Should I charge $1 or $0.99?
I have an app that I want to start charging people. The in-app purchase will allow users to remove ads, have extra features (e.x. dark mode, remove quotas, etc.).
I'm letting the users choose between $1/month or $9.99/year.
Now, I want to know if I should present the $1/month as a $1 or $0.99? I know I can A/B test this, and I will. However, I just wanted your opinion. Also, let's hear your opinion on charging users monthly for an app service.
0.99$ for B2C, 1$ for B2B. Just my 2 cents
Or 1 cent to be precise
hah that cracked me up
Without knowing what your app does, it's hard to give you advice responsibly. But generally, charging yearly is better than monthly, monthly is better than once, and once is better than free. You really want to deal with churn as little as possible.
Also, if people don't bite, the most tempting thing to do is lower prices. But if you understand what your goals are and what you hope to get out of all of this, then it's straightforward to work backwards and calculate what kind of price you need to be selling your product for at minimum. Never go below that. Instead, work to provide more value (or the right value) to your customers so that they will eventually agree to that price.
I'm thinking about using an anchor price. Users can choose between these:
$0.99/month or
$9.99/year or
$25 one time payment for life
I know that $25 might seem like a billion dollars in the App Store, but that price point might make my other two (real) prices more appealing.
I'll suggest you to get rid of the monthly subscription.
The probability of an user to stick with your app for the whole year is lower than paying 9.99, plus when they paid an app for a reasonable amount, they try to stick with it to get their money worth (so you also have active users).
And finally 0,99 customers are usually cheap customers who requires a lot of attention and will unsubscribe after a month.
This pricing guide from Stripe made the rounds a few days ago. It's really good. For B2B, they advise against anything ending in .99.
Thanks, going to read through that (even though my product is B2C).
I always do the power of 5 or the power of 9. As much as it looks appealing to just charge the flat rate, to come under does actually make people think they are paying less.
What do you mean? Like $1.99, $1.95?
That is correct. Have a gander: https://www.paymotion.com/ecommerce-blog/the-pricing-power-of-9-does-it-work/
We tend to look at the whole number. The first thing we notice is to the left. However, as we scan over to the right, we see 5 or 9. 0,2,3,4,6,7,8 can work, but it seems that power of 5 or 9 hits a sweet spot for us.
And then our whole mindset resolves itself as, "Hey it's just under $2.00!"
I wonder how would a Japanese or Korean solve this challenge as they have no fractional part in their money - only integers.
I strongly believe that people unconsciously round up all numbers ending in 5/6/7/8/9 and round down the rest. So if I were you - I would have chosen the $1 price. Simple and exact. People love simple prices because it is easy to aggregate the purchases mentally.
If you believe in the trick that people only see the X in x.99 - then ask yourself "Would I choose the x.99 thing if there is another x.23 on the next shelf" ? If you always choose the x.99 thing - then you can safely conclude that people really only see the X.
I am not a representational example but I always feel that a price like 1.23 looks more real and adequate than the fake 1.99
I am more eager to buy the thing for 2.00 just to avoid the need for rounding in my mind and escape from the damned 9's
I was born and raised in a country, where the currency was for a long time at a rate of about 10 000 for $1. Interestingly, people gave preference to items priced as multiples of 10, than to items priced a bit less, like 150 000 is more competitively priced than 149 900, or 100 000 is better than 90 000. I guess it was because A) it is not a fractional part, so people don't discard it either way and B) just like you, they try to avoid the need for rounding up, and would prefer summing up prices that are easiest.
I always thought Steve Jobs invented the x.99 prices :D
You want to make the most money you can convince the buyer to part with. That's economics. But you're actually testing two pricing models with only one variance here, and I think that's not going to be very useful in this case. There's a lot of evidence to suggest that $0.99 is going to perform better than $1.00, even considering those of us that know about the psychological trick.
If it were me, I'd test a couple other sets: $0.99 per month, or $14.99 per year (try it); and $1.99 per month, or $14.99 per year. Since you're gearing up for multivariate testing, you may as well try out a broader set of options.
Yeah, I'm going to test various price points and see what attracts people.
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I recall reading a study where even when your audience consciously realizes that you're pulling the $x.99 trick, they're still more likely to buy.
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Thanks for the reply. It seems the old $0.99 trick still works.
I agree, I have no clue how users expect continuous app support and features when they only paid $1 a couple of years ago. Blows my mind really.