New "throttled" ICE pricing model proposal to Adobe

Question

First off I agree that the ICE service should not be free, but for it to be worth while from a business standpoint, and at $20 per month paid to Adobe, the "web shop" would need to charge at least $10 per month to each client to use the service. It's a given that most clients won't want to pay more than $10 a month for the ICE service unless their web site is a large one. So if Adobe needs $20 a month for 5 domains in the current price proposal, the web shop would need to have 2 clients using it right away just to break even and acquire 3 clients just to start making a profit. The proposed pricing model puts much more "pressure" on the web shop's side to sign people up on the service as fast as possible starting out. The situation becomes even more evident if the web shop has 6 clients and is now paying $40 a month to Adobe for two base accounts. With 5 clients and one base account the web shop profits $50-($20 to Adobe)=$30 total per month. With 6 clients and two base accounts the web shop profit takes a dip with $60-($40 to Adobe)=$20 total profit per month. So the current pricing model becomes a kind of stair-stepping profit and loss situation for the web shop when they don't have each base account "loaded up" per say.
A MUCH better pricing strategy for both Adobe and web shop owners would be for Adobe to create an initial 3 domain base account for $10 a month and then "throttle the price" for each additional domain. This would lower the initial profit risk for the web shop greatly. Let me illustrate... Let's say Adobe charges a base price of $10 a month for a 3 domain base account to start with. Then for every NEW domain there is an additional $5 a month charge. Ok, so let's say the web shop has 5 client domains... now we have a a base price of $10 (3 domains in the base) + 2 NEW domains and that's a total of a $20 total per month paid to Adobe. Now for 5 domains Adobe is STILL making the $20 a month it needs. At this point though, the web shop has 5 committed ICE clients and is charging a minimum of $10 per domain so they receive $50 per month minus the $20 paid back to Adobe for a total profit of $30 per month. If the web shop has 6 client domains then the total profit is $25 to Adobe rather than having to pay $40 per month with the current proposed pricing model. Now we must look at how this pricing strategy "benefits" Adobe, because at 6 domains Adobe was previously getting $40 for two base accounts with 5 domains in each. BUT if they go with a throttled pricing model those same 10 domains now would mean $45 per month ($10 base + 7 new domains at $5 each for $35) instead of the previous $40 per month for Adobe. Ok, wait a second (I can hear most of you saying it now) why would we now pay Adobe an extra $5 per month for 10 domains? The answer is simple, because previously they would be getting $40 a month for say 6 domains whereas now they would only get (($10 + 3 new domains x $5 each = $15)) = a total of $25 per month for 6 domains. This is very fair because Adobe now takes on a lower rate per month as the domain counts ramp up, but now at the 10 domain mark they would be getting $45 per month instead of $40.
Overall this strategy eliminates the starting risk for the web shop, ensures the web shop's profit right away, and in the long run Adobe profits a little bit more for higher domains counts. Both sides get a much better deal with a throttled pricing model!
And as a last note of "profitable hope" for the web shop readers, you could also base your ICE monthly service price on the size of each client's web site. For example: 20 pages or less = $10 per month, 21- 50 pages = $15 per month and for large web sites above 50 pages you could go with $20 per month. This is actually still fair, because if you think about it you still have to provide ICE code support for each page should something go wrong and provide support for ICE user e-mail questions, training, etc. So the more page support you have to deal with code-wise, e-mail-wise, or even phone-wise the more it should justify a higher monthly cost back to your client for having a larger web site to maintain overall.

Answer 1

First off I agree that the ICE service should not be free, but for it to be worth while from a business standpoint, and at $20 per month paid to Adobe, the "web shop" would need to charge at least $10 per month to each client to use the service. It's a given that most clients won't want to pay more than $10 a month for the ICE service unless their web site is a large one. So if Adobe needs $20 a month for 5 domains in the current price proposal, the web shop would need to have 2 clients using it right away just to break even and acquire 3 clients just to start making a profit. The proposed pricing model puts much more "pressure" on the web shop's side to sign people up on the service as fast as possible starting out. The situation becomes even more evident if the web shop has 6 clients and is now paying $40 a month to Adobe for two base accounts. With 5 clients and one base account the web shop profits $50-($20 to Adobe)=$30 total per month. With 6 clients and two base accounts the web shop profit takes a dip with $60-($40 to Adobe)=$20 total profit per month. So the current pricing model becomes a kind of stair-stepping profit and loss situation for the web shop when they don't have each base account "loaded up" per say.
A MUCH better pricing strategy for both Adobe and web shop owners would be for Adobe to create an initial 3 domain base account for $10 a month and then "throttle the price" for each additional domain. This would lower the initial profit risk for the web shop greatly. Let me illustrate... Let's say Adobe charges a base price of $10 a month for a 3 domain base account to start with. Then for every NEW domain there is an additional $5 a month charge. Ok, so let's say the web shop has 5 client domains... now we have a a base price of $10 (3 domains in the base) + 2 NEW domains and that's a total of a $20 total per month paid to Adobe. Now for 5 domains Adobe is STILL making the $20 a month it needs. At this point though, the web shop has 5 committed ICE clients and is charging a minimum of $10 per domain so they receive $50 per month minus the $20 paid back to Adobe for a total profit of $30 per month. If the web shop has 6 client domains then the total profit is $25 to Adobe rather than having to pay $40 per month with the current proposed pricing model. Now we must look at how this pricing strategy "benefits" Adobe, because at 6 domains Adobe was previously getting $40 for two base accounts with 5 domains in each. BUT if they go with a throttled pricing model those same 10 domains now would mean $45 per month ($10 base + 7 new domains at $5 each for $35) instead of the previous $40 per month for Adobe. Ok, wait a second (I can hear most of you saying it now) why would we now pay Adobe an extra $5 per month for 10 domains? The answer is simple, because previously they would be getting $40 a month for say 6 domains whereas now they would only get (($10 + 3 new domains x $5 each = $15)) = a total of $25 per month for 6 domains. This is very fair because Adobe now takes on a lower rate per month as the domain counts ramp up, but now at the 10 domain mark they would be getting $45 per month instead of $40.
Overall this strategy eliminates the starting risk for the web shop, ensures the web shop's profit right away, and in the long run Adobe profits a little bit more for higher domains counts. Both sides get a much better deal with a throttled pricing model!
And as a last note of "profitable hope" for the web shop readers, you could also base your ICE monthly service price on the size of each client's web site. For example: 20 pages or less = $10 per month, 21- 50 pages = $15 per month and for large web sites above 50 pages you could go with $20 per month. This is actually still fair, because if you think about it you still have to provide ICE code support for each page should something go wrong and provide support for ICE user e-mail questions, training, etc. So the more page support you have to deal with code-wise, e-mail-wise, or even phone-wise the more it should justify a higher monthly cost back to your client for having a larger web site to maintain overall.