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Thread: Price plans

  1. #1
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    Default Price plans

    OK, so what have you done or plan to do about pricing?

    A free period seems to be the norm but how long should this be for and more importantly what price after?

    One of my target groups sell a lot stuff via forums, which is of course free. My plan is offer a special pricing plan to forum users on which i plan to advertise. Of key importance is getting a buyer safe/ feedback system as this seems to be an issue with selling stuff via forum.

    One the reason i am behing in getting my GC site up and running is that i am also building a portal/forum site for this targetted group, which will of course be used to promote my GC site.

    Doing my reseach it seems that people are willing to pay (ebay) and advertise item via link in forum.

    Any thoughts?

  2. #2
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    Default

    Hi Carpman! (I hope we're not the only two users active in these conversations )

    Price plans, price plans...

    My revenue projections relied on a percentage matrix model, where a user was charged a percentage of the item price, with a reasonable min and max fee limit. The initial iteration of GC did not include any means of doing this, although the latest version has a reasonable facsimile. Until the ability to charge a percentage of item price is added to GC (or I adopt the auction model), I have a price matrix set up with various thresholds between $25 US and $1000 US. I used the lowest amount for the fee within each threshold (for $100 - $199, I used $2.00, or 2% of $100).

    My matrix was designed to compete against eBay.

    The site was launched on Sep 16, 2003 using the tiered plan as above, however, I used a registration code for my test/initial users that assigned them to a free listing plan.

    I decided to start a promotion on market forums that invited people to take advantage of a free listing period, expiring on Jan 1, 2004. Not many people responded to that (and I did limited promotion) so I extended the expiration to March 1.

    I will not extend the free period any longer, but I still have not had great response (and still have not devoted adequate time to promotion), so I intend to use an interim promotion of a flat fee of $.50 per listing, regardless of item price.

    I believe that pricing is directly related to value, and value is built through market share, which equates to exposure in this kind of business.

    A great deal of business is done in my market niche in forums. I think the most effective way to compete against a forum listing is to provide more exposure than the forum can provide and more structure to the listings. Using forums is ok, but they are cumbersome and you really have to be diligent to find what you want, contact the seller, and complete the transaction.

    I'm not sure the buyer safe issue is so big unless the transaction is taking place without any interaction with the seller. In a forum or classified based transaction, typically there will be some kind of conversation between the buyer and seller before the transaction carries forward. This is not necessarily the case in an auction scenario. An entire transaction can be completed with no interaction between buyer and seller. In that scenario, the only insight into the behavior of the buyer and seller is via feedback.

    Whew!

    Chris
    Chris
    Visit www.motorecycle.com: THE Place for Buying and Selling Used Motorcycle Parts

  3. #3
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    Default

    Hi, my portal forum site will be independent from GC and although it will represent large portion of target users it will not be all of them, though other targetted users will have something in common with them.

    There are a few sites offering free classifieds and auctions for my main target but the sites are far from user friendly or feature rich.

    My plan is offer free period for basic ads but extras will cost nominal amount, not sure how long this will be for. After this i am going for free up £50 for basic ads with extras at cost, then scaling up as selling price increases. this will be for pesonal use with commercial users on different plan i have yet work out.

    The problem as i see it is that users will not advertise item on site that does not have much on it, the more ads on your site the more users will visit and the likely they will be to sell item on your site.

    I for see a long free period, if remember ebay when it started was free for long time, though i may be wrong on that.

    A long a good marketing period is also going to be needed on both websites and mags.

    Case in point a free classified site which is tied into a online shop began advertising in associated mags and its user base increased, and it is not easy to submit ads either. The more ads appeared the bigger it has grown.

    It may be a case that you need to give personal user a loss leader with the intent of attracting the commercial user. This is what free ads papers like Loot do and it works.

  4. #4
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    Hi Carpman!

    Hmm - I see your point. I'm not sure I would be comfortable establishing a price threshold for free vs. charge ads. I wonder about something like up to X number of ads free, then charge for additional ads... I couldn't think if a super neat way to do that in GC except for limiting a user account to the X number of ads, then providing a new account for them if they wanted to go over that amount. But then they would have to manage multiple accounts...

    Chris
    Chris
    Visit www.motorecycle.com: THE Place for Buying and Selling Used Motorcycle Parts

  5. #5
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    Default

    Hello, what is your issue with a price threshold for free vs. charge ads?

    This site has an interest idea:
    www.usfreeads.com/files/register/

    You can register for a basic account which gives one free ad, then if you want to be able to place more then one ad or have other features you need to upgrade to Gold account.


    The idea of having a tier based user account structure is appealing, a user could start as personal free then when needed or wanted upgrade to paid perosnal or commercial and thus have access to many more features.

    This would give us control over feature pricing whilst allowing users greater flexibility.


