PetaPixel

SmugMug Pulls a Netflix, Raises Fees for Some Customers by 67%

Back in July of 2011, Netflix announced that it would be separating its movie streaming and DVD rental services into two separate subscriptions, increasing the cost for customers who wanted both by about 60%. The news was met with a massive customer backlash online, and over the next three months, more than 800,000 customers canceled their subscriptions and the stock price took a huge hit. The story became a lesson for corporate executives on how not to do price increases. Apparently SmugMug didn’t get the memo.

The subscription-based photo sharing service sent out an email to “Pro” customers tonight informing them of a major service change and price increase. The details are eerily similar to the Netflix case.

Here’s a snippet from the email,

For the first time in 7 years, we’re raising the price of SmugMug Pro subscriptions, something we tried hard not to do.

We know $100/year is a lot and personally, if I were asked to pay more for a service, I’d want to hear from the person responsible for the decision. That’s me, so I placed my dSLR on a tripod, and looked it right in the lens, imagining it was you. I tried to offer a peek inside SmugMug and our thinking:

Because storage, engineering and support costs are so much higher for pros who sell at a markup, we split pro accounts in two: Portfolio and Business.

1. Portfolio is still $150/year (or $20/month) and still provides access to our pro labs for both you and your visitors, plus pro features like watermarking.

2. Business lets you set prices and earn profit. It will be $300/year (or $35/month) for new customers, but existing subscribers who set prices will be asked to renew at $250/year (or $30/month) beginning October 15, 2012.

More details about the change were published to this blog post.

Wanting to put a human face on the bad news to soften the blow, company CEO Chris MacAskill posted a video to YouTube explaining the “what, why, and how” of the price hike:

So basically, like in the Netflix case, paying customers who want to retain the full range of features they enjoyed before (e.g. make money by selling their photos) will be asked to pay roughly 60% more.

Interestingly enough, Netflix’s CEO also uploaded a YouTube video at the time of his announcement explaining the change. Understandably, both videos have few “likes” and a boatload of “dislikes”.

Customers are turning to social media channels to express their displeasure. One of the popular (and humorous) hashtags being used is #smugmugged:

SmugMug was wise in dropping the bad news on the Friday night before Labor Day weekend, as many customers may not hear the news until next week.

The company has long been known for its friendly employees and excellent customer service. Given how similar the details of this case are with the Netflix one, it will be interesting to see whether SmugMug has accumulated enough customer loyalty to avoid the painful backlash that Netflix experienced.


Thanks for sending in the tip, David!


Image credit: 11.EndTheFed.March.EStreet.NW.WDC.9October2011 by Elvert Barnes


 
  • fuzzywuzzy

    Right… in other words, “even though providing the service isn’t costing us any money, regardless of how it’s used, we’re going to charge more because … um … WE CAN!”

    Great thinking.

  • Dave Collyer

    Zenfolio – Cheaper, better and customization without that shameless smug mug logo all over everything.

  • http://www.facebook.com/efstop Rob Byron

    I’ll be looking for a new service for sure.Zenfolio looks promising.

  • Gary C

    At least AT&T gives the option to keep your grandfathered unlimited account (for now). Way to treat your loyal customers who were with you from the beginning and helped spread the word. I’ll be looking for an alternative.

  • http://www.jjsaul.com Jim Saul

    Adobe’s creative cloud storage and services seem well suited to creating a killer for the niche… I’m surprised that hasn’t been rolled out yet.

  • CATFACE T-SHIRT

    Come on photographers, if you can’t put $100 in your business what the heck are you doing pretending to be a “professional”? Man, I paid four times that for the battery grip for my D800!

  • littleroot

    $150 a year for unlimited storage and very fair print prices was too good to be true. If your shopping cart is not making you money, don’t buy the $300 level.

  • J Askew

    Love the Netflix analogy – a Company that grew its revenue 48% since price increase and increases it’s net income by 66M. Yep, that’s definitely a lesson on “how not to do price increases”. Good one.

