Experimenting With Pricing Lifted My App Revenue Almost 500%
Back in 2015, when Claire and I were thinking about going full time on Appbot, we decided to take a month off while Claire went holidaying in Japan. I decided to take some rest and relaxation, for about two days, before I talked myself into making a new app in my new found spare time.
I wanted a keyboard extension where I could save common phrases and easily insert them. I hacked together an MVP and managed to get a bit of press when it launched.
I decided to monetize it via a $1.99 in app purchase to unlock unlimited keys. The price felt right to me and so I never considered changing it. The app never broke any revenue records, it would tick along at around $10-$20 dollars a day.
Then I received an app review suggesting I should bump my price. I’d never really considered it. I haven’t given the app a lot of thought since I launched it. It functioned exactly how I needed and the value felt right to me at $1.99.
I knew people who like the app really love it. It’s rated 4.9 stars in the US. But would they be happy to pay more?
So I decided to take their advice and test with some other price points over the course of a few months. I tried $4.99, $7.99 and $9.99 all in USD. Apple using price tiers to keep pricing approximately the same across stores. MacStories have a great article on how it works.
The three metrics I wanted to focus on were Average Revenue Per Day, Revenue per Download and Conversion Rate (downloads to IAP purchases).
Given the downloads are pretty inconsistent, Revenue Per Download is probably the most important metric.
The results were pretty interesting. Moving to $4.99 immediately gave a big boost in revenue. The conversion rate only dropped 2%. Which means only 1 in 10 people had an objection in paying 2.5x the price!
$7.99 also gave a good bump on revenue with only a slight drop in conversion rate.
Unfortunately my first run at $9.99 was interrupted by Christmas and New Year. Games might be booming that time of year, but it’s not when people are looking for productivity tools. Most interestingly the second run numbers match up pretty well with $7.99.
Taking the results of the second run of $7.99 and $9.99 revenue per download grew from $0.42 to $1.42, a 338% win compared to $1.99.
Looking at pure revenue it lifted from $17.10 per day at $1.99 IAP to $84.63 at $7.99 IAP, a win of 495%! Not enough to retire on, but more than enough to buy a constant stream of the latest tech gadgets.
The Fallout
One thing that started happening, which I never had before, people started contacting support asking if it was a subscription or a one-off payment. My first though was I need to improve the UI to make it clear it’s a one off charge.
Good afternoon,
Is this a one time fee of 9.99?
And one that seemed to be happy to pay a subscription.
With the upgrade is that per month? If so what is my payments per month and what day will they be took out?
But maybe people are happy to pay a subscription 🤔
What’s Next?
Although it looks as though there was some resistance at $9.99 I think it makes sense to test some higher price points. $14.99, $19.99?
Possibly the most interesting future experiment is subscriptions. Based on the feedback I received users are starting to expect subscriptions.
Sounds like there might be a part 2 of this post.
Conclusion
I’ve had to learn the pricing lesson many times over. You are probably the worst person to decide the value of your product.
The value of your product also changes over time due to:
- the market
- your product improving
- and competition
Let your customers decide the right price.
Never take anything for granted and always be testing.
