Starting today, Doorman personal plans have a new pricing structure based on volume and features. It turns out that the Doorman app doubles peoples’ online shopping behavior, which has put an unexpected strain on our original 2014 pricing model. Here are the new pricing plans and some background on these changes.
Additional visits are $5, additional packages are $2
Transforming shopping behavior
In March of 2014, Doorman was being cooked up in the 500 Startups incubator and had a total of 46 daring customers. A few of them suggested we introduce monthly payment plans. So one day over lunch, Kapil and I and came up with the original Silver and Gold unlimited plans.
Then we got a bunch of other requests: support for returns shipping, oversized packages, later scheduling cutoffs, alcohol delivery, on-demand delivery, etc. All of which we’ve either rolled out or are rolling out soon. What we didn’t expect was that Doorman would actually change peoples’ shopping behavior. Now we know that Doorman customers shop online twice as much within six months of signing up. Amazing.
Unfortunately, that means that the service we’re now providing has outgrown the original pricing model. 100,000 deliveries later, we have enough data to craft a more sustainable pricing structure.
New plans and features
The new plans are based on volume and features. Return pickup and shipping is now standard with all monthly plans, and to address the feedback we’ve gotten about XL boxes, we’ve included two plans that allow for larger package sizes. There’s also a new Premium plan that includes cardboard box recycling pickup.
To support all of this we’ve been plowing resources into a system overhaul to become completely based on barcodes and capacity, which will bring our delivery and pickup error rates to near-zero.
Pricing took a few tries
We do a lot of math at Doorman, and sometimes what works in Google Sheets doesn’t necessarily work in reality. We knew the concept of “unlimited” was eating us alive, so we originally derived a set of plans that were based on packages per month, with value discounts for the higher plans (for example, one of them included 15 packages per month, with no limit on deliveries).
In October, we sent an email blast to our entire customer base with this first version of the upcoming change, and the reaction was overwhelming. It even got picked up by TechCrunch.
We knew there would be some push back on getting rid of our inexpensive unlimited plans, but we didn’t expect everyone to say exactly the same thing: “Please base the new plans on the number of deliveries, not packages.”
Feedback is everything
E-commerce fulfillment systems are now so dynamic and distributed that shoppers no longer have any idea how many packages an order is going to be split up into, and the argument was “make the pricing based on something we can control.”
Customer feedback is one of the greatest driving forces at Doorman, and there’s no way this was going to be an exception. We went back to the drawing board, did a bunch more math, and sent a revised concept to the 60 people that had responded, and there was a universal sigh of relief.
Because of the nimble engineering prowess of Kapil, David, and Kevin, we were able to change course and start testing the new plans in a matter of days.
What we learned
Pricing changes are hard for everyone, from customers to engineers to designers, and any MBA will tell you to engage in multiple surveys and focus groups before making almost any change, much less a big one like this.
At a startup, however, you rarely have the resources (including time) to follow all the rules, and sometimes you just have to hit the button. However, in a surprising way, the original warning email we sent behaved like an unwitting survey, prompting thoughtful feedback from dozens of people, sometimes in the form of 300-word essays filled with calculations and insightful product suggestions.
By chance, it was one of the most successful surveys we’ve ever sent.
So if you have to make a significant change with limited time and need candid feedback immediately, the best survey may not be a survey at all, but an early announcement. Just don’t send it to everyone.