    There are so many free ad sites that i feel i need to offer users something special both in terms of price and service, GC needs to offer the flexiblity to be creative with pricing plans.

  6. #6
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    Default

    Quote Originally Posted by carpman
    Hello, what is your issue with a price threshold for free vs. charge ads?
    Hi Carpman,

    Well - One issue is that because of the nature of the market I serve (used motorcycle parts) a large percentage of the items sold are relatively inexpensive (less than $100). If I chose to offer an item price threshold, I would need to keep it at a level that attracted a volume of interest, yet still made the site profitable. Until the site was established, my assumption would be that people would elect to take advantage of the free listings on my site, yet opt to post their more expensive items on other sites.

    I like the idea of a threshold, that's why I offered the option of quantity of ads. That model offers a tiered approach that is not dependant on any particular specific of an item or ad.

    I saw that you posted in the Ideas/Wishes section. We'll see what admin says...
    Chris
    Visit www.motorecycle.com: THE Place for Buying and Selling Used Motorcycle Parts

  7. #7
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    Default

    Well this is catch22 situation, from where i stand the most important thing is to get your site established and to do this you need a good user base.

    From where i stand if i could place say 2 free ads and have to pay for one at one site or go to another and pay for all 3 i would go to the 2 for free pay for one.


    Human nature being what it is most users are lazy and will not want the hassle of putting ads at 2 sites, the other thing about human nature is we love it when we think we are getting something for nothing.

    So take the scenario where you have 500 ads placed on your site of which 300 are free and 200 paid for. Now users who place free ads may think that because they have got somethig for free they can afford to pay for paid premium ad service such as Featured Ad. Thus out of the 300 free ads 5% go for premium ad service so you earn there.

    The added bonus of allowing free ads is that your classifieds appear busy and busy is what attracts more users. Example, have you ever been to a computer fair or similar, you will notice that if one stall has no one there then users are reluctant to browse but if there 1 or 2 people then very quickly poeple start to gather around that stall.

    The key is what price or features to set the ceiling for free ads? This is only something you can decide as you know your market.

  8. #8
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    Default I been reading these posts, throughing in my quarter

    I been reading these posts, just wanted to through in my quarter

    Although I am a bit skeptical of this Forum, it was really considerate of the developers to put this here for us. I been reading the things you two have been discussing, it has put a lot of thought in my head. Personally, I feel the problem with trying to sell ad space over the internet is that you loose the interaction. Although this is most defiantly a difficult business to develop, I think with some consideration, there are other ways of accomplishing the task.

    Without personal interaction, you can not discover your prospective buyers or the general audience. I think most people would agree to sell something you have to build value, regardless of the price. For example, if you would tell 10 people they can have a beat up car that don’t run for free, would they take it? I know this is a bit off topic, but the point I am trying to make is that people don’t want something just because it is free. There has to be some value, need, and desire. The problem is, to build value in a product you need to become familiar with prospects. You have to discover their hot buttons, what will make them purchase. For example, if you told me you wanted to buy a Condominium, I would be wasting my time showing you a single detached. There is less value to you, and less chance you would buy. The task here is having the foresight of who your prospects are.

    I been thinking back on the times that I shopped online, and although convenience was a big part of things, I did not necessarily purchase from the Websites that had the most traffic. However, when a person is considering advertising, it is pretty obvious that they would want to ensure there advertisement will be seen. The dilemma that I see, users come to a classified Website for one of two reasons. They are looking for something to purchase, or they are looking to expose something they want to sell. I think it is fair to say, we are not as concerned with buyers, as there is no financial gain to us. Being so, our target audience is sellers and the value is exposure. So, how do you build the value without ads, or the appearance of a lot of traffic? As a Realtor, we have a similar value, lots of exposure and a quick sale. However, the value is built through a combined effort, an association of many Brokers and Agents. Rather than only having my listings, I have the listing of everyone in my MLS region. I think with some thought, there are other ways to establish value in the product besides pricing. Figure out how to build value and convenience, and the sales will come.

    With all do respect to the staff of Geodesic, I think there website is a perfect example. A bulk of the user interface operates behind the scenes. As a consumer, I browsed through at least thirty different Classified Programs, over a period of two months, before I made a decision. Thinking about it, their website provides hoards of information about the products. It seems that no matter what your motive would be, they address it somewhere. It is a well developed catch page that establishes value. They have customer commentaries, samples, comparisons, and lots of details. A lot of thought was put towards their audience, and I am sure it took a lot of experience, trial and error, and development to make what it is today.

    Personally, I am going to hold firm at charging a fee for ad placement. Although loses are a tax deduction, the idea of generating high expenses without return is not very appealing. To get where you need to be will most likely take a lot of time and energy. By developing a strong and complete marketing campaign based on research, I think the site will mature into a successful income stream (over time). There are lots of people looking for places to advertise products and service, the key is getting off your sales pitch to as many of them as possible, and finding their “buy button”. I think the basic design of the program pointed towards building value (Seller Features, Buyer Features, Signs & Flyers, Put a bunch of great stuff about your site here, etc..). It will be interesting to compare the different Marketing approaches used through this forum.

