Case Analysis Report On Basecamp

Pricing
Group – 2A(TECH.COM)

GROUP MEMBERS –
 (140002) ABHISHEK PANDEY
 (140019) KUMAR ANAND
 (140022) MD ASIF ALI
 ( 140037) SHIKHA PATEL
 ( 140042) SUPRIYA JAISWAL

Guided By Professor – Nilamadhab Mohanty

INTRODUCTION
Base camp is a web design company names as signal 37 was initiated in 1999.
Basecamp was launched in 1944 as a project management tool launched by
signal 37. The company was rebranded in 2014 as basecamp LLC . moreover ,
all other products off to different entities. Basecamps 3 was the first product of
the company after its reorganisation. The company has great success from
starting. The company has always been profitable since its initiation. A minority
stake of company was sold to amazon founder Jeff Bezos , in order to increase
the customer growth rate and satisfaction. In addition , the free and paid
customers of the company were also increasing year by year as it was
estimated that there was estimated that there was 7000 accounts increasing
weekly . the trade of basecamp service is done through web interface which do
not require any location or limited place, moreover it has been analysed that
this selling model has facilitated more customers that can be served by
minimum salespersons . for the purpose of promotion and marketing ,
company has been availing facility of Google , Adwords and content marketing.
Despite of these sources , word of mouth of respective customers have been
helping in order increase the company customers base . the pricing of
basecamp has been varied from different schemes after its initiation.
However , the current price scheme shave been divided into their groups
which contains for us plan which has been priced at $29 month . secondly the
with clients plan have been priced at $79 month lastly for the enterprises at
$79 month lastly for the enterprises , the price has been set at $3000 month.
Moreover a free trial has been allowed to every customer . in addition each
pricing groups has been fascinated with different services. The company has
always been profitable. However to make further growth company was
thinking as if procedures set correctly , moreover if there would be need of
changing price . therefore different pricing testing methods have been
conducted. In order to get satisfactory results company conducted A/B pricing
of increasing its process. However, it failed and results are not satisfactory as
usual. In order the addition price sensitivity survey method has also been
performed which also failed and resulted in prices of different services not
being optimised
BASECAMP SUCCESS

The success of basecamp have been dependant upon its business model. As it
was an early entrant in the project management software market moreover
the basecamp team spread sheet and email rather than difficult software In
order to satisfy customers . many competitors were using complex software
that could be confusing to customers slow up the speed and create problems
for different customers. This acted as the company core value competency and
competitive advantage that helped it to achieve success since its inception .
the software of basecamp was just the collection of tools that would help the
customers and their teams in order to collaborate and work accordingly. In
addition the web page and mobile application of basecamp was also
announced which would help them to remove email system as well as it would
make communication easy. Moreover the open API of its applications would
also help to integrate with other software. There was not any locality that was
used by the company in order to make purchase or selling software , rather it
was done online and through web pages. There are many advantages of sales
through internet such as it saves the company cost of opening store or
maintain. Moreover it would also attract customers and would be easy for
them in order to make purchase. As this is an intangible items, it could not
make sales through local stores. The promotion and brand awareness has been
created by many sources company haven always been using content
management and Google Adword for making sales. However it was not used as
much as the company’s owner is also a writer of many blogs, books and articles
much promotion has been done through these means. However the best
sources of marketing has been considered the word of mouth of potential
customers bases . different pricing structure have been used since the
initiation of company when it was started 2004 , one free project was allowed
them with the price range from $24-$149 per month which was differentiated
according to file storage and number of project.
SWOT ANALYSIS

SWOT Analysis are very helpful in identifying the strength , weakness ,

opportunities and threat of the company.

STRENGTH

 Decloline offers a costumed services

 Innovative design
 Ability to provide unique products
 Already have customer base.

WEAKNESSES

 Assumptions on product life

 Limited production capacity
 Cost production is high compared to previous product
 Production capacity is at 77%

OPPORTUNITIES

 Expand to US market
 Expand to consumers markets
 Expand to another country
 Potential to grow.

