BASECAMP:

PRICING
AYESHA AKHTAR
MAHNOOR KHURRUM
SHARUKH REHMAN
USMAN FAROOQ
TABLE OF CONTENT
■ History of basecamp
■ 4P’s
■ Price test selection
■ Test conducted
■ Consumer and comparable
■ KLP
HISTORY OF BASECAMP
■ In 1999 - 37 signals was founded by Jason
fried
■ A project management tools was introduced
in 2004 that became a runaway success
■ After their success they shifted focus from
services to full time software products
■ Launched 7 more products later
■ 37 Signals rebranded to Basecamp LLC in
2014
■ Basecamp was profitable since its inception
■ They sold a minority stake to CEO amazon Jeff Bezos
■ In 2007 they posted an article highlighting the importance of long term
product health
■ In 2009 Jason Fried made a serious statement .
■ Their goal was to iterate toward pricing structure that attracted new users
to the platform
■ “Ten of millions” was generated in
revenue as quoted by the founder
Jason Fried in a ted talk
■ Profit and revenue were generated
without any new hires
■ Company displayed a live weekly
customer acquisition on its home
page
■ 100,000 accounts by 2006 , 3 million
by 2009 & to 15 million in 2014
■ 7000 weekly accounts in 2016
4P’S
PRODUCTS
■ Base camp helped teams communicate on collaborating projects
■ Identified 6 major components required for group performance
■ Base camp was designed with two way communication in mind
■ Base camp web and mobile application could replace email for internal
communication
■ Basecamp became the most popular project management tool
■ Estimated 15 billion market with 12%
YOY growth
■ Brands launched after Basecamp
– Atlassians JIRA
– Fog Creek: Trello
– Citrix Podio etc.
■ Teams were accustomed to using
emails as opposed to P.M software
■ Basecamp focused on that issues
■ Basecamp try to go in opposite direction as
opposed to their competitors
■ Not focused on features unlike competitors
■ They focused on common use cases
■ Fried believe that product should be built
around ease of use
PLACE

■ Base camp is purchased and used through a web interface

■ The early success of basecamp helped it gain momentum between
consumers
■ The company experimented on a referral system but dropped it later on
■ Teams with 5-20 individuals used the tool
PROMOTION
■ Basecamp was an early adopter of google AdWords
■ They did a lot less paid acquisition as compared to their competitors
■ Surveys indicated the ease of use for the software helped the software
succeed
■ Word of mouth advertising was a particular success
■ Their visibility in the web community also aided in their success
PRICE(BC3)
1st 2nd 3rd
Tier -$29 per Tier -$79 per Tier $3000 per
month month month

-Basic -1st tier -2nd tier

features features feature

-Interact -2 terabytes
with external of document
clients storage

-Support and
training
provides
Why has Basecamp been successful? Analyze the firms
Go To Market approach, including product, marketing
methods, pricing and value proposition
■ Less complex as compare to competitor
■ Easy to use
■ Positive word of mouth and blogging for marketing
■ Long term value
“Base Camp was purchased through a web interface in
a purely inbound model without any sales outreach” .
What has allowed Basecamp to do this?
■ Simple in nature
■ No need of training can be used easily
■ Simple tools contain by software
■ No extra hardware requirements
PRICE TEST
SELECTION
PRICE TEST
■ Base camp was the most affordable small business
■ Pricing is the most important factor because it represent the products
quality
■ Base camp did not charge per user or per seat
■ They had to find novel ways to increase their sales revenue
 BASECAMP VERSIONS
Classic Next 3
Month, Year Month, Year Month, Year

• BCC was the original • BCX gave a 60 day • This marked the return
version (2004) trial period of featured based
pricing
• One free project was • Launched in 2012
available without any • One permanent free
• Removed the time
limitations but that project
tracking feature and
version did not give file
started charging on • Teams needing more
storage or time tracking
project size and storage than one projects used
feature
to select between $29
• Price range $20-$150
• Prices range from $24- “for us” $79 “with
$149 • Effective in attracting clients” plan
lower end customers
PRICE TESTING PROCESS
■ Price testing Is never easy
■ It is more important than financial impact
■ It effects the companies commitment to the quality of service
PURPOSE OF PRICE TESTING

Most of the monthly revenue was generated by LTV since 2004

Long term value exceeded customer acquisition cost

They used a cash flow formula that worked since 2004

So they started price testing to get a better system and reach an optimal position
EVALUATION OF THE PRICE
TESTING PROCESS
■ In previous test they did not identify the key points that increase the
customer life time value
■ Measuring LTV is not easy
■ Basecamp earned most of its revenue from ltv
THE THREE CONSTRAINTS OF PRICE TESTING WERE

No developer resources were made available to alter the

product offered for price testing

Tested the changes within the three tier plan rather than
changes to whole structure

They also focused on increase in price only

CRITERIA FOR SELECTING TESTS

Charges for API

Long-term goals Selling features
access

Charging for
industry specific Usage based ROI
template
TYPES OF TEST
Doubling or tripling price of the tier

Making $29 tier limited to five people and $79 unlimited

Make both “for us” and “with clients” for $79

Increase the price difference between “for us” “with client”

reduce the price for annual pre payment

Should Lorang have conducted different tests in
different manner?