  9. #9
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    Hello, welcome mjm1905 good to see some fresh input on this subject.

    The point you raise about loss of interaction is something i have been thinking off, is this related to site owner users or seller buyer?

    My thoughts are about seller buyer interaction. One of the appeals of buying and selling in a forum is users have that feel of close interaction with seller, either via posting or PM. With this in mind i have been thinking of suggesting a radical feature for GC, a public interaction box. This would be similar to the shout box feature something like http://shoutbox.sourceforge.net/

    Your thought on value, features and targetting your market / users seem to mirror mine. Though i do not agree that buyers are of no interest to us and of no finacial benifit, if it was not for buyers visiting your site then then none of your sellers would sell their items and thus be no incentive for them to sell ads on your site.

    I also think that there is a revenue stream to be made from buyers, although my site when up will be a classified site i will also provide other oportunities for users to purchase item through affilliate links or paid for advertising.

    This last point raises the question of what will be you main revenue stream? Are you aiming for paid placed ads or free ads with sold advertising space, affilliate links as revenue stream, or a combination of both.

    I will be aiming for combination of the two which is why i will be happy to offer some sort of free ad feature.


    I agree with much of what you say, a niche market with good users features does not need a very high user base if you have quality users willing to pay for a good highly targetted and convenient service.


    What this thread has shown is that we need to know and reseach our targetted markets, get the price and features service right and we should do well get them wrong and we will end up like the many empty online classifieds.

  10. #10
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    Default

    Hello Carpman,

    It seems we have the same perception with some things. One thing I would like to point out, I do believe that having buyers is important. However I do not feel they should be the focus audience of a Marketing Campaign. In my opinion, if you are offering free ads to sellers, while trying to generate traffic, you are placing a focus on having buyers which will not benefit us in anyway. Well, “anyway,” is a bit harsh, but I think it will cause a longer maturity time. The punch line is missing here. I believe sales is a numbers game, but the numbers are relative to distributing that punch line.

    As far as ad space (banners), originally I was trying to implement something. I also figured it would generate additional income and help offset the expense of carrying out a marketing campaign. I started using PhpAdsNew as per recommendation in the administration panel. It seems that to develop a marketing strategy would take a lot of time and energy, and I would prefer focusing on the classifieds first. Charging for this type of ad space relies much heavier on traffic. However, my marketing campaign never progressed past the research of the industry. I did have the product and a price, but nothing more. I then went to Commission Junction and created an account. This opened my eyes to how people carryout marketing on the Internet. It seems that they do not try to target any audience. Additionally, they are not willing to pay a flat rate for ad space as in print media. I get the impression that the person who developed many of these advertising campaigns just figured, “through the banners everywhere, and eventually the ad will catch the eye of a potential customer”. There is no strategy other than mass display. Personally, I think to effectively do this you need to have very general advertising. Not pointing directly to a product that you are taking to market. At any rate, I am going to leave my site banner free for now, but I am going to develop a banner affiliate program to promote my product.

    Forums seem to be a big issue with other classified Site owners. I do believe they are a powerful tool, but I am still trying to find the proper application. I was thinking towards a help center, but I am changing my mind after seeing some of the ticketing systems available. Additionally, I see your point of establishing a type of interaction through forums. However, this is still not the same of delivering a punch line. The interaction I am referring to is the interaction between you and your audience (people looking for ad space). The only buyer to seller interaction I want is through the sellers’ ads. I remember someone posting to the Forum about linking the tables in the database, or sharing a table (allowing one username). If you are going to allow people using your site to converse openly, what is going to stop them from completing transactions and never rewarding you for using your site? There is a potential of them completing transactions without advertising. Especially considering that there are only two types of users (buyers and sellers). Providing content will establish a reason for people to visit the site, and establish name recognition, but personally, I want to have some income stream to offset the advertising expense and reward myself for all the hours I put into marketing research and development of the site.

