The new pricing structure, what's next, and what to make of it all
Last week, we put out an [announcement](http://about.skype.com/2007/01/skype_takes_internet_communica.html) about our new pricing plans. I like to distinguish between facts and opinions. So here’s a quick recap of the facts.
* As of January 18, a [connection fee of 0.039 € or equivalent](http://www.skype.com/products/skypeout/rates/connection_fee.html) applies to SkypeOut calls after the fifth second, with the exception in the next two bullets.
* The connection fee does not apply if you are on the Skype Unlimited plan in the US or Canada, or Talk for Britain plan in the UK.
* The connection fee doesn’t apply to toll-free calls. You can do toll-free calls without having any Skype Credit or paying anything.
* The following regions were added to our Global Rate of 0.017 € per minute: Czech Republic, Guam, Hungary, Israel, Luxembourg, Malaysia, Puerto Rico and both Alaska and Hawaii in the United States.
* We are working on our new Skype Pro offering that, among other things, will have domestic SkypeOut calling in a number of countries with a connection fee but no per-minute charges. You can [sign up to receive more info by e-mail](http://www.skype.com/products/skypepro/), and it will of course be here on the blog. No date yet, but I think it’s safe to say we will speak more about Skype Pro in weeks, rather than months.
* Nothing changed in the structure of our other prices (Voicemail, SkypeIn, or free Skype-to-Skype).
]]>Now, as for what to make of this. This illustrates the direction that we’re taking this year. Apart from free Skype-to-Skype calling and the other free features that will remain there, Skype is increasingly about providing good value for good money and the answer to “what’s your business model?” is thus more clear.
I illustrate this with the example of our Skype Unlimited North American calling plan. When we introduced the free SkypeOut calls last May, it was a truly revolutionary offering and we massively increased our North American adoption over the year. When we replaced this with the Unlimited paid plan, we weren’t fully sure how you would react, but by now, we can say that it has been a success both in terms of general feedback and also in actual sales. I can’t talk about the specific figures, but it’s really selling like crazy, it works well, people like and understand it. (I apologize to the very small percentage of those of you who have had trouble buying or activating it for whatever reason. Please keep working with our Customer Support and we will surely sort things out with you.)
So this plan is working well and it’s really a model that we want to replicate elsewhere, with Talk for Britain in the UK being just one example. And the first form of this replication will be Skype Pro for a large number of countries, containing not only zero-minute-price domestic calls, but many other goodies. So you could say that Skype Pro is like a whole bunch of Unlimited plans rolled out for each of the countries.
We want to make things easier to buy. You like Skype because its free features are easy and fun to use, and we want to provide the same experience also for the buying journey. So far, you needed to make many choices about what exactly to buy, plus, you couldn’t really predict the costs. With Skype Pro, you get all these great things in one great package. The cost is predictable across months, and the features combined in Pro will cost less than they would individually.
I don’t think that the connection fee will really matter that much in the long run and in the grand scheme of things. Sure, some people are unhappy and will probably leave Skype. We still think that it all comes down to the whole picture — not only pricing that is of course important, but also the ease of use, quality and reliability of service that we pride ourselves in. We could tell you stories about how Skype had massive connection and growth trouble in the early days of SkypeOut. We think that by now, we’ve become pretty good at managing our growth and are fairly competitive with SkypeOut across the whole telco spectrum.
Bear in mind that we are not really talking beyond, say, the first quarter of 2007 in all of the above. You can expect a steady flow of announcements as we keep developing our paid offerings through the year.
Up to now I’ve been a fierce fan of skype, It was, for me, impressing the way how they grew in such a short period of time and how they called the attention of thousands of developers to integrate applications. Skype has now became a huge ecosystem and target of new business models.
What happened with all this great revolutionary concept? We would have to remember that Skype was bought by Ebay, and since then, the interests have changed. Ebay primary interest is, for sure, not to get the whole world talk for free. This “communist” concept of the P2P is not dominated by ebay. The ideal has been gone with it’s creators that are now concentrated in the launch of a revolutionary internet P2P tv service.
But, why do I say all these things? It happens that last month, Skype announced that they would introduce a disruptive pricing plan. I was so curious about their next move, up to then every single new released exited me so much, that I was pushed to write articles with thumbs up and wondering about the future. Well, today I was pushed again to write, but for totally the opposite reasons.
