Picking Pricing

What It Covers

37signals cofounders Jason Fried and David Heinemeier Hansson explain their pricing philosophy across products, from per-project consulting fees to SaaS subscriptions, revealing why they cap Basecamp at $299 monthly and avoid enterprise sales.

Key Questions Answered

• •Capping whale customers: Basecamp limits pricing at $299 monthly for unlimited users, deliberately avoiding enterprise sales that would require salespeople, key account managers, and product features built for individual large deals rather than broad customer needs.
• •Testing time horizons matter: AB pricing tests can mislead when evaluated short-term. Basecamp's switch to $99 flat pricing showed immediate revenue gains but took four years to reveal negative viral effects from fewer signups reducing downstream customer acquisition.
• •Bucket pricing reduces friction: Highrise charged based on user ranges (0-15 people, 15-30 people) rather than per-seat, eliminating the constant internal debate about whether adding each individual user justifies the incremental cost that per-seat models create.
• •Scarcity drives premium pricing: HEY charges $99 yearly for four-plus letter addresses, $300 for three-letter addresses, and $1000 for two-letter addresses. The limited namespace creates real estate value that justifies higher prices compared to crowded email providers.