THREATS

 Competition can release a me 2 product

 Price War
 Other factors which include price competition by different brands
 New entry

PESTLE ANALYSIS

PESTLE Analysis are very helpful in identifying The political , social and
economical factors which affect the product of the company
POLITCAL

 No government policy can be impacted on basecamp as it is intangible in

nature.
 It is selling legally and all over the world .
 No any illegal products launch by the company.

ECONOMICAL

 ANY Environmental factor such as globalization or biotic issues do not

have any impact on basecamp sales due to intangible nature and in
effect venture.
 There is no legal constraints as it hold an open API and is available for
every country.
 It is not violating any legal law

SOCIAL

 Social effects such as different norms and culture have not been
effecting basecamp sales due to nature of intangible and is not affected
in any descriptions of religious or social conflicts

TECHNOLOGY
 Lastly technology includes products and processes. It has been analysed
that basecamp do not sell product but rather services
 The selling process is not tangible but based on software which make
process easily and understandable
 Technology is also key factors for the success of the basecamp

 PRICE TESTING PROCESS

 Every company needs to grow itself at every stage. However, if any company
is not trying to grow considers to be failing in future.
 There are many other aspect switch can be considered by Basecamp
management in order to grow such as increasing services, making different
acquisitions and many more. However, prices can also be a source for a company to
grow itself.
 Consequently, Basecamp perform different pricing tests in different stages.
Such as in first stage, it conducted five tests which were based on increasing its
product price or to limit its service and reducing its annual prepayments.
 However, these all resulted negatively and other price testing strategies were
used by the Basecamp. It includes A/B testing, Price Sensitivity Survey and
Customers and Comparable.
 Conducting price testing in an early age helps the company to identify its
future strategies. Moreover, it also helps the company to increase or decrease its
price or quantity in order to achieve successful growth.
 In addition, price testing help companies to set its process correctly so that
increase in facilitating customers cost would not impact the company’s profitability.

Price evaluation results

Mainly Basecamp use two Price evaluation for the survey.

A/B Testing Results

A/B testing was conducted to analyze the customer’s reaction on increasing its pricing.
Therefore, the company doubled its prices of services. That is increased in price of “For
Us” to $59, “With Clients” to 159 and “Basecamp Big” to 6000. Moreover, two groups
were designed in order to conduct test such as Control group and Treatment group.
Control group was facilitating current pricing whereas, Treatment group were facing
tested prices that is doubled prices. A rough analysis have been conducted, after
running this test for three days, rough analysis that 30% of customers were deviated
from control group. However, mathematical analysis shows that 5011 users have signed
up for a free account. 1573 customers joined in the treatment group and remaining 3438
signedup in control group. The results showed that after signing up for free, out of 3438
population of control group, only 120 were converting into freemium account. On the
other hand, in testing or treatment group, only 28 people have converted themselves in
payment. Consequently. 3.49% of people in control group and 1.78% have been
converted.

PRICE SENSEITIVITY SURVEY

A price sensitivity survey method have been used in order to analyze the pricing of the
company. Therefore, 26000 of Basecamp customers received an email of questionnaire
to conduct survey. The survey consisted of four questions in which inquiry of low pricing,
bargaining pricing, expensive pricing and most expensive pricing have been asked to
the customers. 895 survey were collected and a meter chart was developed by the
company
Optimal Pricing for US Would have $20 as it contracted the line of too cheap and too
expensive.

Customer sand comparable:

Despite of conducting different pricing tests, the company surveyed customer’s data
which was based on their demographics. Consequently, it was identified that the
Basecamp customers belongs to different practices, reason of using software,
demographics and job titles. Therefore, there is a lot of difference in customer’s nature.
Different suggestions were generated by different employees such as differentiating
customers into different segments. Another employee suggested different pricing
techniques for different customers. However, currently, Basecamp is suing just one type
of pricing
Options and recommendation

Lorang team considered a number of pricing options, including but not limited
to the following

One time user on boarding charge - BC3 Could be priced so that once the
commitment to purchase was made , customers paid a one time fee for
different buckets of users (5,10,15,20 etc)

Monthly fee per number of external contacts – The client side allowed BC3
users to include external parties in the project management software , a
features valued by high -ROI