  • Aaron

    Higher end photographers (the ones who actually make money) will have no problem paying the extra fees. If they are able to focus on offering a better product (pro togs like smoothly running tech) then the price increase is welcomed. The guys who complain about a price increase are probably the same ones that would complain about lack of features in the site.

  • http://www.petapixel.com Michael Zhang

    The company’s image and brand took a big hit though, and its stock isn’t looking pretty compared to the crazy growth it was seeing prior to that announcement date.

    You’re right though, the hike may succeed in making the company much more profitable — just at the expense of other things.

  • http://www.facebook.com/kevin.kratka Kevin Kratka

    There’s no way I’m paying that much for my pro account. Bye bye smug mug, hello…..Zenfolio?

  • https://twitter.com/#!/thelonelylights Adam Cross

    before even attempting to consider such prices and considering various other portfolio websites – people should be reading terms & conditions and checking what they’re actually paying for and whether they have any rights to the content they upload

  • CATFACE T-SHIRT

    Is smugmug public? I couldn’t find them on yahoo finance.

  • http://twitter.com/KamoPhotos Kamo

    Sounds like they’re trying to compete with PhotoShelter.

  • Johnny

    Pros who use SmugMug – you realize your customers can see you whining publicly about a $100 a year increase (or whatever it is), right?

  • brian

    I’m just starting out and was using Smug to show my portfolio, but there are a few shoots in which I’ve sold some things through Smug. That said, even if I were making a full time living at being a photog, I’d not tolerate 60% increases to anything in my supply chain and take the hit into my sales margin (unless I too attempt to pass along the price increase into the cost of prints-and so many people already think Walgreens/CVS is good enough). I don’t in my current job. Our customers would flock away just like I did when Netflix raised their rates and I was a customer there for over 5 years.

    If Smug is going to stick to their guns, I’ll find a workaround – even if I pay for hosting and have to code my own site.

  • evanR

    Agreed. I moved to Zen years ago. Yeah, SmuMug has friendly staff and helpful boards… but you only need them so much because it is so difficult to customize your site and figure out the system. Zen is cleaner, easier to use, and has more pricing/service options. Go check it out.

  • http://www.facebook.com/bowlrider George Medina

    which it does lack seriously.. especially at 300/year

  • Mansgame

    I was thinking of going with smugmug but they had no way to collect sales taxes for my state (they require sales tax on all sales even if through a third party) . As a portfolio display, smugmug is plain ugly though.

  • JR

    Same here… only offering self-fulfilled products. I have the pro account and pay no commissions, just the annual fee :)

  • Redhotkate

    Not to be the dissenting voice here, but I’m kind of glad they’ve changed the pricing. Maybe this will be enough for the hobbyists to get out of the shoot and burn mode, and for the semi-pros to start charging appropriate prices. If you can’t afford $30 a month for your hosting fees, you shouldn’t call yourself a business.

  • Redhotkate

    Private, family run, with no outside investors

  • Chris

    I don’t think the price increase in unreasonable. If you’re really a pro, $100 more per year is nothing for the service you’re getting. Suck it up.

  • http://thomashawk.com/ Thomas Hawk

    It seems to me like the increase is really only for the ecommerce engine portion of SmugMug. SmugMug very generously pays out 85% of all mark ups to the photographers. Compare this with something like Getty Images that keeps 80% and pays photographers 20%.

    If someone is a Pro and making money off of their service, this is just another tool. You pay for computers, software, cameras, lenses, etc. A customizable ecommerce engine that pays you 85% of markups would seem to be worth it to me.

    If it’s not worth it to other photographers though they do have cheaper plans still for regular hosting without ecommerce.

  • http://www.orlandolocal.com William Beem

    Where is this friendly service I see reported so frequently? I never got it when I was a Portfolio customer, which is a big part of the reason why I left them months ago.

  • http://www.orlandolocal.com William Beem

    Possible, but unlikely. Customers are looking for art, not message boards.

  • The Prophet

    You are a very insensitive, Kate. Long before you likely ever picked up a “semi pro” camera, I was using Smugmug to not only sell a few prints here and there, but more importantly, to safely archive years of client photos. It is not just the price that many are complaining about, it is the late Friday night email on Labor Day weekend when Smuggy mugged us that we’re upset about via 60 – 100% price increase a.k.a. Netflix.