Mistake: Price testing is offering the

same product in different prices

Slight difference between the

products of different prices
WHAT THEY SHOULD BE DOING

Offer different products at Focus on revenue not conversion

different price point rate
TEST CONDUCTED
A/B TEST
PRICE SENSITIVTY SURVEY
A/B TEST: RESULTS
 Conversion
 The conversion rate is 1.8%(test) GROUP SAMPLE CONVERSI PERCENT
< 3.49%(control) ON AGE
Control 3438 120 3.49%
 Plan value
Test 1537 28 1.78%
 User picked the least expensive
plan when price were doubled
 Plan value increased by 68%
GROUP SAMPLE PLAN VALUE
 Value per signup VALUE PER
SIGNUP
 16% less value in test group then
Control 3438 $42.25 $1.47
in control group
Test 1537 $71.14 $1.27
 Need more information on likely
price multiple range.
EVALUATE THE RESULTS OF THE TEST
THAT BASECAMP DID CONDUCT?
■ Willingness to pay is lower when price doubled and value of lowest
priced tier increased.
■ Doubling the price will most likely lower the number of accounts.
■ LTV is not achieved as value per signup is low.
■ Does not provide enough data.
PRICE SENSITIVITY SURVEY
 Van Westendrop Price Sensitivty Meter (PSM)
 To identify lower, upper and optimal price points
i. At what would you consider basecamp to be priced so low that you
feel that the quality can’t be very good?
ii. At what price would you consider basecamp to be a bargain?
iii. At what price would you say basecamp started to get expansive its not
out of question but you have to give some thought to buying it?
iv. At what price would you consider basecamp to be expansive that you
would not consider buying it?
RESULTS
PRICE SENSITIVITY

Graphs shows optimal price lower then original price.

Anchoring effect on current price

This kind of response is usually when a customer accustomed to getting a good

value and does not want to respond truthfully to price raise questions.
 Continued……
 25% indicate the price the
currently are paying is
low.
CUSTOMER AND
COMPARABLE
PRICING OPTION
“DON’T LET ANYONE OVERPAY
YOU”
■ Set price for software according to what we are comfortable in paying
■ Never overcharge and did not go for customization
■ A self service company
– No large workforce
– No army of key accounts
– No extensive training
■ We aim for large number of SME accounts as it helps protecting the
company to be itself.
CUSTOMER AND COMPARABLE
■ After reviewing customer data base on demographic info:
– It was identified that Basecamp customers are much diversified.
– Senior execs have the most aggregated usage and smaller account use mostly on
usage per project
■ Options
– One time user onboarding charges:
– Monthly fees per number of external contact:
– Identify and target more big customer based on usage:
– Reduce annual payment:
INTERPRETATION FROM DATA
■ Doubling of price will not be effective and research on
other rates is lacking
■ It seem customers know the value of the product and
would be accepting towards change in price packages.
■ The main target of the company is SME and according
to consumer research their usage is on per project
basis.
■ Value lies in number of accounts
Evaluation of pricing option
■ One time user onboarding charges:
– Customer pay a one time fees for different bucket of user
– E.g. bucket of 5, 10, 15 etc.
– Some argued that it can create a feeling of investment
– Can cause retention
– Reveal user group size
■ Monthly fees per number of external contact:
– Charging additional monthly fees on the bases of external clients
– E.g. number of external client 5+, 10+, 25+ etc.
– It can help to charge price with value received
■ Identify and target more big customer based on usage:
– Evidence about customer choose $79 basecamp
– With client and project volume more suited for $3000 basecamp big
– Encourage them to upgrade to basecamp big
– Using a campaign
■ Reduce annual payment:
– Did not offered a discount to customer if he paid in advance for an
annual contract
– Improve cash flow
– Increase lifetime value
– Help in forecasting
– Use sunk cost to motivate customer
MY RECOMMENDATION
■ Monthly fees per number of external contact
– Value received
– Consumer surplus
– In favor of small businesses
KLP
■ Price testing is important to attain optimum value.
■ Before testing make sure its properly planned out in matter of time and
resources.
■ Stick to your company values as Johan said value is not the dollar we
earn but the number of users we have.
THANK YOU
ANY QUESTIONS?