Complicated pricing plans

May 24, 2008

I have recently acted on a couple of things that have been on my mind for some time. I have got myself a decent accounting package, and joined the Gym.

Actually, that's not entirely true. One of these tasks has a pricing plan so complicated I'm still deciding what option is best for me.

The accounting package

I'm now using Xero for my invoicing and accounting, and couldn't be happier. It's not cheap compared to other options, but it's got some smart people behind it, and I like the concept of having them host it and me not having to deal with upgrades. Because I pay monthly, they have a financial incentive to keep me happy, and so far, I am.

The price is $49 per month.

The gym

It's little wonder I'm still deciding what to do about the Gym. Their 12 month pre-pay price is only twice as much as the 3 month price, so there is a very ddecent discount for signing up for 12 months and prepaying. But because I'm in a rental property, I may not be here for 12 months. To break the contract involves a penalty fee, but then that might still work out cheaper than paying for 2 lots of 3 months. Because I'm not a student / pensioner / beneficiary, I can't join for 6 months. The competing gym doesn't have a paper pricelist I can take away with me, and involves sitting down with a sales consultant to work out the right package.

It's reminicent of the scene from Monty Python's meaning of life where John Cleese is explaining 'the lower peg' to the class.

Sometimes, you get the feeling that you get a selection of plans solely for the purpose that you choose the wrong one. Why can't Gyms do what Xero does and offer a fixed price per month?

It's complicated

When your pricing structure is so complicated that you need to have consultants to explain it to customers, this doesn't do great things in terms of trustworthyness.

If customers find it a piece of cake to sign up for your service, then that leaves a positive first impression. If they have to argue with a consultant about arbitary rules and then go away and think about it, this is a very poor way to start a relationship. As it stands, I'm thinking about not joining the gym just to spite them (despite the fact that I need exercise more than anyone).

I can even remember those companies I deal with that have extraordinarily simple pricing plans - I recommend these companies to people because it's easy to recommend them.

• SecurePayTech (who provide payment systems for websites) - you start on the lowest plan, and if you exceed your allowance, they move you up to the next plan automatically. Awesome.
• Xnet (who provide my internet) - the plan includes 0Mb of data (that's zero) and you pay $1 per Gigabyte you use - extremely reasonable.
• Xero (mentioned above) - Online accounting for $49 per month. And $25 per month to add another business to your account.

Then there's the companies out to screw you - I remember these too:

• Vodafone (mobile phone + internet) - charge a reasonable amount for mobile internet access, but if you go over your allowance they absolutely screw you. You are free to upgrade your data plan, but aren't allowed to downgrade.
• The National Bank - Every so often I get a letter detailing the new bank fees. They never make mention of what the old fees were, so I'm left wondering, "what's changed". Obviously something has increased in price (hence the letter), but it's impossible to know without something to compare against.
• The Labour government - between working for families, KiwiSaver and these artificial new tax cuts, it just seems like more ways to screw middle-high-income New Zealand at great expense to the taxpayer. It's great that the web development industry gets lots of work writing online calculator scripts for Government websites, but I think we would all prefer to pay less tax and not bother with all this complicated nonsense.

Keeping it simple

Does your business have a complicated pricing structure? Does it need it?