feedback on how to improve Bidsketch. Plus, due to my launch strategy, the first week of my launch I had more people sign up for the paid account than the free one.

What I do regret is hanging on to my free plan once conversions to my paid plan started slowing down. Luckily I didn’t let it go for too long before I decided to experiment by removing that plan.

As of this moment, my conversion rate has dropped a bit due to a pricing test I’m running. The good news is that revenue has gone up! I’ll be blogging about that in a few weeks once I feel comfortable that those number aren’t a fluke.

Pricing Test

I just increased my pricing on Bidsketch.

$9/month for Basic and $19/month for Premium.

New Pricing:
$14/month for Basic and $24/month for Premium.

Did I add any major features? Nope.

Sure, I’ve been adding some enhancements every couple of weeks, but nothing groundbreaking. Not just yet anyway. I was considering waiting until after I released a few big features that I’ve been working on. But after talking it over with my good friend Rob, I realized that I never found out what my pricing point was.

I moved up the pricing 3 times, and removed my free plan, but I never tested what the market wanted to pay for Bidsketch. Sure, it’s scary to make any sort of pricing increase. Each time I’ve had this unrealistic fear: “No one is going to sign up, and I’ll get 100 people emailing me about how insane I am to expect people to pay that much!”

Fortunately, that’s never happened. Quite the opposite. Conversions have slightly increased or stayed the same.

It’s been said many times that developers tend to undervalue their work. I completely agree; we do exactly that. That’s why we it’s so important to test your pricing. Even if you lose a little money in the process. And especially if the thought of doing so scares the crap out of you.