Results: Price Increase Experiment

At the beginning of the year I decided to try an experiment and changed the price of the In-App Purchase for Reminder+ (App Store link) from Tier 1 ($0.99) to Tier 2 ($1.99). The price change has been in place for eight weeks.

At the time, I made the following prediction about the change:

Changing from $0.99 to $1.99 won’t have a significant effect (decrease) on the IAP conversion rate.

Well, I was wrong about that, but not too wrong.

The conversion rate dropped from 8.9% to 6.9%; looking at that figure alone, I’d say that is a significant difference. But things are more interesting when the price increase is factored in.

Here are the numbers comparing the these two periods. Before the price increase:

  • Period: 26/08/2015 – 04/01/2016, 132 days
  • App version: 2.0
  • App price: free
  • Downloads: 833
  • Downloads / day: 6.31
  • In-App Purchase: Send via Messages
  • IAP price: $0.99 (Tier 1)
  • IAPs: 74
  • IAPs / day: 0.56
  • IAP conversion rate: 8.9%

After the price increase (no other changes; only the IAP price):

  • Period: 05/01/2016 – 29/02/2016, 56 days
  • App version: 2.0
  • App price: free
  • Downloads: 360
  • Downloads / day: 6.4
  • In-App Purchase: Send via Messages
  • IAP price: $1.99 (Tier 2)
  • IAPs: 25
  • IAPs / day: 0.45
  • IAP conversion rate: 6.9%

So, whilst the conversion rate did drop, and my prediction was wrong, the revenue per day still increased:

  • At $0.99: $0.55 / day
  • At $1.99: $0.90 / day

What am I going to do with these results?

Overall the daily revenue is higher with the IAP set at Tier 2 (almost 2/3 higher), so it makes sense to leave it as is.

Additional notes:

  • When users send a reminder using the IAP, there is a small server cost involved. Charging more, per user, for this capability is advantageous
  • Whilst I am biased, I value software, and I think that there is value in this IAP. I prefer the higher price.
  • Although this is un-tested, at this point, I do not think it is worth trying to increase the price further beyond Tier 2.
  • I’ve updated the Reminder+ downloads and sales page. Now that I’ve got additional data for v2.0, comparing the IAP conversion rate with v1.2.2 is more interesting. There older version was better at converting users…

Small numbers

I know that the numbers involved with my app are particularly low. That said, I still think this price experimentation may be of interest to others; in other circumstances the impact of a change could be more meaningful.

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