I'd imagine--based on purely anecdotal evidence--that their market research indicated consumers are highly responsive to changes in price. People (even those who should know better) tend to have an irrational confidence in the idea that they won't need to fall back on a backup in the future. Hard drives crash, but mine? Unlikely. Foolish in the extreme, but far too common nevertheless.
Faced with that sort of thinking, the lower price likely helped them convince consumers. At $5, it's a low enough fee for most people to kind of just forget about it rather than consciously weigh the opportunity cost involved. The last think Backblaze wants is for its customers to think that they'd be better off spending the money on a really good hot dog or two rather than a backup service.
> their market research indicated consumers are highly responsive to changes in price
That makes it sound like we carefully thought it through. :-) Our "market research" was the 5 Backblaze founders asking their friends and family questions like "Mom, how do you feel about paying $5/month for a backup?" After asking that question to 15 different people, it seemed like there were reasonable tipping points around $5/month and then another one at $1/month. The math didn't work at $1/month - so $5/month it was! And we've never changed prices, because we got lucky and it worked out for us. So we've never run the experiment of whether we would lose half our customer base if we raised the price to $6/month. And I hope we never have to raise prices, because subscription customers seem to HATE that - like when Netflix raised prices it was a hate fest towards them.
Faced with that sort of thinking, the lower price likely helped them convince consumers. At $5, it's a low enough fee for most people to kind of just forget about it rather than consciously weigh the opportunity cost involved. The last think Backblaze wants is for its customers to think that they'd be better off spending the money on a really good hot dog or two rather than a backup service.