Views from Phanfare CEO and Co-founder Andrew Erlichson

Link Phanfare Price Increases

We raised our subscription prices today for new customers and renewals. The new prices reflect the value we deliver to customers and will increase our margins to the point where we can continue to invest in the business.

Phanfare stores all customer photos and videos at Amazon S3 and we encourage customers to store all their media with us. We store the photos in their original quality and the video in HD quality. The average customer has 10GB of data. Amazon’s S3 pricing is well advertised.

Amazon provides the quality of storage that our customers expect. Data is kept in multiple data centers and the likelihood of their losing a single piece of data is so negligible as to not be worth discussing. The data will be there. And it’s all near-storage, not tape backup.

What does storing your photos in “original quality” mean? Well, if we got rid of photo renditions larger than what we use in our slideshow, we could remove 90% of our data costs. But if you are a customer of Phanfare, you don’t take photos to have us lose 90% of the data. Phanfare is the service that won’t have to upscale your image to show it on screens that are 600 DPI in ten years.

Unlike many services, Phanfare treats the data as if we have the only copy. We are not secondary; we are primary. Even backup services, that sell based on the fear of losing all your data, typically don’t keep the data in storage built to endure data center fires. Backup services expect you to keep a copy as well. Not true for us. Our vision is to be your cloud-based photo and video asset management system. Computers, mobile phones and tablets become cache-coherent terminals. Cameras become connected acquisition devices.

The decision to keep archival originals, which is one of our primary differentiating characteristics, drives our cost position. But Phanfare, as I blogged in 2006, was never designed to be the low cost leader. In a world of free, low-fidelity photo services with no customer support and me-too features, we try to produce a service that is better, not cheaper.

Phanfare enjoyed some margin at our old prices, but it was very thin. At enormous scale, the model was fine, but at the size we are today, and the size we will likely be in the near future, we require much healthier margins to invest in the business. If you are our customer, you want us to have that margin. Really, you do. Because the alternative is not pretty.

Today’s price increases merely represents our acceptance of the reality that we are willing to trade growth for the profitability and sustainability of the business. Our first obligation is to run Phanfare in a way that is responsible and enables our long term success. We are the steward of our customers’ memories.

I truly believe that there is a huge opportunity to build a trusted brand in photo and video management to last the next fifty years. Kodak had a strong enough brand to do it, but they squandered the opportunity. I am talking about a brand strong enough that you know that if you pay the company, your photos and videos will outlive you. We are not there today, but I want to try to get there. And the way to do it is to charge prices that give the company a healthy margin so it can control its own destiny.

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  • notyoutoo

    Ah, comments are back here. Good. Here's a link to the new pricing:
    http://www.phanfare.com/corp/pricing.aspx

    And a summary:
    Premium $99
    Pro $199 (= everything in Premium + you can set pricing and earn profits)

  • ss

    Not quite everything: Pro allows 20 minutes per video, premium only 10.

    C'mon guys, this feature has nothing to do with storage. Please give the $100 plan full video capability.

    I'm not a “pro”, I don't want to sell my stuff. I just want to put home movies online with my photos, in one place.

  • http://blog.phanfare.com erlichson

    actually video is a significant part of our storage costs and videos that
    are 2x as long would cost much more to store.

  • Timmy

    I beleive you will find that with this price increase
    your customer base will deminish. With cost of storage
    coming down your pricing is going in the other direction.

  • Dazed and Confused

    Does this mean that my annual subscription goes from 49$ to 99$?
    I hope I am mistaken, especially as I don't see the latest changes as improvments: my pictures are now on a web site that can be hacked and I cannot monitor all visitors.

  • Dazed and Confused

    Does this mean that my annual subscription goes from 49$ to 99$? I hope I am mistaken. I don't see the latest changes as improvements: my pics are now published to a web site that can presumably be hacked and I cannot fully monitor who has access to my site, security and privacy were the 2 considerations why I chose Phanfare in the first place.

  • groscouillon333@yahoo.com

    What's going on with Phanfare? Why all of these changes. Why are you *doubling* your rates? Is your VC funding running out and you are about to go bankrupt?

  • http://blog.phanfare.com erlichson

    The subscription went from $49 to $99 upon renewal. There is no decrease in
    security though. We also added most of the pro features (except for selling)
    to the Premium tier. Note that we are on annual subscription so the average
    customer won't see the price increase for six months but gets the increased
    features right now.

  • http://blog.phanfare.com erlichson

    Phanfare's revenues exceeded its hosting costs prior to the price change,
    but to continue to invest in the technology, we need to have better margins.
    the alternative is not bankruptcy but its an operating point that is not
    particularly interesting from a product development standpoint.

  • Dazed and Confused

    With all due respect, you are *doubling* your subscription – do you honestly believe that you are *doubling* the value for your customers? For one, I am happy to stay at 49$ and keep the service the way it was. You are not increasing your fee by 10% or 20%, you are doubling. You may have an MBA in finance, but you don't have an MBA in marketing.

