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.