    In addition, I’m not sure why you are so bitter at “hobbyists” but quite frankly, when you were probably still filling your Pampers with what was formerly your morning breakfast, many of us were shooting professionally on media like Kodachrome, VPS and Velvia.

    Now, make sure to stop driving your Smart Car before you send your next text on your phone in response. Understand that Smugmug was created for a community of photographers of various skill levels, abilities and passions. Overall, they’ve done a great job with their service.

    But the bottom line is this…they blew it with this price increase and they are risking losing long term customers like me, and replacing them with snit-nosed uppity pretenders like you.

  • http://www.orlandolocal.com William Beem

    I agree. Unless you pay for some customization, SmugMug just looks awful.

  • Alex

    Why would customers look negatively at photographers trying to keep their costs under control?

  • http://twitter.com/namebrandon Brandon Harris

    “Higher end” photographers..? Come on.. like wedding photographers? Please.. There are plenty of us high-end photographers who get by without selling prints via SmugMug and just used it as a host that allowed us to cover the hosting fees via print sales. I made enough on a single architectural shoot to pay for SmugMug and their new pricing for the next 15+ years. One week of image royalties would’ve more than covered that increase, but I won’t do it. It’s about the value and the principle of respecting your customers.

    They’ve drawn the line. “Pro” to them means people who sell volume prints online, and those are the customers they want. Fine by me, I’ll point my domain over to ZF or PS and get more features, for less money. My clients will still get the proofing and review selections they need, and I’ll be able to make enough profit on random print sales to cover my new hosts costs.

  • http://twitter.com/namebrandon Brandon Harris

    If semi-pros and hobbyists are shooting at level of quality that cuts into your business, I think you have larger problems than SmugMug to worry about.

  • Johnny

    Do you really want your whining to be what a potential customer sees when they Google you? Makes it seem like you are unwilling to pay for a professional service so why should they want to pay you?

  • http://www.orlandolocal.com William Beem

    I guess that’s why you use a profile with only one name. You can be acerbic and accusatory while hiding from the consequences.

    Here’s another way to look at it. Potential customers aren’t all searching for a photographer by name. They’re searching for results. Either they want an existing photo of something that they desire, or they’re searching for a photographer to hire for some purpose.

    In my case, I don’t have the latter kind of client. The former isn’t searching for me by name.

  • Tom__G

    I’m not leaving Smugmug. I still think there is enough value for my money at the new rates.

  • http://twitter.com/HydroRacerTV HydroRacer Live

    Just wait until Facebook starts to charge for its service, just how long
    do you think they can store the millions of photos uploaded each day
    for free. Only a matter of time in my opinion.

  • Mansgame

    I take special pride in making “pros” feel inferior with their photography. I remember when I was first learning, they would be all smug as if they were curing cancer comparing themselves with doctors (no, really that’s what they did) and laughing at the mere notion that an amateur can take pictures as good as them.

    Then they saw that amateurs could do that so they started to say “well he can’t do it consistently” and they did. Now that people are taking their own pictures instead of hiring you guys, the ones who aren’t good are getting weeded out and you’re blaming everybody but yourself.

    But hey, look at it this way Kate, I can do what you do professionally as my weekend hobby, but you could never ever do what I do professionally. How does that make you feel?

  • Mansgame

    what the hate for smart cars?

  • Mansgame

    You don’t need to upload every single picture you ever made to your portfolio. A good portfolio doesn’t need 500 GB of data. Use backup services for that so you can backup all your files- raw, lightroom catalogs, etc. For a portfolio there are plenty of other options. heck even 500px is good.

  • Aaron

    That is the point. With the extra cash flow they will be able to add features. That is why he said “instead of knocking on investor doors”. I will gladly add $100 a year to get better features.

  • Aaron

    Obviously you dont have the business model that would actually support sales volumes or quality products. You probably only sell one photo every so often. It’s good that you can sell it for a higher price but face it, you have an easy time filling your print orders. If you sold thousands of the same print (people like Trey Ratcliff) then you may change your tune.

