Managing Your Pricing Strategy

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Managing Your Pricing Strategy

Any pricing strategy to be applied on the AppStore is limited by the playground set by Apple. The variables at your disposal are:

  • Package price
  • Package period
  • Type & price of the Introductory Offer

Package Price

Every country has a different purchasing power and it should be taken into account to maximize value. Continuous A/B testing to improve LTV is paramount in the subscription business.

Package Period

Just like package pricing, package periods should also be analyzed on a country basis. Longer period packages can contribute to short-term cash flow since they “lock-in” the customers for the said period and extract all value at the start of the period. However, although that might seem counterintuitive, short-term packages’ LTVs can be higher. This is why every package’s LTV should be analyzed and compared to determine the one that extracts the most value. Please note that customer behavior changes constantly and geographically: hence there is always room for improvement in a package’s LTV.

Another approach is to look at daily churn distribution values and analyze billing periods’ effect on subscriber behavior. This can lead to different package period preferences in different countries.

Type & Price of the Introductory Offer

It is fairly difficult to get users who installed your app to subscribe (the ratio is usually in single digits) and this is why Apple offers the possibility to onboard your users via Introductory Offers. These offers enable the user to see and experience your app with its full features either for free or a discounted price. Using Introductory Offers usually increases your ItS ratio but creates this second step that needs to be monitored which involves users that started an introductory period to become fully paying “real” subscribers.