Skype, as any vulgar cell phone company, introduced a connection fee of 4 cents for every call made with the Skype Out. Basically it means that for a normal call in Europe that in former times coasted around 2 cents/min, now you have to add this connection fee. That makes a one min call 3 times more expensive. Wow! how disruptive! Where is this going to? What happened with “The whole world can talk for free”? So, now after the people bought their Skype phones and all their hardware that just work with Skype, they raise the prices just because they know that people is tied up and won’t switch so easily.
Is sad to say, but all of you that are thinking on buying any Skype harware should think it twice. Other companies such as VoIPBuster, offer free calls to most of the European countries and the US. Skype as a leader of the Internet calling companies have the efficiency to offer the best tariffs, but nevertheless it is the most expensive one nowadays. I see it coming, the day when they announce the next disruptive pricing scheme, and I wouldn’t be so inaccurate to think about them charging the on-net calls. I’m switching now … see you on VoipBuster, or Jajah or any other. why paying more if the quality is roughly the same?
http://www.luisbenavides.com
“I don’t think that the connection fee will really matter that much”
“Sure, some people are unhappy and will probably leave Skype”
These are som the things I wouldn’t like to hear from Skype.
Happy 2oo7, Skype
I know you are actually paid to write nonsense but could you please kindly refrain from insulting our intelligence.
Beside adding a monthly subscription fee how does Skype Pro exactly make the cost more predictable as in any case we have to still buy credit to pay for international calls.
Maybe you and your colleagues could not figure out what to buy (do you have a disability ?), I personally never had this problem – every other month / month and half 10 euro of credit. What is difficult in that and how unpredictable it is ?
Kindly also keep your philosophical claptrap and the “grand scheme of things” (sic) to yourself as the connection fee does matter (especially that the service is still what it is). I bought 10 euro credit the day you announced your new disruptive (resic) price structure and my balance to date is only 4.71 euros
The real big problem of skype is that it is still populated by outright morons who believe that working in a cutting edge outfit means that they need at all cost to seem to be cool and hip hop and are convinced that they are communicating with other morons that watch MTV, reality T.V. and have a joy stick in their hands.
You are damn lucky you are not working for me, if you had submitted such inanity to me with a as a pearl “some people are unhappy and will probably leave Skype.” I would have promoted you immediately to… clean the toilets.
A small friendly advise don’t add insult to injury and have the intelligence and marketing acumen to rewrite your text and remove my comment.
I, just as many others I’m sure, turned to Skype because of low international calling rates. I was looking forward to be able to pay a yearly flat fee, or even a flat fee plus a connection fee, for all my calls, when Skype Unlimited was announced in the US.
But no, instead you introduce a connection fee for the pay per minute calls, and propose a flat fee for domestic calling. Domestic calling, which is already super cheap in many countries.
You want to create new product and add “Pro” at the end? Please make it global, and let the whole world “talk for less™.”
I, too, cannot see what is disruptive in adding a connection fee. Much of Jaanus posting was just corporate woffle, as he knows himself. The best thing about the comments was that I now know there are cheaper alternatives. I’m disappointed with you, SKYPE.
skype has clearly lost touch of what their customers want, not that they’ll ever admit to it. the new “innovative and exciting” pricing structure is really an insult to our intelligence. um, hello?!?! we all know how to count!! you’ve just simply put the rates up, and for the short calls most of us make it’s getting close to extortion.
skypepro isn’t even a reality but we’re supposed to be excited about it? give me a break. the only thing i’ll be able to do with that service is call a landline in my own country, which i hardly ever do… and i mean hardly EVER! i, like most others here, are calling mobile phones almost exclusively in this day and age. what makes me want to get excited about skypepro?
skype, i know you can sense the backlash from your customers already. it’d be wise to drop the arrogance and maybe treat your customers with some respect. your corporate taglines are misleading and full of crap. we’re not as dumb as you think. and to all those working at skype that are forced to write such utter garbage as that written above, you know you can do better somewhere else. you shouldn’t have to sell your soul to the devil just for a paycheck.
With all the due respect, It runs actually deeper than that. On jan 22, 2007 on this blog.
Quote
We’re now going over everything that you guys have said on all of this over the past few days, more to come.
Enquote
Amen…
I suspect that they are actually really convinced that avatars and wallpapers are the answer.
One thing nobody mentioned…
The connection fee is enforced since Jan 18. The Skypepro scheme will be announced “…in weeks..”.
