Questions

Pricing for mobile app? High price vs lower price with equal conversion rates?

This is probably a stupid question. We are testing three price points for our mobile consumer mhealth platform. We are neck and neck with two price points which are pretty much equal in conversions, 1.99 and 4.99 which price should we pick? The high one right?

5answers

If you mean the conversion rate is the same (meaning you're making a lot more revenue with the larger price), then that's the right call.

If you mean that your net profit is the same but you have higher unit sales on the first price I would go for the lower price to have more customers (and more chances to have them buy an IAP eventually, or leave a good review).


Answered 6 years ago

Conversion rates only provide a part of the picture. Total number or buyers and/or total top and bottom line dollars made must also be considered.

If 70 out of 140 people purchased at the 1.99 but only 2 people out of 4 purchased at the 4.99 price point - even though the conversion rate is the same (50%) and margins might be better at 4.99 - you should definitely go with the 1.99 price point. In other words - the bottom line is the bottom line.

Lower conversion rates with a significantly higher number sales still equals greater revenues. And all things considered equal this means more income/profit (bottom line money)

So heed this REMINDER: Always remember to look at all key metrics (I recommend at least 3) - and not any one in isolation.

With sales already coming in - it looks like you are on the right track and off to a great start. For any assistance with other questions feel free to get in touch with me. Best of luck!


Answered 6 years ago

Go for the higher-paying customers.

The risk in a race-to-the bottom is that you might actually win. Worse, you might come in 2nd.

Early on you want the higher-paying customers because you want their feedback. You want to listen to their feature requests and implement them, so that you can iterate your product and get more $4.99 customers in the next release.

You also need to consider the opportunity cost of maintaining a larger customer base. Assuming you are breaking even on revenue and all other things considered equal then you need to answer 5 times the number of customer support requests on the lower plan.

All things are NOT considered equal. Your $.99 customers are going to have far more complaints, customer service requests, and overall headaches. All of these things are going to distract you from developing an app that provides real value for your customers.

We see this pretty frequently at Ambassador. If you'd like to schedule a call I'd be happy to share more specific insights around how moving up-market has helped us.

Good luck!


Answered 5 years ago

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