37signals · Strategy · Mid · 45 to 60 minutes

How should 37signals price a new product?

37signals is a software company known for products like Basecamp and HEY. Answer this product management case and get it graded line by line against a weighted rubric.

pricing strategy
segmentation
tradeoff analysis
operational thinking
written communication

The situation

At 37signals, the founders have asked you, a PM on a new product team, to prepare a pricing recommendation before launch. The company already has products with different pricing styles, so there is no single template to copy. Some teammates want a very simple public price that small teams can understand in minutes. Others see a chance to use tiers, per user pricing, annual plans, or custom deals for larger companies to increase revenue. The decision matters now because pricing will shape who the product is really for, how much sales and support work the company takes on, and how easy it is to explain the product in the market. Assume the company can launch with self serve checkout and basic support, but it does not want to build a heavy enterprise sales motion unless there is a strong reason. Your job is to recommend a pricing approach that fits the kind of business 37signals wants to run, not just the highest theoretical revenue on a spreadsheet.

What to produce

Write a 1 to 2 page pricing strategy memo.

Your answer must

Define the primary customer segment for launch and explain why that segment should drive the pricing decision.
Compare at least three credible pricing structures and recommend one, with clear tradeoffs.
Explain how the proposed pricing would affect sales, support, billing, and day to day operating complexity.
List at least two pricing options you would reject at launch and why.
Propose three launch success metrics and a review plan for the first six months, including what would and would not trigger a pricing change.

Constraints

Do not assume a field sales team or custom procurement process at launch.
Do not add new product features, bundles, or packaging solely to make the pricing model work.
The recommendation must be explainable on a public pricing page in plain language.

Format

Use sections: target customer, options considered, recommendation, operating impact, risks and metrics.

How 37signals actually played it

The two 37signals co-founders walk through the pricing choices they have made over the years, including options the public never saw, and how they think about pricing a new product such as Fizzy. They explain why they avoid chasing large enterprise deals and why simple, steady pricing beats gimmicks. The full transcript is on the page, which makes it readable as an essay on pricing philosophy with real examples.

Pricing style can follow your business model; Basecamp and HEY are priced differently.
Choose a customer segment (small teams) and let it rule out enterprise-style pricing.
Avoid gimmicks and overthinking, and keep prices stable.
Record the options you rejected, since they show the thinking.

Built from Picking pricing (REWORK podcast transcript) by Jason Fried and David Heinemeier Hansson, 37signals.