Joshua Strebel is a husband, a father and co-founder and CEO of Pagely, the first managed WordPress hosting company. He graduated college on a Friday, got married on a Saturday and started his business 90 days later with the leftover honeymoon money.
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Pricing WordPress Hosting
- What is the most important thing you can share about pricing?
- Always charge more.
- Charge what the market will bear – your price is always too low.
- Pricing lets you choose your customer and assign a value to your work.
- Does your subjectivity (lack of objectivity) get in the way of pricing?
- It depends on the customer.
- Being able to launch a WordPress site is a huge value to someone who doesn't have those skills.
- It has less value to someone who does not have those skills.
- Where did you get the inspiration to start a managed WordPress hosting company?
- In the first 5 years, it was a design shop.
- Priced the original customers out by increasing their pricing over time.
- Asked themselves how to make building a website easy, which is what led to Pagely as a streamlined website building company.
- Asked themselves how to automate the process with basic information to serve previous customers who had less money.
- After the first 20-30 customers, the model stopped bringing in customers and they put it on hold for 3-4 years.
- How did you determine your plans and prices for Pagely?
- Pagely was the first of its kind and there wasn't any true competition.
- Compared themselves to GoDaddy and others at the time, and they priced their more valuable services at 3x the going rate.
- Now they have a range of prices from about $24 to thousands.
- Pagely focuses on the niche where they can profit in their market.
Responding to the Market
- Did you foresee the market change or did you respond as it was happening?
- They responded as the market changed.
- They are pricing toward the value they are delivering to the customer.
- Do you consider managed hosting to be a SaaS application?
- Yes, they do consider themselves SaaS.
- “WordPress as a service” is the phrase they coined.
- What is a common mistake owners make when pricing a SaaS app?
- Always pricing it too low.
- The freemium model doesn't work.
- Don't give away services.
- Be aware of the competition, but benchmark off where your desired customer is vs. your goals and values.
- What is an example of a SaaS app that is pricing well?
- Optimizely is cool – great app for A/B testing, and isn't cheap, but the value is there.
- They earn their pricing because their UI is intuitive and slick.
- An app has to look good, not just work well.
- How is pricing a SaaS app different from pricing other products?
- Products are a one-time sale.
- SaaS is more like a lease.
- Josh's example of using Basecamp shows how he got value and they made money.
The WordPress Economy
- What is your opinion of the state of pricing in the WordPress economy?
- Everything is too low.
- To be taken seriously, you have to put a dollar value on your product.
- You are incentivized to innovate if you are well-paid, which helps you keep and earn customers.
- Where did you get the inspiration to start the PressNomics conference?
- As a community member, they would speak at WordCamps, but then stand in the hall and network after the session was over, rather than attending other sessions.
- They wanted a business conference for WordPress rather than a technical one.
- It is the missing link.
- Where did you get the idea to invite your mastermind group to speak at PressNomics?
- His group is full of successful people who drop knowledge bombs.
- He learned from their lessons and wanted to share their insight.
- What have you learned from the members of your mastermind about pricing?
- Their pricing ideas are all over the place; no one is a master.
- One member is playing a freemium game, which is working at the low-end.
- A theory is brought to the group and then the group follows up on the data six months later to discuss what happened.
- Does the mastermind group serve as a pricing council for you?
- Yes, they do.
- When product launches happen, they do mental exercises on pricing.
- You need points of reference outside to price well.
- How do you think PressNomics has influenced pricing in the WordPress economy?
- Josh didn't have a firm grasp on what it was 3 years ago.
- PressNomics definitely raised the question and has gotten people talking about pricing.
- The ecosystem is its own best and worst enemy, due to its open-source nature.
- You don't have to be poor to work with WordPress.
- What have you learned since you published the pricing chapter in The Art of the WordPress Startup?
- Sean O'Brien (MBA from Harvard) wrote the post on pricing elasticity, Startup Pricing 101.
- Pricing experiments were done on Pagely: the lowest price increased their customer service costs on less-savvy customers and some of the medium-priced customers dropped to the lowest price.
- Experiment on pricing and adjust your offerings, as the market changes around you.
- What is one of your best stories about creating value for a customer?
- PressNomics is the ultimate give-back.
- The price for PressNomics was noted as too low by the attendees.
- They priced it high enough to keep the “freelance 101” people out, but low enough that it is affordable. It is priced that way on purpose.
About Joshua Strebel
- Co-founder and CEO of Pagely, the first WordPress managed hosting company
- Started PressNomics, a business conference for the WordPress community
- Twitter: @strebel
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