If connection fees and Skypepro are supposed to be working in parallel (for any possible reason) and they are part of a disruptive policy, why are they implemented at different times? Why the “bad” connection fee is imposed on the spot and the Skypepro scheme is postponed for “weeks”? Why the announcement made, speaks for a new policy that will be released on the 18th of January and the only thing applied is the connection fee, and why this, even misleading announcement of yesterday, was made 5 days later?
All these are not good signs and at the best case scenario show amateur contact and careless behavour. What has been built over time needs only some moments to be destroyed and that is reputation and trustwortiness.
Well, mostly everything was said. The connection fee pressed me to look around and stop me to be a blind afficionado of Skype. I knew that there are cheaper and even better VOIP providers here, but I was a Skype fan.
I call domestic landlines a lot, mostly about 30-50 seconds per call. With Skype it was .023 EUR. Now it is 0.017+fee. We have here a VOIP supplier with the price 0.021 EUR with the 1+1 tariffication and VOIP-In number (0.025 EUR/month). It uses standard SIP protocol nad the quality is unexceptionable).
I was a “Skype volunteer” and had got about ten SkypeOut users. Now I have to tell them about the situation and appologize…
I will not ask to refund my money on the SkypeOut account, I probably use it time to time and in few years I will slowly spend it
I suggest every one that feel fooled and insulted to write emails to the custom service to complain and request refund for the credits.
“innovative and exciting”, that’s the most funny joke I heard in 2007.
You see, there is not a single favourable comment about your DISRUPTIVE connection fee. I also agree the voice quality of other providers are as good. Instead of further reducing the rates to eventually get bigger volume, skype is driving us away. I bet the numbers of new skypeout customers won’t be like before.
To make this situation even worse, Skype Customer Service is not even responding to refund requests. I’ve submitted three separate requests for the same refund and Skype Customer Service has yet to respond to any of them. The 1st was submitted 4 weeks ago. Good luck getting your money back! I WAS a huge fan of Skype and recruited many friends and family. It’s unfortunate that greedy big business has taken over. We can only hope that the majority of the 170 million Skpe users provide Skype with enough bad publicity that Skype if forced to respond. …apparently the pocket book is all that matters now with Skype!
My two cents:
TO SKYPE:
The connection fee is absurd. It compleatly disrupts Skype’s moto and purpose. I would really like to know who proposed this: was it on eBay’s side or Skype’s side?
Mr. Jannus, let me register my compleat (yes, that’s correct spelling) disappointment with Skype. Be careful with your customer base… as they say “Don’t get mad. Get even.”
TO USERS:
I agree with you. This is going bananas…
And, did you notice Jannus hasn’t said anything yet??
Phillip
‘Now, as for what to make of this. This illustrates the direction that we’re taking this year.’
— means robing our customers
‘The connection fee does not apply if you are on the Skype Unlimited plan in the US or Canada, or Talk for Britain plan in the UK’
— who cares about domestic calls???!?!?!?!
‘I can’t talk about the specific figures, but it’s really selling like crazy, it works well, people like and understand it’
— you mean you and others can’t understand
1.7 c/min?
‘So far, you needed to make many choices about what exactly to buy, plus, you couldn’t really predict the costs’
— dont insult my intelligence, HOW CAN YOU NOT PREDICT 1.7 CENTS PER MINUTE? WHAT PART DONT YOU UNDERSTAND?!?!?
‘With Skype Pro, you get all these great things in one great package’
— refrasing: with skype pro we fill you with junk and get more money for it
‘Sure, some people are unhappy and will probably leave Skype’
— i already left you twit. Hail LOW RATE VOIP, you pay 10 euro, you get 1 month free and then 1 cent per minute international calling and then all over again. Thanks SKYPE for making me SHOP AROUND
‘We still think that it all comes down to the whole picture’
— which is all about money
I have requested a regund of my 1.60 euros A WEEK AGO.
GIVE ME MY DAMN REFUND SKYPE
SKYPE YOU WILL PAY FOR YOUR INSOLENCE WHEN YOU BECOME SOMETHING LIKE YAHOO BUT THEN IT WILL BE TOO LATE
GOODBYE
Let me add to your comments, regulus05:
“We think that by now, we’ve become pretty good at managing our growth”
— Oh really? What a showoff… ‘Managing our growth’, how can this get worse?? You are becoming more expensive than other methods of calling, e.g. calling cards, etc… and you still say “we’ve become pretty good at managing our growth”?
Seesh. Get a life, Skype. Or at least, get your old one back.
