When I was a kid, my mom instilled in me a lesson to always get paid for my work. When I went to mow a lawn or do my newspaper route, she’d remind me, “Be sure you get paid.” As an adult, these flashbacks are vivid like a scene from Citizen Kane—just swap out the Rosebud sled with my newspaper delivery bike. Today, this lesson still resonates when running Bridge. When calling a store that hasn’t paid its Bridge bill, I’m confident in asking to be paid. Plus, I know that my mom, if I asked, would probably call the store for me.
Her inspiration has affected how I set pricing for our Bridge services. When we first offered the Product Syncing service in 2008, it had a different pricing structure than it does today. Back then, retail members paid for the service and brand members didn’t. We had various pricing models over the years, and some of them were complicated. In 2010, I recall the founder of Juliska, a premium tableware brand, expressing that he thought the pricing model was complicated. It was. And it was labor intensive for me to figure out a client’s bill.
When I see our pricing chart from 2010, I cringe because the pricing model likely hurt our business. It gave customers time to 'slow their roll' and not join. And that may have been what happened. Founded in 2007, Bridge had slow growth for its first few years. Imagine if Netflix had used our model. Netflix would not have become the $100 billion titan it is today. Instead, it had simple pricing. (It charged a flat fee of $8.) I was likely too concerned with following my mom’s advice and getting paid. (Note: not all advice should be questioned; other maternal maxims included not eating with an elbow on the table and taking small bites at dinner—advice my dining companions benefit from to this day.)
How quickly would Bridge have grown if our pricing was different from day one? Would we be as big as Netflix? Yes! Just kidding. No, I intentionally didn't take the explosive growth, venture capital-backed route that most businesses take. Due to that, early on Bridge's growth was constrained by limited resources (tsk tsk, Jason). Bridge was just me and my colleague Moshe for the first six years. But while limited resources were intentional, my misguided pricing was not. I should ask: what did I do wrong, did I ever correct it, and how could I do it better in the future?
To answer these questions, let’s look at how Bridge’s syncing service price changed (improved!) over 11 years:
2008: The Product Syncing service can only be subscribed to if we build a new retail website that costs $9,000 - $12,000. We don’t have a distinct charge for Product Syncing (nor other services, such as the Gift Registry service).
2010: We launch a template store service, which today we call Bridge Store. Due to this service, we create stand-alone pricing for the Product Syncing service. A store may pay based on sales volume. The fees are complicated. On the entry level plan, there are six tiers. Orders up to $500 are charged a 15% commission and orders above $500 pay 20%. One can bypass paying the commission and instead pay $149 per brand.
2012: To spur growth, we remove the commission model and move to a flat-fee model for syncing. For starters, a store can sync with five Product Syncing brands for $99/month. (As such, the starting price to sync with a brand is $20.)
Then, for the next few years, we continue reducing the price stores pay for the syncing service. In 2013, the starting price to sync with one brand is $15/month.
2014: The starting price to sync with one brand is $12/month.
2015: The starting price to sync with one brand is $8/month--half the price of two years earlier.
2017: We finally offer a free syncing plan. The starting price to sync with one brand is $0. A store can sync with up to four brands for free. In 2017, we made another change: we started to charge brands for the syncing service. We realized that they were receiving advertising and marketing value for which they’d pay. While the charge to brands was small, it helped offset reducing prices to retailers. Brands were charged about $.25 per month per synced store.
2018: A store can sync with up to 20 brands for free. Also, in 2018, after a four-year hiatus, Juliska rejoined the Product Syncing service. At a meeting with the founder, I shared our updated pricing. Since their departure and rejoining, our retailer pricing had gone from $12 to sync their brand to free. (Today, we help Juliska sync products with 170 of its best indie stores.)
2019: We achieve what we deem to be a goal: we make Product Syncing free to retailers for an unlimited number of brands. A store can sync with all of our partner brands, receive their product data in their Bridge account, and pay us nothing.
How (and why) did Bridge wipe out its Product Syncing revenue and still increase revenue? We updated our strategy. Our strategy became to give away the product data and make our money on additional services and transaction fees. We grew to use the syncing service as a loss leader and honey pot to get retailers to open free accounts. We wanted more customers and we anticipated they'd need other services which are paid features. While we can't prove it’s causation, we do see an inverse correlation between lowering the syncing price and increasing retail membership. In 2015, we had 100 retailers using Bridge Store and the starting price to sync was $8/month. In 2022, three years into the free, unlimited syncing plan, we have nearly 1,100 stores.
We also realized we’d been undercharging for our registry services and increased the fees in that area. By increasing our registry business, we could decrease our syncing fees and use syncing as a marketing and customer acquisition tool. There's a saying that Colorado residents have: people come for the winters and stay for the summers. In the state of Bridge, retailers come for the product data and stay for the paid features, including our award-winning gift registry software.
Consumers don't like frequent price changes. As we can see from 2008-2019, Bridge changed its Product Syncing (and registry) prices almost annually. I believe a company has to do that until it finds the right pricing equation. Over the last three years, our syncing and registry prices have not changed. We added a performance fee, which is a percentage of the order. I feel our pricing is simple and fair now. Our pricing page reflects this. (You're invited to check out this tidy and organized pricing page for retailers: https://www.shoplocal.org/pricing.cfm)
Recently, traditional pricing mantras were upended by the pandemic, supply chain issues, and inflation. Companies responded by changing prices more often, separating features, and itemizing charges (aka: adding complexity). Bridge may now have the opposite problem it did seven years ago: our pricing may be too simple and low. As a reference, we see the issues that Netflix is facing. Realizing its prices may be too simple and low, it’s now seeking tiered pricing by offering an advertising-supported plan. The goal is to gain more customers, generate more revenue, and appease shareholders. While we don’t have shareholders, Netflix needs money to make blockbusters, and Bridge needs money to build a POS system (an iPad-based cash register) and marketplace service. What if Bridge is leaving money on the table, too? (First, please don’t tell my mom). We give the Product Syncing service to stores for free. Seven years ago, stores paid $20 per brand. I’m not suggesting a return to complicated pricing. I’m considering charging retailers a $5 flat fee for unlimited syncing of brand data. Plus, what if like Netflix, we could offer an adverting-supported tier? We have 110 brands advertising today. There are 3,000 other brands in our directory. What if they could advertise to our 1,100 stores? We want to monetize value and generate revenue. Mom would approve.
PS ~ A special thanks to my team. I tell my mom often about what we’re building at Bridge. I tell her about the people on our Bridge team and what you do. I guess I’m saying, my mom knows who you are and you're invited to dinner! Thank you for giving me something that we can be proud to tell her about.