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Launching ArtistData's premium pricing model in January 2010 came after years of talking to customers about pricing and examining what had worked and not worked for other companies. We designed our system to bill users in three ways: one-time, monthly, and yearly.

We weren't planning on launching with any one-time services, but we planned to offer all our premium upgrades at both a monthly and a reduced yearly rate. It was fairly standard strategy for web services, where users receive a 20-50% discount for paying for a year in advance. ArtistData would benefit because more cash would be generated, which we could reinvest immediately in making our platform stronger.

2 days before the launch, I cancelled yearly pricing. The two reasons were simple: 

1. Yearly pricing can be introduced at any time, but taking it away is really difficult.
2. Yearly pricing makes things far more complicated.

If you are charging month-to-month, you have the ability at any time to offer your users a yearly option. But as soon as you introduce a yearly option, you open yourself up to all kinds of potential issues. Here are some of the things I prefer about straight monthly pricing:

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If there is one thing I've learned over the past year, and also confirmed with everyone else I know in the business of selling products and services to users, is that the customers who pay the least always account for the largest amount of customer service and handholding. It's amazing, but I have yet to hear when this isn't the case.

I'll use ArtistData as the example, because I have the most visibility into that business. We have many price points because most of our services are a-la-carte. Our users (who are musicians) can pay as little as $2/month for some services, and up to $25/month for our all-in package. We also have a free component to the site.

Part of the $25/month package is "Priority Support" that is, an exclusive way to contact ArtistData staff and get a response very very quickly. When we first launched it, we feared this guarantee could become an issue, because we'd need to be available all the time. But over the past three months, we've received TWO priority support messages. Yes, two.

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