Stop Spamming Me – The OtherInbox Blog

Freemium business model

20 dollar bill

It's funny how much a startup's business model can change over time. When we started OtherInbox, I really wanted to give away a free domain name with every signup, even though it costs us about $7 each in bulk. Most of the venture capitalists and advisers I talked to laughed at me (literally), but I was confident that our long term vision of creating a win-win for consumers AND marketers would be profitable enough to cover the expense.

The first 100 beta testers who signed up for OtherInbox each got a free domain (and are still using them). I still think that in a few years this could be a viable option for us - other companies such as America Online, Register.com and Microsoft have given away free domain names as part of a promotion to acquire new customers.

At our TechCrunch50 launch, we switched to using yourname.otherinbox.com or yourname.oib.com so that each user doesn't need his or her own domain name. Anyone can add a custom domain from Settings->Domains but we don't pay for it anymore. This allowed us to take on users more quickly without raising millions of dollars to spend on domain names. We always planned on adding a "premium" version of the service with extra storage space, security features, and other premium features.

Soon we'll be implementing a freemium model that includes a free service as well as a premium version that costs $19.99 per year. The main difference between the free and the premium service is that the free service only displays messages received in the past 30 days. If you're just using OtherInbox occasionally, this might be good enough for what you need. For most users, we hope that they will want to be able to view all of their messages and will be happy to pay the nominal $19.99 annual service charge - less than two dollars a month.

Don't worry - as always we will take good care of our beta testers. You'll all receive a three month complimentary upgrade to the premium subscription so that you can take your time to decide which version is best for you without any change in your service. If you know that you want to upgrade anyway and do so within the first 7 days before April 15, we'll give you 50% off for being a beta tester. On top of that, we'll still give you the 3 month complimentary subscription for a total of 15 months for $9.99!

We really need your feedback! Please comment and let us know how you feel about these changes and whether or not you plan on upgrading your account right away or waiting to make a decision until towards the end of the three month complimentary upgrade.

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74 Comments

That sounds like a good deal. I love your service and that doesn't seem like an outrageous price to support it. I'd love to see some other features added to the premium service in the future though.

I completely agree with the price point and moving to freemium and will upgrade my account. However, investors I have known have told me repeatedly to offer at least quarterly if not a monthly option so users do not feel tethered to the service and I would recommend the same approach in your case :)

Terry

Using the free version, what happens to my email after 30 days? What if, in 45 days, I think "oh crap, needed that email" and decide to pay for the service? Is that email lost in the ether?

Aaron, those messages won't be lost. We will simply start showing those older messages to you if you decide to upgrade.

It might be sufficient since I only use my otherinbox account for "FYI"-type e-mails anyway, but I will have to think about whether upgrading makes good sense. I echo Aaron's concern that if I decide to upgrade later in order to save an important message that it will be too late. This also negates OtherInbox from storing my travel itineraries as I book flights more than one month in advance. It's something people are going to have to decide for themselves, and the more I think about it, the more it dims the bright light of OtherInbox for me.

Sidenote: If you offer a paid version, the number one way to get me to NOT do it would be to automatically charge my credit card next year. I distrust companies that automatically charge me and that would pretty much be a dealbreaker for me; I should have to approve each and every charge.

Other than that, I have enjoyed using the service and wish you continued success no matter what you choose!

--Mike

What guided your decision to go with this model instead of a "pay to remove ads" model?

I don't think I've played with the product long enough yet to jump in on that initial offer (gotta see how much I'll use it first -- once I start a subscription, I tend to keep it up, like with Flickr going on several years now), but I do think the price is reasonable.

Love it Josh. $20 is a steal. I think you could also do something about speed of the service for the paying users (it's been a bit slower lately it seems) so maybe the paying users are on a dedicated server or something.

I like the idea of paying for additional features and $20 dollars/ year are ok.

