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Ask Joel Spolsky: Pricing – what changed?

In 2004 you stated "I have certain competitors that [...] charge small customers per-user but then there's a "unlimited" license at a fixed price. This is nutty, because you're giving the biggest price break precisely to the largest customers, the ones who would be willing to pay you the most money."[1]

Today fogbugz has a "unlimited" license as well as substantially lower per user pricing if buying 150+ licenses.[2]

What changed?

[1] http://www.joelonsoftware.com/articles/CamelsandRubberDuckies.html [2] https://shop.fogcreek.com/FogBugz/default.asp?sCategory=HOSTEDFB&sStep=stepEnterEmailAddress&fccmp=_buyfb (click the prepay radio button)

( 23 comments | 67 points | on HN )
Re:Ask Joel Spolsky: Pricing – what changed? by mgkimsal on Saturday April 13, 2013 @09:59AM (#5543339)
It's always felt to me that 'unlimited' over a certain amount makes it easier for large companies to purchase/subscribe because it means they don't have the overhead of tracking usage.

"Whoops, we're only licensed for 172 users, but we just hired Bob and we now need to get a new license key for him!" causing hours or days of delays just isn't appealing. Saying "unlimited" to the companies that have hundreds of users might be leaving some money on the table, but also might be netting some extra sales you might have otherwise lost due to fear of complex licensing.

Re:Ask Joel Spolsky: Pricing – what changed? by Joeri on Saturday April 13, 2013 @10:11AM (#5543362)
If it is installed software, you also have to do license audits, which usually require going on-site. Much easier just to slap an unlimited license on a product.
Re:Ask Joel Spolsky: Pricing – what changed? by jtbigwoo on Saturday April 13, 2013 @12:22PM (#5543680)
It could also be the lessening influence of Microsoft on the software industry. A decade ago, big companies were used to paying per seat because the bedrock apps like Word and Visual Studio were always licensed per seat or per server. With the rise of smaller competitors offering online tools and software either for free or with site-wide licenses, big businesses might try to avoid the hassle of tracking every user added and subtracted.

(It's also possible that Microsoft's pricing model has less influence on Joel since he's been away from the company for a long time, but that's just speculation.)

Re:Ask Joel Spolsky: Pricing – what changed? by lifeisstillgood on Saturday April 13, 2013 @03:02PM (#5544240)
Now that's why I come to HN - simple, straightforward insight that looks obvious but everyone missed it.

Thank you. I will now quote you as if I had though of it myself in future conversations.

Re:Ask Joel Spolsky: Pricing – what changed? by mh- on Saturday April 13, 2013 @09:46PM (#5545501)
I will now quote you as if I had though of it myself in future conversations.

..and that is why I come to HN.

Re:Ask Joel Spolsky: Pricing – what changed? by gecko on Saturday April 13, 2013 @04:09PM (#5544495)
He was wrong; Atlassian's pricing cut the floor out from the market, so Fog Creek changed our pricing to stay competitive. I've watched some SCMs change their pricing in response to Kiln's downward force, too, and I expect that Trello's competitors are doing the same. Welcome to responsive pricing.
Re:Ask Joel Spolsky: Pricing – what changed? by mhp on Saturday April 13, 2013 @07:08PM (#5545050)
It's complicated, but the sentiment that charging your most price insensitive people a fixed price is nutty is still true - I don't think that's wrong. Although Jira has a fixed price ceiling, Confluence is not priced that way: http://www.atlassian.com/software/confluence/pricing/?tab=do...

As for FogBugz, as another poster wrote "if your competitor is an order of magnitude cheaper, and not significantly worse" you have to respond to that (even if you think they are nutty, and a bit more than significantly worse).

Re:Ask Joel Spolsky: Pricing – what changed? by gecko on Saturday April 13, 2013 @11:35PM (#5545777)
Sorry; the "he was wrong" applied purely to FogBugz' situation due to the Jira price cap, which is really not clear in my comment. That'll teach me to bang out a response on my iPhone in answer to a tweet when I ought to be reading a book.
Re:Ask Joel Spolsky: Pricing – what changed? by jiaaro on Saturday April 13, 2013 @10:05AM (#5543353)
I think it's most likely that large institutions (who are most able to pay) are willing to pay a premium to avoid the hassle of adding and removing seats from their license with every change in staff.

It was probably also starting to be incur noticeable administrative overhead for fog creek

Re:Ask Joel Spolsky: Pricing – what changed? by casca on Saturday April 13, 2013 @10:54AM (#5543450)
Joel has no obligation to be consistent over 9 years or to keep to the same pricing philosophy as his company has grown and evolved significantly.

Bear in mind that "Unlimited" usually is not so. Even if his customer has 100k employees, the likelihood is that only a few thousand at most will use it. Why nickel-and-dime them - make the sales process as simple as possible and make everyone happier.