    I can relate to what you guys are saying to a point. In my experience as a Real Estate Agent, buyers are in a way equally important as sellers. To explain, if you are buying a home, you will probably have one to sell. Additionally, if you are selling a home you will need to buy one. The advertising segment of my Marketing campaign, in Real Estate, relies heavily on this equation. Generally, I run a print ad of a low priced home in a highly desirable area. In the ad I withhold as much information as possible, by including only the township, number of bedrooms, and price. Done. This invokes a landslide of phone calls and questions (do you have a picture, what are the taxes, how many baths, how big, etc…). Naturally I have a preformed reply I try to through off with each call and I spend a lot of time on the phone when I do this, but generally about 5% of the callers convert to customers. I will usually run this ad during the peak times people begin to shop, not sell. That is tax return season, and again when schools close for the season. From them buyers I will usually generate one or two listings during the month the ad is run. I am reaching my true target audience of sellers, using foresight and attracting buyers. I was fortunate and realized this early in my career with little research. I see some similarity in what the two of you are doing, but the problem is the buyers may not need to sell the one that they have (dependent on the focus of your site). Another marketing strategy many large Brokers try to get agents to use is the free offer ad campaign. Timing is essential and this helps develop your marketing strategy. How it works is pretty simple, the theory is it delivers clients while providing market research data to help find your niche. After a year, the information can benefit by reducing the advertising dollars spent when it is unnecessary. You run a direct-mail ad to several neighborhoods of different ages and price values. You establish a system to suite yourself for the frequency of each neighborhood (yearly, quarterly, monthly). The free offer can be anything depending on the information you want, to develop your marketing campaign. For this example, I’ll use a common one, a free pamphlet with 20 questions to ask any Agent before selling your home. Seems idiotic, but this will give you a lot of information. Everyone that calls is thinking of selling a home, why else would they want 20 questions of what to ask any Agent. The free information is what they will be challenging the competition with, hence it came from you, you became the Authority on the subject. As you continue the campaign, you receive statistical data of when people sell their home in different price brackets (how transient they are), in various locations. The other thing, they got something free, but it surely wasn’t my service. It was something simple that I printed off my computer and stuck in an envelope. If they list their property with me, I still want at least 1% after the splits. I definatly feel a similarity as I develop the marketing plan, I think something like either of these could be applied, but this is a strange environment. I mean, sending thousands of Emails saying 10 things to ask Ebay before selling seems absurd. But I just fail to see the strong link here with the buyers.

    Although there are a couple things that I am questioning myself on, there is one really big one I want to establish before spending money on the advertising segment. It has been brought up, but nobody has actually come forth with their answers. Who is the target audience? I know this will be different for all of us, depending on what we are providing as ad space. Although I originally wanted a classified program to incorporate into my Real Estate Marketing efforts, I decided to leave things diversified and created several categories outside of Real Estate. Personally, I have always been pretty good at creating advertisements, but the diversity makes it difficult to target a specific group. I have come up with three groups to target. The first is people that need to generate money, or are desperate to sell something. The second is the people that upgrade into something new often. Last, are the people that see no value in an item and simply discard things when they buy something new (low dollar, in perception). The first group, I think anyone would agree, is very easy to advertise. They are in need of money and would probably be looking for an affordable solution that creates a lot of exposure. Although I have some resources I could use to target some of the first group, the second and last will be a challenge.

    Another thing I am having trouble establishing is how to convey my advertisements to people. The internet is so diverse and open it is difficult to pinpoint where the target audience will see your ad. To make things worse, my research of online marketing has simply cluttered my mind with mass confusion. I know most companies are trying to deliver their punch line, but many contradict one another. I was considering a modest budget towards an email campaign. I found a company that implied they have resources of targeting customers on many levels through records procured from registrations. However, I have also read that many of these campaigns are fraudulent and many of the emails have become stagnant after the owner was bombarded with, “spam,” advertisements. I would appreciate if anyone has some insight on this type of tool.

    After putting thought into developing a banner ad campaign, I can see why the other companies have general ads and only pay by the click. Banners will have to be displayed at a mass rate, as there is no way for me to target the audience I feel is my focus. The only strategy is get the banners out there as much as possible. Although I have seen Geographical targeting, that is not much of a concern, in my opinion.

    Search engines and large ads (catch pages) seem to be the best alternative, but you have to recognize what your target audience is typing into the search engine, and what search engines they use. I am trying to figure this out now, it seems there is a lot of diversity in the way they tic as well. Has anyone ever put money towards Search Engine placement? I was looking at Yahoo, and Overture. Yahoo charges a flat fee while Overture accepts bids on keywords. I personally like the keyword idea, but I am skeptical. Additionally, I am considering that people in need of money would probably not be using the more expensive ISP’s. Therefore, the search engines provided to cable, satellite, and DSL users would only be good for group two and three, where free internet providers would be good for group one.

    I am in agreement with your closing topic, a great deal of research needs to be done, and we defiantly need to know who the people are. The approach I am taking has three factors product, advertising, and customers. The price is starting at what I feel is modest, but as we all know that price is the gauge of demand. If the third factor is missing from the equation, the logical thing to do is reduce the price as the value is not matched to the demand. The thing that is scaring me is that I am getting the impression the value has been reduced to zero on both of your sites, and we are all starting out. However, we are taking different approaches with our marketing. I don’t think the zero is an adjustment to match the value. It is the basis of the start-up.

    Phew, that got long,
    This is really a nice discussion forum to have.

    Mike

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