  • http://blog.phanfare.com erlichson

    I have an MBA in neither ;-)

    You can look at at lot of different ways. This is the price that makes sense
    economically to deliver the service as we deliver it, backed by Amazon S3
    with custom engineering work done in the US.

    I understand that nobody likes price increases. I surely don't like them.
    When we started in 2004, this was the price (well, actually it was
    $9.99/month). We lowered it hoping that we would attract a much bigger
    audience of subscribers. That did not occur. We are a niche photo hosting
    business for enthusiasts who don't want to ever lose their stuff and want
    high quality sharing. Now we are once again asking a price where we know we
    can be profitable at our current size.

    So this is not really a negotiation. This is us telling our loyal
    subscribers that this is what is needed for the business to be healthy. But
    if you go to one of our competitors over this, look carefully at their
    business because if they charge less, there is a good chance that either
    they are not keeping the data in storage that is as reliable as we or they
    are not making money and hoping to “make it up on volume.”

    The new price amounts to $8.25/month. You can't even get decent generic web
    hosting for that price, let alone web hosting that includes specialized
    domain software, unlimited amazon s3 storage and high touch customer
    support. Phanfare is a ridiculously good deal.

    In any absolute sense, Phanfare is an awesome deal. As for us charging a
    price that would require *doubling* for it to be rational, well, you can
    chalk that up to our dreams of being an order of magnitude bigger in one
    tenth the time.

  • Brian

    I originally chose Phanfare because of standard features plus the fair price of $52 with unlimited storage. I believe at that time SmugMug had a limit on the amount of storage and that led me to chose Phanfare. At this point what is the advantage of Phanfare at $99 vs the SmugMug Power account at $59 considering they now provide unlimited storage?

  • Dazed and More Confused

    I am amazed that they let you post, my last comment was deleted and contained no profanities.

  • Andrew Erlichson

    HD Video, better tools, better slideshows to name just a few.

  • Andrew Erlichson

    I don’t suppress comments but there is a spam filter running (disqus includes it). I checked the quarantine and can’t find anything in spam from you.

  • Tom

    So your expecting us to pay double the price now for no added benifit. While my 10 GB average means you pay $1.50 to amazon for backup leaving you with $97.50 for the remaining services. If you have a thin margin now that means over $40 profit per year for absolutly no gain for me. Wait, you expect us to pay more now for two reasons, you have big dreams, and you think I want you to have a healthy margin.

    If you truly are expecting me to pay double for a possible future dream you couldn't be more wrong about what I want for myself, and for the services I'm paying for. If you want me to pay more, offer more. Certainly not the same. There have been many times i have advocate phanfare, and often said to others how wrong they were in not having an account yet. I couldn't be more mistaken it seems… Glad i still have all my backups…

  • Justin

    can't justify paying double for the service. See ya later Phanfare Hello SmugMug!!

  • http://blog.phanfare.com erlichson

    Tom, we pay about $20/yr to store 10GB on amazon, plus we have other server, development and support costs. Not that I expect you to care what our costs are. The service is worth what it is worth to you. We get this. This price increase is necessary to fix the economics of the business. I hope you ultimately decide to stay.

  • Tom

    By your own words “Phanfare enjoyed some margin at our old prices”. There are no economics to fix. You want old customers to pay almost double for the same thing, and I won't stay after being treated like this. I hope some day you'll learn the value of treating existing customers fairly…

  • http://blog.phanfare.com erlichson

    Tom, you are misunderstanding the economics. Margin is not net income. If you sell lemonade for 30 cents per cup and it costs you 25 cents per cup of lemonade (cup + mix) then you have gross margin of 5 cents a cup. But if also pay $50/day to rent the booth and $100/day for advertising and $80/day in labor, you would need to sell 4600 cups per day to break even. Beneath that number, you have some margin but no net income for the endeavor. At phanfare's scale, we need to have higher prices. Since we really sell to the high end of the market (there are free services that downsample, show ads on your stuff and offer no support), the market is going to be smaller. Point being, this move was not designed to abuse existing customers. It was motivated by the need to have the service be profitable at its current size.

    The good news is it looks like customers are accepting the price increase overall. We are delighted by that since it means we get to continue doing what we love: serving our customers. Over time, as our costs drop or our scale increases, I hope to lower prices.

    Nevertheless, I am sure from your perspective it all seems very arbitrary. Sorry to see you go.

  • http://blog.phanfare.com erlichson

    Tom, the price to store 10GB is nearly $20 for amazon alone, plus our other
    compute costs, plus engineering and support. the margins are not nearly what
    you think.

    phanfare was designed to be primary storage. you don't need your backups.

    We did actually bring down many of the pro features to premium so there is
    more value there, but even if we had not, phanfare is a great deal. but
    ultimately, you have to decide.

    andrew

  • http://blog.phanfare.com erlichson

    Aside from other tool advantages we have, you are giving up HD video unless
    you agree to pay them more than our Premium price ;-)

  • Helen Hauver

    Please cancel my subscription – money is a bit tight now – so I need to cancel. Thank you. Helen Hauver

  • http://blog.phanfare.com erlichson

    please contact support. you can't cancel in the comments of the blog ;-)

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