[patio11]

Your way of doing it almost certainly decreases conversion rates, but feel free to test.

The idea is that, for every transaction ever, someone has an amount of money they'll go up to for that purchase. If it costs more than that, no sale. If it costs less than that, they capture what is called a "consumer surplus." (This is micro-econ 101.) It happens to be the case that a lot of software is sold to businesses which have ways of calculating value against which all common startup software price points are negligible. Accordingly, attempting to capture some of the consumer surpluses from businesses does not leave them meaningfully worse off.

Can I give you a concrete example of how this works for Appointment Reminder? I have a particular customer whose appointments are worth in excess of $2,000 each. His actual usage of the software puts him in the $29 / month plan, but the software demonstrably makes him in excess of $10k each month. He pays $199 a month for the software, and told me that if I charged him $2k a month he'd pay it without a second thought.

It is strongly not in my interest to tell him "OK, start on the $9 plan and you can upgrade to the $29 plan when your usage goes over the limit.", because he'd never reach the higher plans. The difference in $29 and $199 is not meaningful to his business but, aggregated over similarly situated customers, it is very meaningful to mine.