Last modified: September 7, 2017
Achieving the perfect balance between price and value is a fundamental challenge of commerce. That balancing act can be especially tricky for subscription-based ecommerce pricing models. Successful subscription offerings must make a consistent case for their enduring value to customers, month after month — while achieving the financial returns it takes for the retailer to stay innovative, competitive and profitable.
When the price-value relationship falls out of balance, the impact can be immediate and lasting. But when you get it right, you’ve got a genuine win-win proposition that generates long-term value for merchant and customer alike.
Sometimes it can be hard to tell if you’ve struck the right balance. Such was the case earlier this year when Evernote, a popular cloud-based note-taking and collaboration tool (instantly recognizable to many by its green elephant logo), announced changes to its free and paid access plans. Most notably, the company added a two-device limit to its free-to-use Evernote Basic plan, while increasing subscription prices for its Evernote Plus and Premium plans. Additionally, it began promoting Evernote Business to consumer users.
Evernote, once considered a tech “unicorn” with a valuation of over $1 billion, is on the receiving end of much criticism and scrutiny this week, following the announcement of a price hike and device limitations for free users.
One thing is clear about the recent changes: no one is happy, since Evernote wants you to start paying for features that were once free. For some, paying for the new plans is a no-brainer, as the chat and sharing features built into Evernote make it a powerful collaboration tool, as do its helpful integrations with IFTTT and Zapier.
While it often feels like “no one is happy” to pay for things they once got for free, many freemium models rely on time limits or feature restrictions to convert casual users into paying subscribers. Naturally, making the mental shift from “this is free” to “this is something I pay for” often causes friction and irritation for customers. But the success of freemium commerce shows that this friction can be overcome — with transparent communication and genuine value.
Going back to our example, Evernote has consistently been transparent in communicating plan changes, as well as why those changes were necessary to deliver new high-value features and integrate with other technology platforms. This commitment to open communications has kept many of its customers loyal. As some customers noted on social media, the company has a long-standing track record of frequently releasing new product features and promotional offers for paid subscribers. They also added a new middle-tier pricing plan last year — Evernote Plus — to give customers another option between its basic and premium plans. In fact, to its credit, the company has not shied away from being open about its focus on moving free customers to its paid offering. That is how the business makes money, after all.
Only time will tell if these new features are enough to convert free customers and keep paid subscribers loyal given price increases. In the interim, Evernote should be applauded for its ongoing transparency and direct engagement with its user community.