But i don't think it is a good idea that the free service only displays messages received in the past 30 days. - You will lose a lot of happy customers.
I talked to some of my friends and most of them think that way.
Please try to find another solution...

Were I to pay for the service, I would want some specific problems fixed that have not been.

I'm not sure that this is a great idea. I think cutting out features (like your own URL or whatever) will make more people try it out than if they see they can only access the last 30 days of emails. If I were a new user, I know that would make me think twice about even signing up for the free service to try it out.

I think the price point is right (very affordable and not too scary, though quarterly billing might be a good idea) as the number of people in these comments ready to sign up have shown... I just think that what you're deciding to not give free users isn't the right thing to not give them.

Charging for the service is the right thing to do. However, I think this plan is going to cause you to lose users. People view email as something that belongs to them, you can't limit people's access to something they perceive that they own without causing an uproar. I know it's your bandwidth, storage cost, etc., but you've already said you'll be keeping the messages around in case people flip the switch, so storage cost must not be an issue.

Alternate plan: what if you limited the number of inboxes that can be displayed in the UI for non-paying users? So, I can still create as many email addresses on the fly as I like, but if I'm not paying, then some number (say, 6) of my inboxes will be displayed as they are today, and everything else is dumped into one inbox (with labels on each email for the inbox it would go to, were I a paying customer). I can see all of my email, but it's more pain and I need to pay to use otherinbox to its full potential. You could also limit the coupon clipping and receipts to the visible inboxes. Every time someone creates a new email address, in addition to bouncing the first email to it out to a real email address, you could also send a reminder that says "you're over the limit on free otherinboxes, messages to this email address will appear in inbox@[yourname].otherinbox.com."

You might also consider not showing all emails in the daily digest for non-paying users...just show them the messages that are going to their visible inboxes, and say "and X others" for the mails that will appear in the catch-all inbox until they upgrade.

(How deliciously recursive; I just used my OIB email to sign this comment about OIB emails.)

$20/yr is an unexpected gift from my point of view; I was expecting something along the lines of $4-6/mo. I'm going to sign up right now to grab your discount, too, even though I don't really care about old messages at the moment. I would start caring if I used OIB for primary storage of receipts, software activation keys, etc, but I use Yojimbo for that.

I also think that you chose just the right way to limit free service. Ads on a "spam blocker" solution would have been catastrophically ironic. I don't like the idea of limiting the number of mailboxes, because that damages the main value proposition of the product: reducing spam. You've got to be able to use OIB freely, every time you type an email on a new web site, for it to make sense to use it at all. But limiting how long your ignored messages stick around is good: free users can still get the spam-blocking value out of OIB, and paying users also get the secondary feature of archiving content.

In brief: I think you chose the right model, a good way to incentivize users to upgrade, and I'll be upgrading promptly.

Cheerio!
Ben

Rob - what problems are there that need to be fixed? We would like to address any issues that you have found.

when do I get to pay! can't wait!

I'll upgrade. At first I thought you were being too generous with 30 days, but in the context of saving receipts and flight confirmations it makes sense. Limiting number of mailboxes would also be reasonable, in my opinion, but seems like it would produce a more convoluted user interface.

For those complaining about locking up their email, you might instead consider an export feature so that people can move their data out if they are surprised it's gone after 30 days.

Good luck.

Thanks for the feedback everyone! This is really helpful! We'd like to hear from more people though, please add your comments!

I think the free service would be sufficient for the way I use OIB. I'm not really interested in using another web based email viewer as I am more than happy with the Gmail interface, and when I'm at home I simply pull email from Gmail via Apple Mail and IMAP. I also have OIB set up to forward all messages to my Gmail account, so all messages are archived and available to me via Gmail.

My main use of OIB is simply so I don't have to give every web site my primary email address, and if I start seeing spam coming to one of my OIB email addresses I know either they sold my address or someone managed to get it via email harvesting attack or simply by trial and error.

