Scared to raise price; how will I know it will work?

Grandfather old customers, and maybe set prices to $399 and $39 first (to test the waters). If it works, I would go for $499 and $49 and again, see what happens. After each increase give it a week (or required time - you know the best how long) to see if the sales are affected. Remember to keep an eye on total sales volume, not the number of sales. While number of sales might drop, your revenue might be higher.

Many years ago my late Grandma used to recover lampshades as a way to make some extra income in her retirement.

My older brother and her were chatting one day and she complained because she was working really hard and had a lot of clients and it was stressing her out.

My brother said, "double your rates". And her first response was "I'll lose customers", he said, "Maybe so, but remember if you lose half your customers you still end up making as much as you were before but with half the effort." She doubled her rates and she lost no clients.

This has stuck with me ever since. Hope that helps.

What I do is grandfather people who auto renew into the existing rate and raise the price as I add more valuable features to my app (freemium/yearly subscription) for new customers. It lets me experiment with pricing while recognising the customers who got on board with the app early.

After that, I keep my eye on my effective MRR growth rate. If it increases in spite of a reduction in new customers, I know I'm on the right track. It hasn't happened yet, but if I found that my MRR growth suffered from a price hike, I could always adjust the price down and prorate the people who did subscribe at that price to the 'new lower rate.'

In my case, I can also use the rate increase as a sales tool for existing non-customers by dropping them an email about two weeks before the hike to let them know they can lock into the current rate if they subscribe now.

This book got me over my hesitation to adjust pricing:

https://www.amazon.com/Strategy-Tactics-Pricing-growing-profitably/dp/1138737518/ref=dp_ob_title_bk

After reading it, I was able to make informed decisions about the pricing of my product instead of comparing it to what my competitors were doing. I can't recommend this book enough.

why not try it and see if it works?

Hard to gauge without a solid understanding of your product and market, but as a principle - if you truly have no competitors at a lower price point than you, and have a comparable offering, I can't see much reason to price significantly less then them (I would normally aim to come in just under).

To be more accurate though, you should A/B test your conversion at different price points (signups as a percentage of traffic to the page). Choose the price point that is generating the best overall return (conversion % income).

To get even more accurate you could incorporate lifetime value, but you need more data.