    Next time I am in Chicago and need an architectural photographer then I may as well just look at your competition because many of them produce the same quality you do but for a lower price. My other option is, while the quality of your photos is nothing more special then most other photographers, I believe in the service and quality that you offer so it is worth the investment (I am in marketing, I hire guys like you) to my client to get good service. You are supporting the very mentality that you fight. Also, lets see Trey Ratcliff (who sells thousands of photos of a single shot) whine about a company offering a better product for a small price increase. When I do hire photographers, I would prefer to hire someone who costs more and I know can deliver on deadlines, has good gear and will go the extra mile for me. Same with a service.

    For smugmug, it makes perfect sense. If they want to build a better product then they have one of two options, raise prices or get investment. One puts them into debt, the other keeps them in the red and weeds out the guys who only sell one photo a year. You are the type of guy to complain about the price increase but then complain when you are sitting on support with Zenfolio because they didnt have enough money to get the bugs out of their code or hire better support staff.

  • http://www.facebook.com/pday28 Patrick Day

    so because u spent 400 on battery pack that make your more professional. this is why people hate photographers most are complete jerks.

  • Mansgame

    who still buys prints?

  • http://twitter.com/namebrandon Brandon Harris

    “Who still buys prints”?

    Exactly.. My overall income from photography consists of about 1% actual prints. Random people come to my site and buy prints. I don’t market them, it just happens. Those sales cover my hosting costs. Why would I give SmugMug an extra $180 in sales when I can use ZF and pocket the extra $180?

    99% of my work is sent digital and ends up with publishers or marketing people who work with their creative and publishing staffs to create the final result for printing. And guess what, they’re sure as hell not using SmugMug and Bay Photo to print out their annual reports, adverts or brochures.

    I use SmugMug for hosting and proofing. The fact that random print sales cover my hosting costs is a bonus. SmugMug just told me that they don’t want me as a customer, since I don’t do volume prints. Fine by me, because I’m not paying them an extra $180 out of my profits to use them.

    ZenFolio and others offer the same level of proofing and hosting as SmugMug for less cost to me.

    And who gives a crap about Trey Ratcliff? If I wanted to seriously sell prints I’d be talking to galleries and not selling 8×10’s with SmugMug for $50 each.

  • Jason

    Why on earth would someone want to down vote this? Looking at Ts&Cs is a must if you are going to run a commercial enterprise on someone else’s servers!

  • http://twitter.com/namebrandon Brandon Harris

    That’s not how it works, Mr. Marketing. You don’t start selling a product, have some hazy idea of how you might improve it at some point, then decide to charge your customers 100% more to finance the “new features” without even detailing the new features. That’s when your customers leave, especially when your competitors are already under-cutting you on price (and arguably service).

    What you should do, is cost-benefit analysis,
    research your market and look at elasticity, then borrow the money (or if you’re actually running a profitable business, invest profits) to fund the R&D, and then price the product appropriately. Then you hire marketing people who know what they’re doing to spin the product differentiation and justify the increased cost to your customer.

    “Give me 100% more money now so in a year I can give you some new features” is about as backwards as it gets.

  • katherine

    Hi William – could you email help[at]smugmug[dot]com ATTN Katherine with more info? We looked for you in our system, but didn’t turn up your info. We’re sorry to hear that you didn’t get the excellent service you deserve and would like to take a closer look at what happened.

  • http://www.petapixel.com Michael Zhang

    There it is :D

  • Michael Rasmussen

    Smugmug has something Netflix didn’t, significant friction to make a change. It’s time consuming and expensive to flip your business to another provider. Hopefully all the links on the internet pointing people to your work will get updated. (Har!)

    With Netflix you just visited a different website to transact your business.

    Good luck to all faced with this dilemma.

  • Doug Logue
  • http://www.facebook.com/profile.php?id=1357770135 Tom Bryan

    Is that really a photo of someone protesting Smugmug? What happened to protesting for civil rights… find another website if you feel so personally wronged.