Jott's Move From Free to Premium - Bait and Switch or Good Business?
Many Web 2.0 companies have tried to make money by charging for their product, but it can be hard work - especially if the product started out as free. Jott, a voice to text transcription service, is an example of one that took the plunge and succeeded.
Jott moved to a paid model following a successful free beta. I spoke with Jott CEO John Pollard to learn how they did it and how it is working out for them.
Jott is a great tool if you haven't tried it. It is a voice-to-text service where you call a number on your phone, dictate a note, schedule a meeting, or write a to-do and the service transcribes your voice into the appropriate message type; it even creates an object on Outlook automatically. The service had been in "beta" status and completely free. Recently, they came out of beta and rolled out a paid model with multiple plans for different usage and features.
Jott still has free service, but it's been put together such that if you are a frequent Jott user, you'll be very tempted to upgrade. The upgrade itself is less than $4 so I suspect many people will go for it. Jott has a variety of plans to choose from including free, basic, pro, pay-as-you-go, etc.
The company based these plans largely on user behavior and lots of data. When they started the company, they knew they would ultimately have a free and paid version, but had to learn the rest along the way. For example, they had to find out if their customers were home makers, road warriors, students, professionals, etc.
Some of the factors they experimented with during the beta program included turnaround times, length of recordings, and features. By collecting data around user behavior and usage, they were able to model scenarios and identify trends. They then used focus groups, the Jott user group, and conjoint analysis (a very cool survey technique requiring users to make trade-offs on product features versus price) to come up with the different packages. They were very confident that some professionals wouldn't want an ad-supported service, and the research confirmed it.
As you can imagine, they overcame significant challenges along the way. While many users understand that Jott has to put food on the table, there were users who were shocked that a company dare ask for money. Personal note: this is both a common and ridiculous sentiment that has grown as more "free" things pelt us, but that is a conversation for another day.
John and company decided to be extremely transparent about the process and spent significant time in their forums, hitting the blogs, and using other marketing mechanisms to tell their story and let users know what was going on. John admitted they could improve on the communication front, but they did a solid job. The communication philosophy was to tell the users what was coming, tell them when it was coming, and explain why - as many times and in as many places as they could.
The company is very pleased with the conversion process so far. They are apparently hitting their goals and on plan. One pleasant surprise according to Jott is the percentage of people selecting annual plans; John said they are getting 10 times the number of annual subscribers that they expected. I'm not surprised as I'm sure a large percentage of Jott users are business customers, and this is the most efficient way to get something expensed; although this is pure speculation on my part.
John has good advice for other companies embarking on this journey. First, talk to your customers as much as possible. Really talk to them and understand the problem you are trying to solve and how they use the product or service. Second, utilize web-based tools like conjoint analysis to gather quantitative information to make decisions. Finally, try to be transparent and don't surprise your customers; they hate that. If you build something that people want and value, you can ask them for money and it is good business.
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Jott is a fantastic tool that adds a lot of value for people. Companies that add value deserve to get paid for it. I think a lot of people who rely on free software are in for a rude awakening as the companies that produce that software either figure out a way to collect revenue or go out of business. If they don't add real value, they go out of business. The economy has forced the issue: sh*t or get off the pot.
Very smart way of doing this. Good on Jott for sharing this as it will enable other start ups to emulate or put their own spin on what worked.
The key point here is in the last paragraph: "try to be transparent and don't surprise your customers."
Jott never gave the impression that their service was always going to be free, if you were paying any kind of attention at all. It was always pretty clear that they would move to a paid model when they came out of beta.
In my own web app, a submission tracker for writers, I've stated publicly that the features which are free today will always be free. So now, I can't do what Jott has done; I can't move existing features behind a pay wall, or my users would be absolutely right to get irritated with me for going back on my word. If I want the site to make money (not an urgent priority, incidentally, but it might be nice someday), I'll need to introduce entirely new features that are worth paying for. Jott never put themselves in that boat.
@Charles
You could always take your current feature set, call it the "Plus" version, and grandfather existing members into it. That leaves a Basic" version for all newcomers, and a possible "Premium" version for any new innovations you may add.
I was a user during the beta period, and not at all surprised when they revealed their paid versions. I think it's a big help, though, that they have very tangible costs such as text messaging and an 800 number. Servers, developers, etc obviously cost as well, but a lot of people don't really think about that.
Posted by: bbendick.myopenid.com
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September 17, 2008 4:52 PM
From our point of view, in order to charge fees for service that was previously free, you need to have certain amount of customer base and have built your brand on the net for a certain time period - in the case of Jott, it's 2 years already.
http://www.happytutors.com is still in its early stage, although HappyTutors.com is offering valuable service to tutors and students, it's still not a right time to charge everyone for listing their profile.
HappyTutors.com
~ Connect Tutors with Students & Parents ~
thank you for all this info
I have enjoyed using Jott. It's been a useful service - especially capturing notes for myself when writing is not convenient.
That being said, at least for me, the utility of the service is limited. I am still reviewing my options and have not decided to abandon the service or pay for minutes only. The regular plans cost more then I am willing to pay. My rationale is that I use the service at most 5 to 10 times a month for the 10 second messages so I get the transcription in to my to do list. The pay per minute services appear to be the best value for my.
Those of you who are using the more ambitious offerings with Jott might see the cost as valid - but my limited use of the service makes the package prices less appealing.