Over the course of this series I’ve been building towards talking about my Draftwizard project. Of all my past projects, Draftwizard was the most personal and as such is the one I really learned the most from through the years (though I still have tons of others to cover in this series as well).
In looking back on it, I consider it both a wild success and a horrible failure.
It was a wild success because I started it right before the DOT COM bubble burst, and grew it into over 10,000 users (some very active daily) in the lean years that most everyone else was sprinting away from the internet (of course at the time, I didn’t know that was anything special or unique – and, though in NYC, was largely disconnected and unaware of any ‘tech’ or 'investment’ worlds).
Also on a personal level, it was a huge success because it introduced me to people all over the U.S. that I became very close friends with over the years (we’ve travelled in groups, stayed at each other’s houses, and even spent holidays together as a family with our extended families).
On the other hand, it was a horrible failure from a business level because even though I had over 10,000 paid subscriptions, the best I could get it was 'break even’ (and as such I lost gobs-o-money trying to break out of that 'break even’ mode). Statsfeed was bringing in a very nice supplemental income…but Draftwizard was eating almost all of it up.
Since I spent so much time, energy, and passion on the project there is way more than I could cover in one “Didn’t work Wednesday”, so I’m going to try and break down some of the bigger things that didn’t work into individual posts. We’ll see how well this approach works - so here goes.
One of the big mistakes I made with Draftwizard was simply the price. It was *way* too low, and throughout the project I refused to adjust it.
From the start, the atomic unit of Draftwizard was player ranking lists…and it was meant to be most disruptive to fantasy football print magazines.
The magazines all sold for $5-$10 at the time, and so I was adement that we should be cheaper (or at least as cheap)…but that we would add a ton more value (and always be more 'up-to-date’).
I was also convinced that the $4.95 price (for an annual subscription) would allow for more 'impulsive’ buying and lower the barrier to renewals because “it’s cheaper than a movie or a magazine” (things most people bought without a second thought).
Turns out there were a crazy amount of mistakes in my thinking around pricing…here are a few big ones:
1. 'Impulse buy’ online only works if you are part of a larger marketplace (ie. Etsy, Amazon, ebay, or Kickstarter). In a standalone app the users aren’t going to stumble onto your thing…and on the outside chance they do, they aren’t going to already be in or anywhere near 'purchase mode’.
2. Low barrier to renewals…or more commonly known as the 'lifetime value of a customer’ (LVC). I’ve always been fascinated by this concept, and so I’ve spent a lot of time studying and reading up on it (as well as testing different models around it in my various products over the years). In this case, what I failed to recognize early on was that:
A. I really only had one product (LVC works much better with multiple products).
B. Fantasy sports is about the worst possible market to try and build LVC (99% of the players lose each year and won’t remember or want to use your product again; the 1% that win either won’t credit your service as helping much or will at least prefer to keep you as their 'secret weapon’ – ie. the exact opposite of a viral effect).
3. Annual subscription approach. People really just wanted a last minute, updated, player ranking list to fall back on during their draft. The fact that they got all the 'extras’ throughout the rest of the year was really just 'added cost’ and energy on my part. The annual subscription also meant that active users expected, and demanded, more throughout the year. It really should have been a pure transactional product sale (at scale).
4. I set the price based on my personal opinion and (self-inflicted) limitations. I didn’t take into consideration the cost of acquiring customers (super cheap at fist because I was early to the industry, but unsustainable as others turned the market into a loss-leader product). I also didn’t take into consideration the true value to the customer (I was focused on positioning it as a 'deal’, but in hindsight, the market was actually willing to pay for it as a 'pain reliever’ and/or a 'convenience’ – both of which are much better price points).
5. I was unflexible in the pricing (i.e. ignored what the market was telling me for too long). I didn’t test various price points or packages (I did play with some auto-renewing and some 'lifetime subscription’ options, but they were all still based on the $4.95 starting point).
…and these are just some of the 'higher level’ mistakes I made around pricing the product (as you can imagine, there are many details that lay within each). In the end, the experience (painfully) taught me a ton about properly pricing a product, listening to the market, and to being open and flexible in my personal opinions about a given revenue stream…and yet, I still sometimes struggle to set the right price out of the gate!
6. The price point (generally) brought the wrong user, with the wrong mindset. Because I had targeted (and sold) it as a 'deal’, it brought people who look for deals, who are focused on price and value, and not likely to be 'brand loyal’. They weren’t looking to 'feel special’…they were looking to 'feel smart’ and 'get more than they give’. I was able to build a pretty strong community (and I think brand) out of that regardless, but it was much much harder (and costly) than it should have been…and I believe that mostly stemmed from the price and positioning I refused to budge on.
So beware - it’s an easy mistake to make and easy to repeat (and painful every time).
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Kevin has a day job as CTO of Veritonic and is spending nights & weekends hacking on Share Game Tape. You can also check out some of his open source code on GitHub or connect with him on Twitter @falicon or via email at kevin at falicon.com.
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