Intrafamily Bets and the Genius of the Exponential Pledge Schedule

Monday, March 25, 2013
By dreeves

graph of our exponential pledge schedule: $0, $5, $10, $30, $90, $270, $810, $2430

My mom recently lost $5,000 to my brother in a commitment contract gone wild. That was started in part as an experiment early in Beeminder’s beta period before we’d thought of things like the exponential pledge schedule. Believe it or not, it was actually a pretty positive outcome: my mom gradually lost a tiny bit of weight (more importantly: didn’t gain weight!) for over 2 years, thus paying my brother on average $179/month for that fitness program. Not very cost efficient, but quite socially efficient!

I’m sure not many people are keen to emulate that experiment with my mom and brother, but it really hit home for me how valuable Beeminder’s exponential pledge schedule is. With that $5k contract it was a lot of stress to decide on such a high amount and make sure there was no inadvertently toxic fine print (even amongst family!) and to actually take the plunge and have the contract officially start.

The way it works in the current Beeminder is just infinitely better. By the time you hit motivating amounts of money all the doubts, fears, and uncertainties have been quelled. Beeminder has earned something for its trouble and you’ve got yourself nicely self-bound with quantified confidence that you can stay on track from now on, perhaps with a tweak of the road dial.

If that new crazy amount keeps you on track for years (like it did for my mom) then maybe eventually it will lose its sting (like it did for my mom). Well, if so, we hope you’ll feel like Beeminder earned its money by then. And the next even crazier pledge level should motivate you for even longer.


“Once you get to those amounts we’re all but guaranteeing that you won’t actually pay.”

There’s another reason we’re so pleased with ourselves for coming up with the exponential pledge schedule: It’s how we make all our money (currently about midway between ramen profitability and day-job equivalency). We get you hooked when it’s free and then charge you more in proportion to how valuable you find us, as demonstrated by the severity of the kick in the pants it takes to keep you on track. Before we figured all this out, we used to get dollar signs in our eyes when gung ho users wanted to jump to commitment contracts with hundreds or thousands of dollars at risk. Eventually we learned that there’s approximately no chance that people will derail with that kind of money at stake the first time.

pie chart of Beeminder's revenue broken up by what pledge amounts generate it -- almost half comes from $5 and $10 pledges, another quarter from $30, and most of the rest from $90 pledges

That’s especially true given how generous we are about what counts as a legitimate derailment. We pretty much only make you pay if the derailment was due to akrasia. But no one is so akratic that they let themselves derail on an $810 goal (well, one person has been; no one at $2430). So once you get to those amounts we’re all but guaranteeing that you won’t actually pay. That’s why we decided to actually charge money directly if you want to jump to higher pledge amounts.

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  • Evelyn Mitchell

    How To Make It Impossible To Fail
    doesn’t mention you. It should!

  • crainbf

    Totally agree. I complained to Maneesh about this scandalous oversight!

  • Mike

    Looks like a great idea, but how about the inherent conflict of interest if you earn money when we fail at achieving our goals, not the other way around?

  • Daniel Reeves

    Ooh, yes, we get that question so often we wrote a blog post about it! . Short answer is that only 6% of our money is from one-time pledges where the person only paid once. Usually the amounts you pay are just bumps along your road to godlike awesomeness.

    So, paradoxical as it may sound, we make our money almost exclusively by people (gradually) achieving their goals.

    Put another way, it rarely happens that someone puts up money, fails, pays up, and walks away. Rather, they put up money, fail, pay up, put up more money, fail again, and keep doing that indefinitely. Except they’re obviously not just failing. They could do that without Beeminder for much cheaper! They’re in fact mostly staying on on their yellow brick roads punctuated by occasional derailments, the cost of which is well worth it for the value Beeminder provides. Because Beeminder makes you fail less. If you never fail you’ll never pay, but then you must not have needed Beeminder in the first place.

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  • Daniel Reeves

    I should clarify that the above was from before we had universal precommit-to-recommit, ie, goals would always freeze when you derailed and you had to explicitly choose to unfreeze them and recommit.