How NOT to roll out a pricing increase

Note: The title was lifted from the great Paul Young!
http://twitter.com/ptyoung/statuses/14237728653

We can never have too many pricing lessons. Please read this post from Zendesk – “Introducing New Features, New “Starter” Plan, and New Pricing” and let me know what you think. Where did they go wrong?

I am confused to whether they are raising the prices because the cost of development has gone up or whether they have added value (”we have added new functionality to the service for every week for the last two and a half years”). What I do like (assuming I understand it correctly) – they increase the price per agent as their customers add agents. This seems to lead me to believe they understand that more agents add to the realized value and therefore warrant a higher price point.

I do want to highlight a positive, their CEO responded directly to the thread. Regardless of the quality of his response and the response to his response it will a necessary response to the issue.

Hey guys,

First of all. Yes, we are raising our prices on two of our plans. We now have three plans at three different price points (starting at $9). This is the first time EVER that we have increased pricing. But we have added new functionality to the service for every week for the last two and a half years.

And today we’re launching a lot more functionality for knowledge base and community support. Zendesk has gone from a traditional ticket management system to a complete customer engagement platform, supporting 1-to-1, 1-to-many and many-to-many customer conversations and support interactions. Zendesk is investing heavily in new features and our customers will continue to experience great things with Zendesk.

We will deliver on our promise.

Are we the cheapest show in town? No. But we do think that we have an excellent offering for almost every budget starting at $9 per agent seat. And we do offer to grandfather our existing customers for one additional year at their current price point with all of their current functionality grandfathered indefinitely.

The price per agent has gone up with $10 and $20 on the Regular and Plus+ plans respectively. That’s a 50% increase. Some customers may experience disproportional price hikes due to earlier introductory discounts, and we will look into these accounts on a case-by-case basis.

Let me finally point out, that we have been completely open and transparent about the price changes. We don’t try to sneak it in.

Mikkel Svane, CEO

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