37signals · Strategy · Entry · 45 to 60 minutes

Should Basecamp Revisit Its Pricing?

37signals is a software company best known for Basecamp, a product for project management and team collaboration. Answer this product management case and get it graded line by line against a weighted rubric.

Pricing strategy
Structured thinking
Judgment under uncertainty
Communication
Risk assessment

The situation

You are a PM working with Basecamp leadership at 37signals. The founders are asking a basic but uncomfortable question: are we charging too little for the value Basecamp creates? The product is established, the business is healthy, and there is no emergency, which makes the decision harder, not easier. If pricing stays where it is, the company may be leaving meaningful revenue on the table. If pricing changes, the team risks customer confusion, pushback, and a perception that the company is getting greedy. Why now? Leadership wants to revisit some core assumptions about how Basecamp is priced relative to the market and relative to its own value. They do not want a spreadsheet-only answer. They want a grounded recommendation that combines competitive awareness with judgment about the product's worth, and they need a simple way to explain the thinking internally. Assume your quick scan suggests Basecamp is profitable today and some comparable products charge more, but the evidence is incomplete and no one wants to run a long research project before discussing options.

What to produce

Write a 1 to 2 page pricing recommendation memo for Basecamp leadership.

Your answer must

State a clear recommendation on whether Basecamp should keep its current pricing, increase it, or explore another pricing structure, and explain why.
Use at least three inputs to support your view, including competitive context, Basecamp's value to customers, and business impact.
Identify the main risks of your recommendation, including at least one customer risk and one internal or brand risk, and propose mitigations.
Include a simple plan for how you would explain the recommendation to the team in plain language.
List 2 to 3 follow up checks or data points you would gather next to validate the decision without delaying it too much.

Constraints

Do not assume access to a long research project or a large pricing team.
Do not invent exact market share, revenue, or customer numbers as facts.
Keep Basecamp positioned as a mature, established product, not a new launch.
Your recommendation must be understandable to non specialists inside the company.

Format

Use short sections with headings and bullets where helpful.

How 37signals actually played it

Jason Fried explains why Basecamp changed its pricing model, using a lemonade-style water-selling exercise as a prompt. Fried argues the company had probably been selling its water too cheaply and describes the competitive analysis and other inputs that fed the decision. A short, candid look at repricing an established product.

Ask whether you are underpricing, since even profitable sellers can leave money on the table.
Combine competitive checks with your own sense of value.
Explain the pricing change to the team using a simple, memorable analogy.
Expect the change to be about more than the numbers.

Built from The Price of Basecamp's Water (REWORK bonus transcript) by Jason Fried, 37signals.