When I heard about this connection fee it felt like I’d just been handed a “DUMB” hat from Skype to wear. I’d just invested a considerable amount of money in Skype PC-less hardware so that I could benefit from the lower rates. Except that the rates are no longer lower than my local telco’s. Skype Pro sounds alright but I think that Brazil will be left out of the best deals, as usual. Well, it’s hard to get past the door wearing this huge “DUMB” hat but if I bend over I think I can manage it… Thanks for deceiving and disappointing your customers, Skype. Way to go.
Concordado, c.livino. (translates to agreed for all non-portuguese speakers).
“So this plan is working well and it’s really a model that we want to replicate elsewhere, with Talk for Britain in the UK being just one example. And the first form of this replication will be Skype Pro for a large number of countries, containing not only zero-minute-price domestic calls, but many other goodies. So you could say that Skype Pro is like a whole bunch of Unlimited plans rolled out for each of the countries.”
why not one fixed fee plan for everyone, so people in india can phone the usa. if your blocking ISP from out side of UK or USA from buying the plans. Skype has always been international, like phones without borders(doctors with out borders, excuse me).
also Skype long term staff dont show so much arrogance, you dont know it all. take a lesson from the mistakes of apple, microsoft, ibm, amazon,ebay, and a host of other internet companies. Dont diss the users and dont mess with their money. i love my skype and would love to see it make lots of money. Just do it right. dump the connection fee, less arrogance, and listen to what is being said. NO BUTS OR IFS
thanks
Highlights from fishstink’s comments, with emphasis (yes Skype, listen up!):
“…DON’T diss the users…”
— Ohhh, yah, Skype is certainly doing that. HELLO?! ECHO123?! HAVE YOU, SKYPE, BEEN EVEN LOOKING AT THE COMMENTS ON THIS BLOG?
“…and DON’T mess with their money…”
— Another thing Skype is good at. Look at how well they manage NOT to mess with our money: connection fees, a silly Skype “Pro”, among others.
eBay is busting Skype, bigtime.
Highlights from fishstink’s comments, with emphasis (yes Skype, listen up!):
“…DON’T diss the users…”
— Ohhh, yah, Skype is certainly doing that. HELLO?! ECHO123?! HAVE YOU, SKYPE, BEEN EVEN LOOKING AT THE COMMENTS ON THIS BLOG?
“…and DON’T mess with their money…”
— Another thing Skype is good at. Look at how well they manage NOT to mess with our money: connection fees, a silly Skype “Pro”, among others.
eBay is busting Skype, bigtime.
One comment from Italy.
I agree 100% with all the peopple let down by this connection fee thing. I have read the announcement they made in this blog (which I guess regards the USA and UK users) and still it is a lot better than what we have here in Italy. At least you guys could have various months of free out calls. We just had some minutes once in a while. As for a lot of guys, I quit with it. I recently find Voipstunt which gives 120 days of totally free landline calls to various world nations like UK, USA, Italy, Germany, and so on. The quality is just the same as skype but the normal fares even lower than skype’s. Well, I bought 10 euros of credit and they gave me 120 days of free calls to sevaral countries. After these 120 days at the purchase of another credit I have another 120 days of free call. Definitely my choice from now on.
To Skype: this is the best way to loose all of your clients. Go on like this and you end up with voipstunt as I do for your calls since you will have no more money left……….
Michael, Italy
HMMMM…….wake up and smell the writing on the wall. Skype? Hello? is there something you aren’t getting here?
It’s big and it smells bad.. Yep it’s the pile of customers walking away. You can always get new customers right. The growth of skype has been a word of mouth phenomenon, each user telling 5 or 10 of their friends. cheaper than advertising but now you have turned those ambassadors against skype. suck it up and take it back.
Pete
A few years ago I searched for a way to make calls without added fees like connection fees. When I found Skype I immediately swiched and spread the word around to all my friends and family. Everyone that I knew began switching. I have friends and family in Brazil, Peru, Argentina, Australia and Japan. In my circle alone that is like 30 people and each one has probably told another 30. Just as easy as people switched to SKype people will begin to switch to another carrier that offers a better plan. I will definetley begin looking for an alternative as I think what Skype is doing is wrong and the comments that have been made by Jaanus are so insulting that I will make it my time to make sure we switch to another carrier. Skype I am dissapointed!
It looks as though the non-USA Skype users are being made to pay for the massive overbid by Ebay when they bought the Skype business. Please tell me why the UK connection fee is 44% higher than the USA connection fee?
This whole thing has been poorly thought through by the Ebay management. I for one will not be funding such stupidity in the future.
