3 ms·

Ask HN: What pricing model for an experience app?

I'm curious as to what the best pricing model for an app that I'm piloting. It's an "experience app", in that the app allows you to live an experience from your living room that you'd normally get in a brick-and-mortar venue (sorry, contractually can't go into more details). We have currently a freemium model, where you get free unlimited access for a limited time (< 1hr), and then these options: 1/ A one-shot "x hours pass" for a couple bucks (e.g, <5 USD for 6 hours), which can be renewed on demand of course. 2/ A subscription or "unlimited monthly pass" for a bit more (e.g. < 10 USD / month, unlimited usage during the month), which automatically renews. But we've seen that subscriptions are quite "stable" and we don't get a positive increase in recurring subscribers. We get more or less a many new ones as we lose them. Most don't cancel after 1 month, but generally within 2 or 3. And one-shot passes aren't as popular as we had expected, so people seem to think that our subscription is definitely more interesting for a few repeat uses, but don't stick around too much. Visits are fine, but free base growth is not great (think ~10 to ~15 users/day average) and conversion from free to a pass or subscription is rather low. So, I've been trying out some numbers, and thought of trying another approach: a subscription or "unlimited monthly pass" again, but this time for actually a lot less. My gut feeling based on our demographics are that this would encourage more people to register, and they'd be a lot less likely to get cancelled (e.g. < 1USD / month, unlimited usage during the month) Does that fly? Do you have other ideas? Adoption has been a bit low - probably for a number of reasons - but I can see there's definitely interest in that app, so I'm thinking that low-cost subscription is actually not too bad, as long as we're careful that the influx of users doesn't cost more to handle than they bring. I'm thinking of trying of "flash sale" scenario of users to check what the result would be, but I'm a bit worried I'd burn a week or month of potential income for us. Any pointers to actual models on this, or anecdotal experience, are all welcome.

raviparikh 5y ago
It's hard to tell based on the vague info about what the app does, but it seems like the pricing model is not as much the issue as the fact that the retention is bad. If I understand correctly, people are signing up to pay monthly, but then they're churning within 2-3 months; to me this indicates that you have a somewhat compelling value prop (which gets people to sign up) but then they aren't fulfilled by the product and so they leave. I don't think different pricing schemes will solve this issue. Perhaps it's also the sort of product that is satisfying users, but, is the sort of thing that only needs to be used for a couple months at a time (e.g. a furniture shopping app? I only go furniture shopping in "bursts" when I move to a new place). In that case maybe some sort of well-priced "3 month pass" or something is the right way to do it.
- hnhastheanswer 5y ago
  Thanks, I appreciate the feedback. Well, it's hard to pinpoint the right "customer profile" because they tend to vary. I think we have 2 "main customers", based on what we see in our data for the app and the brick and mortar version: - We definitely have a decent ratio of one-shots who just want the app on the moment (it's more impulse-oriented as it's something you'd use with friends when chilling at home or when you have a small party). - But we also have some "die-hard" fans that do tend to be frequent users. So, a 3 months pass may not be the best, but maybe you're on to something and a "X days per year" version would make more sense. Although from a technical perspective and user experience perspective, that'd be hard to get right I think. Still, retention is indeed an issue, but I think bad retention because "your UX is bad" and "your UX is bad in relation to the price you pay for it" could be a factor in my eye. As in, I'd be fine paying a Netflix-equivalent subscription for a niche product that I use a lot, but would I pay that much for something I will use in bursts of 2-3 hours for 2-3 times a month at most (as opposed to the uncountable hours of movie/shows streaming)...? I don't know. That's where I think our repeat customers tend to go over the line of "meh, maybe I should just subscribe whenever I need it, and then let go". (I know comparing to Netflix probably isn't the best idea.) And for sure, the product itself can be improved to increase satisfaction and help with retention. No doubt about it, but that's a longer game and I have this feeling that right now we're pushing people away even when they're sufficiently happy. I could very well be wrong, though.

raviparikh 5y ago

It's hard to tell based on the vague info about what the app does, but it seems like the pricing model is not as much the issue as the fact that the retention is bad. If I understand correctly, people are signing up to pay monthly, but then they're churning within 2-3 months; to me this indicates that you have a somewhat compelling value prop (which gets people to sign up) but then they aren't fulfilled by the product and so they leave. I don't think different pricing schemes will solve this issue. Perhaps it's also the sort of product that is satisfying users, but, is the sort of thing that only needs to be used for a couple months at a time (e.g. a furniture shopping app? I only go furniture shopping in "bursts" when I move to a new place). In that case maybe some sort of well-priced "3 month pass" or something is the right way to do it.

hnhastheanswer 5y ago
Thanks, I appreciate the feedback. Well, it's hard to pinpoint the right "customer profile" because they tend to vary. I think we have 2 "main customers", based on what we see in our data for the app and the brick and mortar version: - We definitely have a decent ratio of one-shots who just want the app on the moment (it's more impulse-oriented as it's something you'd use with friends when chilling at home or when you have a small party). - But we also have some "die-hard" fans that do tend to be frequent users. So, a 3 months pass may not be the best, but maybe you're on to something and a "X days per year" version would make more sense. Although from a technical perspective and user experience perspective, that'd be hard to get right I think. Still, retention is indeed an issue, but I think bad retention because "your UX is bad" and "your UX is bad in relation to the price you pay for it" could be a factor in my eye. As in, I'd be fine paying a Netflix-equivalent subscription for a niche product that I use a lot, but would I pay that much for something I will use in bursts of 2-3 hours for 2-3 times a month at most (as opposed to the uncountable hours of movie/shows streaming)...? I don't know. That's where I think our repeat customers tend to go over the line of "meh, maybe I should just subscribe whenever I need it, and then let go". (I know comparing to Netflix probably isn't the best idea.) And for sure, the product itself can be improved to increase satisfaction and help with retention. No doubt about it, but that's a longer game and I have this feeling that right now we're pushing people away even when they're sufficiently happy. I could very well be wrong, though.