Re:Ask Joel Spolsky: Pricing – what changed? by JakaJancar on Saturday April 13, 2013 @11:17AM (#5543487)
I don't think the OP is demanding consistency, merely asking what changed his opinion.

(it might indeed be the realization that there aren't companies with Unlimited employees, but maybe it's some other interesting reason)

Re:Ask Joel Spolsky: Pricing – what changed? by sorenbs on Saturday April 13, 2013 @12:29PM (#5543700)
I am sure Joel and the Fog Creek team has discovered that having an unlimited license for large customers work best for them. I mean, that's why they are doing it. I would be interested in knowing the thoughts around this, whether this is a general rule for software companies or something specific to their current position in the market. We can guess and reason all we want, but Fog Creek is a big player with a long history. I think there might be something to learn.
Re:Ask Joel Spolsky: Pricing – what changed? by DanBC on Saturday April 13, 2013 @10:15AM (#5543373)
I don't understand the quote. Economies of scale always give price breaks to the big buyers. I don't understand why that's nutty?
Re:Ask Joel Spolsky: Pricing – what changed? by caw on Saturday April 13, 2013 @10:35AM (#5543411)
I think what the OP is trying to say with the quote with traditional volume discounts, you're always getting some additional money per additional unit. With an "unlimited" license, you don't add any additional revenue while the customer adds people. After a certain point with a site license, everything is "free" and that could be bad for the person selling (no additional revenue, increased support costs, etc)
Re:Ask Joel Spolsky: Pricing – what changed? by dsikuade on Monday April 15, 2013 @03:50AM (#5550285)
Unlimited pricing is about fairness. You can't charge a small team the same as you would a gargantuan organization. They don't want to count their users and the supplier can't. The real dividing factor however is the fact that large organizations want different levels of service and different software (Active Directory integration etc).
Re:Ask Joel Spolsky: Pricing – what changed? by lifeisstillgood on Saturday April 13, 2013 @09:35AM (#5543295)
jira does site licenses?
Re:Ask Joel Spolsky: Pricing – what changed? by pzb on Saturday April 13, 2013 @11:05AM (#5543472)
I think this is probably a large reason. If your competitor is an order of magnitude cheaper, and not significantly worse, then it gets very hard to compete.
Re:Ask Joel Spolsky: Pricing – what changed? by benjohnson on Saturday April 13, 2013 @10:40AM (#5543420)
Larger companies tend to be in a position to 'roll-their-own' so you sometimes have to discount.

They may not be able to execute their plans well, but it gives them negotiation power.

Re:Ask Joel Spolsky: Pricing – what changed? by gte910h on Saturday April 13, 2013 @09:58AM (#5543336)
Once you get to a certain size, you hire people specifically to cut costs.

Site licenses are in recognition of those people IMO.

Re:Ask Joel Spolsky: Pricing – what changed? by msrpotus on Saturday April 13, 2013 @11:23AM (#5543507)
It might just be easier to have that option than to negotiate individually with each large company.
Re:Ask Joel Spolsky: Pricing – what changed? by atesti on Saturday April 13, 2013 @12:43PM (#5543751)
It's not the first time he's inconsistent.

One of his recent articles: http://www.joelonsoftware.com/items/2012/07/09.html also reads a little bit like bashing his own product FogBugz and advocating that it's a bit useless:

"Do not allow more than two weeks (in fix time) of bugs to get into the bug database." "Then close as “won’t fix” everything left in the bug database. Don’t worry, the severe bugs will come back."

Maybe they discontinue FogBugz soon and only concentrate on the more hip Trello?

Re:Ask Joel Spolsky: Pricing – what changed? by atesti on Saturday April 13, 2013 @03:19PM (#5544301)
Am I not the only FogBugz user who read his old articels advocating the use of bug trackers, and then read this recent piece which advertises Trello and thinks that he kind of sees or advertises Trello as an alternative to FogBugz? And that the snarky comments against full bug databases are a bit inconsistent?

Also, I'm still disappointed that they discontinued Kiln for self hosted servers. They did that silently.

Re:Ask Joel Spolsky: Pricing – what changed? by mhp on Saturday April 13, 2013 @07:14PM (#5545068)
Trello is not and will never be designed for software developers. Can software developers use it? Sure. You could track your bugs in Excel if you wanted to. That's not Trello's audience.

Regarding Kiln for self hosted: At Fog Creek, we've always said we don't want your money if you're not amazingly happy. We're not taking your money right now because we're not certain we can make you amazingly happy... yet.

We found that the installed Kiln customer experience was not up to our standards as a company, so we've deferred taking on new installed customers until we're satisfied that they'll be amazingly happy with our product.

We prioritized on our On Demand environment because that's where the bulk of our customers and revenue are. We still want to find a solution for our self hosted customers as well, but it wasn't our immediate priority and we weren't going to hold up shipping Kiln Harmony until we figured out what we were doing with self hosted installs.