That said, if OIB starts offering IMAP I may consider pointing Apple Mail at OIB rather than Gmail, and simply using Gmail as an additional archive of my mail. If that were to happen I may be willing to pay the 20 bucks. If OIB added iPhone push support then I'm sure I'd pay the 20 bucks.

-Vince

Personally, I feel a bit anxious about emails disappearing after 30 days.

I think the pricing is quite reasonable, but I probably will not upgrade, for two reasons.

One, times are tough, and like everyone else, I'm trying to cut back on things that aren't an absolute necessity. Despite OIB's unique features, I will probably choose to get by with one of the many free email services out there (or the email server on my own domain) and a bunch of filters.

Two, I'm still not happy enough with the interface to pay. The email list on the left becomes too unwieldy without custom grouping of addresses. I know this has been discussed, but I don't know your timeline. Also, there is just too much wasted space in the interface -- so much so that it's essentially unusable on a smaller screen such as my eee pc.

But again, I think your pricing is reasonable and you have a lot of unique features, so I hope you get a lot of takers.

I think this is a VERY nice offer of service. $20 for a year of the premium service is generous if you're a serious user. For the "not so serious" user, you probably have a reason for not using it as much, like you probably already have another email account. For those users, if the email is that important, forward it to your other email account before the 30 days are up. Simple.

I have a bunch of email saved in my OIB, but none of it is anything I would lose sleep over if I didn't have access to it.

This business model is very similar to Flickr's free vs. Pro accounts. It allows me to "grow into it" - rather than forcing me into an "all or nothing" type of service.

Please don't change it, I think you've hit the sweet spot.

I'll likely upgrade, especially at the discounted price for the first year to try it all out. $9.99 for 15 months is a great deal. However, I think you're taking away the wrong things from the free accounts. Limiting it to 30 days is too limiting. Take away other things, like custom domains, the daily digest, other advanced features. As I said, I'll likely upgrade, but I know plenty of people who wont even bother to sign up with your current free model. Just my $0.02, keep up the great work!

I love the service, but I wouldn't upgrade. I mainly use OtherInbox to subscribe to services. In 99% of them, I have no need to go back past a month to see their messages.

I've enjoyed my experience with OtherInbox so far. In all honesty, I think you'll have a hard time getting people used to the idea of paying for an email account. The advanced features will have to be worth the money to convince people to pay.

Personally, I'm quite tempted by the offer of 15 months for $9.99 and will probably give it a try with the caveat that I need to know in advance how future billing will be handled. I agree with an earlier commenter that it must be on approval only and not an automatic ongoing charge.

I'm eager to pay because I have such a Tech Crush on OIB, but I'll agree with Jon that at least right now I have little need to go back further than a month for the services I've paired with OIB.

As email is a free service these days, I have my doubts about the take rate for the Premium Service. I'd rather OIB go the gmail route, and target their revenue from business subscribers. It seems like an enterprise edition of OIB specifically designed for recruiting or service desk functions would be a faster path to cash flow than a customer-focused subscription service.

My concern with 30 days is I am always afraid that I'll find I need something at 31 days. So a free model kicking messages out after 30 days would scare me away as a new user. I'd be afraid to try out too many new addresses/mailboxes, wouldn't end up finding value in the service, and go back to my single junk mail address.

I'd love a premium model that included IMAP access. The iPhone interface has been broken for ages, so I can only check my mail at my computer. After nearly two years of iPhone use, having to sit down at my computer to check email in a large batch drives me a bit batty :)

I'd gladly pay for convenience.

Conversely, fear of limitation would inhibit my initial adoption.

$20 is a fair price and, as a user, I really hope you guys succeed with it. However, I think you should wait a while longer to roll out the pricing if possible. In my experience, OIB still feels too clunky and beta-y at this point to be something I'd pay for.

Also, couldn't you get more than 2$ / month off of me from CPMs right now if you added Google AdWords or the like? I wouldn't care at all.



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