Pricing Page Teardown - Hey.com: A bold and opinionated pricing strategy
The founders of email provider Hey.com are taking aim at a service long dominated by Google, and they're doing it with a premium price tag. Will anyone pay for a service we've all gotten for free for as long as we can remember?
This episode might reference ProfitWell and ProfitWell Recur. Some information may be out of date.
Hey.com
Does Google finally have a foe?
Hey.com is a new email tool created by David Heinemeier Hansson and Jason Fried, founders of Basecamp. They believe email needs to be a delightful experience and they're taking on Google and Gmail to make that happen. The founders are known for building opinionated products and voicing their opinions through various channels. Hey revolutionizes email by rethinking your email workflow entirely. It has an Imbox to screen important messages, a single library to see attachments independent of emails, and a focus mode to get through certain emails more rapidly. The biggest feature is privacy as Hey.com blocks all pixel tracking technology and claims that they'll never sell your data. However, they charge $99 per year, which includes the hey.com email address and 100 GB of storage.
So, is there enough here to justify a $100 annual price tag, especially when the alternative is a seemingly free product from Microsoft or google who will sell all of your data? Does this calculus change when you realize you can’t use your Hey.com email address with other workflows already built for gmail? Well, DHH and Jason think so, but we’re going to find out by collecting data from 10,452 current and prospective hey.com customers and we’ll reveal all the data to you in just moments.
Hey's pricing page
Leading with their value prop
The company's hero copy addresses the primary concern that potential users may have about paying $99/year for email. They argue that "free" email providers come at the cost of privacy and personal data, which ultimately ends up being more expensive. This strategy addresses the company's main criticism and highlights their primary value proposition—privacy. By leading with conviction and their biggest takeaway, the company is effectively targeting a market willing to pay a premium for privacy. This is a rare and brilliant move, especially for a free product. When addressing a large market like this, it's important to have personality and conviction in your beliefs and positioning.
Simplicity
Hey's pricing page is simple and straightforward. They offer only one pricing tier and no add-ons, making it easy for customers to understand the cost of the service. The page also includes a list of frequently asked questions that cover all the important details about the service, such as billing in multiple currencies and the cost of ultra-short email addresses. Additionally, Hey addresses common objections and clearly states what they do and do not offer. They even provide the reassurance that if you decide to stop using their product, you can still keep your email address and have emails forwarded to another address. Overall, Hey's pricing page provides all the information customers need to make an informed decision.
Data and analysis
Know your value propositions
Hey's key takeaway is to understand your value propositions and focus on them. Hey capitalizes on their privacy feature as a unique selling point, confidently emphasizing it in their opening sentence. Our data shows that people are willing to pay for privacy-oriented products, making it increasingly important to prioritize privacy and security features. Efficiency features have a 10% impact on willingness to pay, while privacy and security features have nearly a 20% impact. To improve your business, focus on the value proposition with the highest willingness to pay and make it prominent throughout your website and copy. This will significantly improve your funnel and attract customers with a higher willingness to pay.
Annual billing and consumer products
Annual billing is important in B2C because it reduces churn and increases customer lifetime value. Hey.com's pricing is within the AMEX effect, meaning it has a price point with few barriers to try the product. SMBs should take advantage of this. Hey.com has simple pricing, making it easy to test and convert customers. The target customer is the mass affluent, who value privacy in email and are drawn in by Hey.com's specific price point.
We analyzed willingness to pay for Hey.com's value propositions, focusing on price cliffs - popular price points for different customer segments. We found cliffs at $50, $100, and $150, making Hey's $99 price point safe within the AMEX effect. Using these price points, even with a larger discount, can increase sales. For your business, ensure your annual plan falls within one of these effects.
Price localization
Price localization is crucial for consumer products since people's willingness to pay varies greatly by region due to different average incomes, standards of living, and value systems. Our data shows that Hey is not taking advantage of this opportunity and is leaving money on the table. Although they may not prioritize it yet, Hey should consider implementing price localization, especially because their internet business attracts customers worldwide.
According to our data, some markets, such as India, Eastern Europe, and Brazil, are less willing to pay than the US, while others, like Nordic countries, are willing to pay over 85% more. Adjusting to these differences is crucial for increasing conversions in these regions. Additionally, some countries prioritize privacy more than others, which affects their willingness to pay for Hey's value proposition. Overall, localizing your pricing is an easy way to increase revenue and prepare for more aggressive monetization projects in the future. This will also ensure that your billing system is set up and internal pricing politics are figured out.
In conclusion, Hey.com is a new email tool that aims to revolutionize the email experience by prioritizing privacy and rethinking the email workflow. While their annual price tag of $99 may seem steep compared to free alternatives, Hey.com's focus on privacy and security features has resonated with customers, making it a worthwhile investment for those who value their online privacy. Hey.com's pricing page is straightforward and effectively communicates the company's value proposition. Overall, Hey.com's approach to email is a refreshing take in a market dominated by tech giants like Google and Microsoft.
Want a bold pricing strategy for your business too?
Price Intelligently is revolutionizing how SaaS and subscription companies price and package their products. Founded in 2012, we believe in value-based pricing rooted in first-party research to inform your monetization strategies. We combine expertise and data to solve your unique pricing challenges and catapult growth.