Having seen the announcement of ‘disruptive pricing’ I was full of anticipation having been wowed by Skype’s abilities over the last 12 months of so and transferring my companies entire outgoing calls to Skype.
Well the connection fee is certainly ‘disruptive’ and almost certainly enough to cause me to change over time to another supplier. I can understand that prices need to be increased from time to time but if that is the case alter the price of the call which people DO understand and can calculate do not add ‘additional charges’ which people DO NOT understand and cannot calculate. Sorry Skype – another very unhappy customer here.
A very dumb question,who is this Jaanus? An intern? The pizza guy that was quickly recruited to write a press release, because nobody else could bother?
Somebody telling the world, that the company doesn’t give a rats ass if there customers leave, that it makes no difference in the big scheme of things (true, one company less, who cares?) can hardly hold a higher position in the company.
What are they smoking there and is anything left?
Chris
I did not learn about the connection fee pricing until I realized how fast my money was leaving my account…
I am probably a weird Skype user but I mainly use Skype to make 1-minute calls so that people can call me back on my online Skype or on my SkypeIn number. The new pricing plan is so disadvantageous to me and frankly, I am disgusted by it. I know eBay wants to monetize on Skype but one way is to keep loyal customers, not eject them with pricey calling plans. I have been purchasing Skype services for about a year and a half now and I have been happy because of one main reason: it is cheap and relatively reliable. I have endured connectivity and sound quality problems in the past, but I have stayed with Skype for that only reason.
The new pricing plan is the final step for me. I am leaving Skype for Yahoo! Voice because:
- the call rate is cheaper than Skype: 1 cent per minute instead of now 6 cent per 1-minute call
- it has no connection fee (until further notice…)
- I do not seriously think Skype/eBay is going to change their connection fee policy.
I of course would want to be refunded like many users (about $15 for the remaining credit + SkypeIn + SkypeOut), but let’s face it, I do not expect Skype to value my money nor my opinion. So I am going to use my credit until there is no more.
Too bad, Skype, you have just lost another customer.
Well, most is already said. I only discovered when my credit ran low very quick, more than twice as quick as normal. Connection fees are nasty.
Often calls are not answered but you get machine. You pay 3x for a few second call that you have to make again, and again till you get the person. It was bad enough to pay the full minute for such calls.
Mostly Skype has good quality calls, but with my dial up connection the calls often drop so to complete longer calls I have to call three four times, paying connection fee each time. I can’t say if Skype is at fault of the dropped calls but I surely feel cheated by the repeated connection fee.
Unfortunately I just added $30 but like other say once finished I’ll dust off my “internet calls” account and call for a lot less.
Why not add .5 cent to the out rates, you may make more without offending customers. Connection fees are nasty, before Skype I always made sure never to buy calling cards that have this practice.
Anyhow it’s a lesson not to buy into closed systems how ever good and idealistic they may seem. Sooner or later they will abuse their hold on the market. Better support the open standards so no one can get such control as Skype has now. It’s not too late.
SKYPE SELL-OUT!
I regstered with Skype and downloaded your software while everything else was still free just for one subscription (annual?). I have been seriously toying with subscribing to use the software to call landlines and mobiles anywhere for free and am very disappointed to read about typical telecoms charges being intorduced since the eBay takeover; this is just at a time when I need to start using it to call a local mobile number, because I neither have a Skype phone nor can feasibly use conventional telecoms to call him nor have him call me.
Thank you very much Skype and hope you sleep in peace in your Mercedes Benz!
Quote :
“As of January 18, a [connection fee of 0.039 € or equivalent](http://www.skype.com/products/skypeout/rates/connection_fee.html) applies to SkypeOut calls after the fifth second, with the exception in the next two bullets.”
NOT TRUE FOR ME!! Am I the only one who’s being charged a connection fee after ONE SECOND ?
I know I used to be able to speak for less than 5 seconds without being charged, but that no longer works. In other words, now my credits are all being lost for those 2 seconds conversation where I tell someone “It’s me, I’m here. Just log in to your Skype account”.
That sucks! I’ll see if my phone company also charges connection fees for calls that are less than 5 seconds!
That’s a really clever and selfish move from the Skype administration.
What?
A connection fee? I did not notice until I look at my history. When did it happen? I was about to introduce Skype to my 82 year old mom so she can make phone calls without using a phone card. This is absurd. I am switching as soon as I get my balance down to some thing more manageable…..