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Licensing changes and pricing

Today Bohemian Coding, an indie Mac development company, who develop the fantastic design application Sketch, announced a change to licensing and versioning scheme of the application.

They are trying something new for them, after moving away from the Mac App Store in the last year, to have full control over the licensing process, among other reasons.

As is expected, such changes bring a lot of response from existing customers. And many are unhappy with change. And they wrote about their disagreement in comments to the blog.

One thing I noticed is that Bohemian Coding’s announcement doesn’t include the price of the new license scheme. So customers can’t really know what they are going to pay. And so some assume that it’ll be $99 per year. Some argue that it should be $50 per year because previously major updates were about every two years. Some say that it should be based on upgrade pricing, which is indeterminate.

The truth it, is that I think Bohemian Coding should’ve announced the pricing structure in the same blog post. Yes, maybe they haven’t decided yet. But price is of such utmost importance to customers’ feelings towards such changes, that leaving it out is, in my opinion, a mistake. People have visceral, immediate response to pricing, on subconscious level.

Consider this: current new license of Sketch is USD$99. The license is for a major version that runs for about two years. Yes, maybe you bought the license 6 months before the new major version and then it’s less value (one thing that the new theme tries to avoid). In any case, taking this price into account:

  • What do you feel about the change to paying $99 for a year of upgrades to Sketch?
  • What do you feel about the change to paying $20 for a year of upgrades to Sketch?
  • What do you feel about the change to paying $49 for a year of upgrades to Sketch?
  • What do you feel about the change to paying $139 for a year of upgrades to Sketch?
  • What do you feel about the change to paying $79 for a year of upgrades to Sketch?

Did you get an immediate gut feeling of “that’s a rip-off”, “that’s a bargain”, “that’s fair”, “kinda OK”?

Maybe Bohemian Coding thinks that the have time to decide about the price because they have at least 6 months before people need to buy the new licenses. I know many people at Bohemian Coding, and they’re smart and passionate. But I wouldn’t suggest putting the announcement off until that moment. Look at what’s happened with Smile’s announcement of TextExpander 6 going to a subscription-based model. Lots of backlash from the customers and the media. Mainly because the people thought they got the price wrong. Then Smile adjusted the prices to a level that seemed reasonable to more people, especially to the existing customer base.

If Sketch announces the pricing now, they’ll remove the speculations and will still have time to adjust the pricing strategy before new scheme goes into effect, before first people are billed.

Pricing is hard. Pricing is psychology. Don’t let people guess what you pricing will be. Tell them the price, then observe the reaction.

Update:

The blog post from Sketch was updated with the pricing decision, after they got questions from customers. Now they have to watch the reaction and have a thick skin.