Mailbox: How to efficiently allocate a scarce resource

There have been quite a few blog posts (and a million more tweets) complaining about Mailbox's reservation system. For those of you that don't know, Mailbox is an iOS email app that is slowing letting users in on a first come first serve basis. Over 500,000 people have signed up which is creating quite the queue. Some people have accused Mailbox of using the line to build hype or to make users feel exclusive, but that misses the point. Mailbox wanted to ensure that they had a solid rollout with no hiccups. Having hundreds of thousands of users hit your servers for the first time can be brutal. Even worse, a crash on launch day could have been fatal for the company.

I understand why the company established a reservation system - to slowly add users to the app instead of all at once, but I can't help but think that there is a more efficient way to do it. As an economist, I would have loved to see a decreasing price strategy. For example, on launch day, offer the app for $20. Few people would pay for it, but those who really wanted it would. Then over time, decrease the price as you gain confidence that your servers can handle the load. In a couple of days you could lower it to $15. In a week $10. In a few weeks $5. Eventually price it down to $1 or free. Pricing in this manor would allow those who want to try the app the most (those that derive the most utility from it) to jump ahead of those who just want to poke around the app for 5 minutes and then delete it. Additionally, this would result in the same exponential user base growth that Mailbox is shooting for.

Sure this pricing strategy would get its fair share of complaints; after all, very few iOS apps are priced over $5. It would be fascinating to compare user engagement over time with price paid. As far as I know this has never been done. It's also worth mentioning that this pricing would actually give Mailbox a source of revenue because as of now, they have zero.

As a side note, I love Mailbox. It has completely changed the way I think about email. I can't wait for the iPad and Mac clients. You really should check it out.

Reposted from my blog