Valuable Blog post from Visual Website Optimizer:

We are in the process of finalizing pricing for my startup Visual Website Optimizer, which is an A/B and Multivariate testing tool. As you can imagine, fixing price is one of the toughest decisions that a startup has to (inevitably) take. Once fixed, it could be extremely difficult to change it without annoying a lot of customers. We want to be extra sure that we don’t end up under- or over-pricing Visual Website Optimizer. So, how do we decide what to charge?

Asking beta users can be one of the strategies and we actually used that for VWO. However, it turned out to be not the best of our ideas because users actually correlate price with quality. Further, if a product is innovative (like VWO is), users aren’t able to rationally determine its price as they would do in established markets (read this research paper [PDF]). Hence, asking users what a new product should cost yields half-baked information as they have little or no reference points to determine the ideal price.